Metric sales

Lawsuit Says Facebook Maintained Inflated Metric To Avoid Sales

  • A judge did not redact parts of a Facebook lawsuit that claims executives knew an advertising metric was inflated.
  • Executives ignored workers’ requests to fix it in order to avoid a “significant” sales blow, the lawsuit said.
  • Potential reach, the metric in question, shows advertisers a possible audience size.

Facebook executives had known for years that its advertising measure of “potential reach” was inflated and quashed an employee’s warning to adjust it to avoid a drop in revenue, plaintiffs in a lawsuit against the giant social media pleaded in an unredacted court case.

A Northern California District Court judge on Wednesday revealed that previously blackened sections of a court document in a class action lawsuit filed on behalf of DZ Reserve and other participating plaintiffs against Facebook in 2018 The social media giant has inflated its measure of potential reach to fool advertisers.

The recently revealed sections claimed that Facebook COO Sheryl Sandberg acknowledged issues with the potential reach metric in a 2017 internal email. Advertisers “frequently rely” on the metric – which shows the number of people reachable – when making purchasing decisions, according to the lawsuit. But employees said the metric actually measures the number of accounts, which includes duplicates or fakes, which makes it misleading.

A product manager offered to change the metric to reflect the number of potentially accessible accounts, not people, but Facebook’s management team rejected the idea because it would have a “significant” impact on revenue, the company said. case. The lawsuit claims that Facebook found that removing duplicate or fake accounts from the total count would result in a 10% drop in the potential reach count.

The employee who proposed the fix said, “This is revenue we should never have generated given that it is based on faulty data,” according to the filing. Other Facebook employees also said the number was misleading.

“These documents are handpicked to match the complainant’s story,” Facebook spokesman Joe Osborne said in an emailed statement to Insider. “‘Potential reach’ is a useful campaign planning tool that advertisers are never billed on. It’s an estimate, and we make it clear how it’s calculated in our advertising interface and help center. . “

Two years ago, the company adjusted the potential reach metric, the FT reported. Instead of calculating the number of active users who viewed an ad in the previous 30 days, Facebook determined the metric by calculating the number of users that matched the advertiser’s criteria during that time period, according to the report. False and duplicate accounts remained in the total, however, the claimant claimed.

The company has previously said that advertisers pay for actual impressions and ad clicks, not the potential reach measure, the Financial Times reported. The social media giant has already faced criticism for its measures. In 2019, Facebook settled a lawsuit after revealing that it inflated the viewing time of video ads due to an error in calculating metrics, the Wall Street Journal reported.