Facebook's Latest Error Shakes Advertisers' Confidence
By Alexandra Bruell and Sahil Patel
Facebook Inc. is offering millions of dollars in credits to some
advertisers after discovering a glitch in a tool that tells
advertisers how effective their ads may be in driving results, such
as getting consumers to download an app or purchase a product.
Facebook's "conversion lift" tool overestimated some campaign
results for 12 months, the company quietly told its advertisers
this month. The glitch skewed data that advertisers use to decide
how much money to spend with the company.
It isn't the first problem Facebook has discovered in its
systems to measure advertisers' campaigns, and it is not likely to
dent Facebook's ad revenue. But some ad buyers said the latest
gaffe has hurt confidence in the company's metrics at a time when
many businesses are navigating the pandemic by trying to cut costs
and make sure their ad spending performs.
Omnicom Group Inc. media agency OMD Worldwide is looking into
how the error has affected some clients' investments before
accepting credits, said Florian Adamski, OMD's global chief
"This is not an easy fix," he said. "It's not like, pay a couple
thousand or million bucks and it's over. This goes a lot deeper and
we need to find out how to rectify the damage done and make sure it
doesn't happen again."
"If there is no governance or third neutral party looking at our
investment tools, I can't sleep well at night and my clients can't
sleep, " he added.
The issue is particularly acute for certain categories such as
retail, where marketers are spending as much as 5% to 10% more on
Facebook and other performance-centric advertising channels to
recover business lost during the early stages of the pandemic, said
the chief executive of one digital agency that spends hundred of
millions of dollars advertising on Facebook every year.
"Being able to attribute where sales are coming from is hugely
important right now," the executive said. "Every dollar spent has
got to map back to data points and performance. If we can't map
that back, it becomes more difficult to justify spending dollars
when clients are trying to manage their costs as effectively as
possible -- and media spend is a cost that needs to generate
Facebook's offer of credits extends to some advertisers that
used the tool when the error went undetected, from August 2019
through August 2020.
"While making improvements to our measurement products, we found
a technical issue that impacted some conversion lift tests," said a
Facebook spokesperson in an email. "We've fixed this and are
working with advertisers that have impacted studies."
At one large buying agency, the size of ad credits will be
around 0.5% of affected clients' annual budgets around the time of
the glitch, according to a memo that the agency sent to clients
that was obtained by The Wall Street Journal.
"More so than past measurement problems with Facebook's ad
platform, this error has the potential to be extremely serious,"
the agency wrote in the note to clients. "The fact that it led to a
systematic overstatement of ad performance, combined with the
yearlong duration of the error, likely misinformed media budget
allocations. These misallocations came at the expense of both
advertiser media efficiency and Facebook's competitors."
Facebook, which said it fixed the error in September, told
advertisers about it this month, according to a memo that Facebook
sent clients. The company is basing the amount of credits it is
issuing to advertisers on an analysis that shows how much the error
may have affected their actual investments during the period
following the lift study.
Some ad buyers are also questioning the analysis Facebook is
using to determine advertisers' compensation -- criticizing the
tech giant for not being transparent enough in how it determined
who receives ad credits and how, exactly, compensation was
calculated, as well as details on steps Facebook is taking to
ensure such errors don't occur again.
"This can't just be covered with a one-time compensation in
credits," said OMD's Mr. Adamski. "It needs that reconciliation for
every single client on how did it influence the investment
decisions we made."
Marketers aren't likely to turn away from Facebook despite the
incident, said Kevin Simonson, vice president of social for digital
marketing agency Wpromote LLC, which spends more than $100 million
a year on Facebook ads on behalf of clients.
"This particular error would impact strategy regarding what
creative to use and what audiences to spend against, which could be
significant to some extent, but it's not going to be significant to
a degree that's going to cause any brand (in this day and age) to
not do Facebook," Mr. Simonson said in an email. "It's more like to
News of the glitch was reported last week by industry
Write to Alexandra Bruell at firstname.lastname@example.org and Sahil
Patel at email@example.com
(END) Dow Jones Newswires
November 25, 2020 18:43 ET (23:43 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.