Facebook Erroneously Inflated Key Video Ad Metric

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For the past two years, Facebook has been committing the blunder of overestimating the average viewing time for video ads on its site, according to The Wall Street Journal. The WSJ reports that the company told major ad agencies and ad buyers that the way it has been counting viewing time had artificially inflated the average viewing time by as much as 60%-80%.

No impact on billing

Facebook fixed the issue several weeks ago, reports the WSJ. It must be noted that this error had no impact on the way Facebook billed its advertising clients, the company told the media outlet. The error took place because it only counted video views of more than three seconds.

“This error has been fixed, it did not impact billing, and we have notified many of our partners both through our product dashboards and via sales and publisher outreach,” the social media giant said.

Facebook’s average video view time metric incorporated only those people who had watched the video long enough to count as a “view” in the first place and thus inflated the metric because it did not take into consideration anyone who didn’t watch the video or who watched it for a shorter time.

Facebook made a posting on its advertising help center web page several weeks ago to inform advertisers of this mistake. The inflated metric has left big advertising buyers and marketers upset, and they have asked for more details from the company, noted the WSJ report. Facebook’s executives will be meeting with top advertisers during the Advertising Week conference in New York.

An embarrassment for Facebook

Facebook is a formidable force in social media advertising, which is its main revenue stream. The company reported ad revenue for the second quarter at $6.24 billion, beating analysts’ expectations of $5.8 billion. After The Wall Street Journal reported the miscalculation, Facebook’s stock declined more than 1.5% in extended trading.

Facebook’s revenues have remained strong in part because of the enthusiasm it has for video ads. Also advertisers use it to compare performance with the ads on Twitter, YouTube and around the web. The California-based company said it renamed the metric so as to make clear what it stands to measure. Nevertheless, the news comes as an embarrassment for the social networking giant, which has been boasting of growing video consumption across its platform.

On Thursday, Facebook shares closed up 0.11% at $130.08. Year to date, the stock is down more than 22%, while in the last year, it is down almost 38%.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

1 Comment on "Facebook Erroneously Inflated Key Video Ad Metric"

  1. This was pretty obvious if you have any familiarity with performance advertising or have worked in the user acquisition field for video.

    Only a few ad networks provide full video (un skippable) video ad units. Their ads are channeled more like Television in a sense that a user is opting in to watch content and in exchange is served a full video advertisement.

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