Tuesday, February 23, 2021

Online Advertising: Was Facebook Caught with Its Pants Down?

For nearly a decade Bob Hoffman, the Ad Contrarian, has been beating the drum that digital advertising is a shady region awash with fraud. Even so, like a shiny new toy businesses have poured billions of dollars into the coffers of its advocates (ad agencies) and platforms, especially Facebook, YouTube and their ilk. 

So it came as no surprise (for me) to read this story a friend sent by Natasha Lomax on MarketWatch titled Facebook knew for years ad reach estimates were based on ‘wrong data’ but blocked fixes over revenue impact, per court filing.

Evidently, internal emails were unsealed in a recent court case that COO Sheryl Sandberg knew in 2017 that there were problems with a free ad planning tool that Facebook provided for marketers. And the more you look the more you may not want to see. The Lomax article goes on to say, "The filing also reveals that a Facebook product manager for the “potential reach” tool warned the company was making revenue it 'should never have' off of 'wrong data'."

According to Lomax, "The unsealed documents pertain to a U.S. class action lawsuit, filed in 2018, which alleges that Facebook deceived advertisers by knowingly including fake and duplicate accounts in a 'potential reach' metric." 

The point here is not to suggest online marketing is a waste of time and money. It's practically a marketing maxim that you put your storefront where the people are. ("Location, Location, Location.") On the other hand, I built my career from another rule of thumb: You can't manage what your don't measure. And a lot of what is being sold simply doesn't measure up. 

This is why I wrote this article about Data Analytics: The Three Most Important People in the Room

In that article I cited an article an opinion piece in The Drum, in which Chris Kelly argues that although digital ad spending grew by 20% year-over-year again, analyzing the impact of this spending has not matured enough to justify the growth in spending. I concur.

The three people you need in the room, therefore, are the Cheerleader, the Skeptic and the Judge. All too often the Cheerleader will do everything possible to keep the Skeptic out of the room because the case they're making is a snowjob. 

On my shelf here is a book whose title I really love: How to Lie with Numbers. It happens every day, in Washington, on Wall Street and in board rooms across the country. And yes, it even happens at Facebook. 

In my first Marketing Matters column for Business North (2018) I wrote a story titled Internet Marketing: Five Considerations. One of these five considerations was the matter of auditing. Both radio and television have third party auditors that collect data to assist advertisers in understanding the reach of what viewers are watching and listeners are tuning in to. If you are a business, who is doing this in the digital realm? 

At that time I wrote: This is the dark side that has Ad Contrarian Bob Hoffman, an ex-ad agency CEO, up in arms. On his blog he makes a point to skewer the lack of policing that takes place in online machinations. In his book BadMen Hoffman writes, “Online advertising has two very compelling advantages for agencies: it is lucrative and largely incomprehensible.”  

Hoffman believed the ad fraud problem was estimated to be $60 billion, though I would have no real clue as to how to even guess, any more than how much gambling there is in Las Vegas or jelly beans in a Mason Jar at the fair.

At the time, Hoffman wrote, Procter & Gamble became so disillusioned about the effectiveness of their own online spend that last year they cut their digital advertising by 200 million dollars, with no visible negative side effects. In fact, a Wall Street Journal headline declared, “P&G Contends Too Much Digital Advertising Is a Waste.” The March 1, 2018 Adweek headline that same day read, “When Procter & Gamble Cut $200 Million in Digital Ad Spend, It Increased Its Reach 10%.” Something’s happening here, but it ain’t quite exactly clear.

As the saying goes, Buyer Beware.

Related Links

Facebook Really Doesn't Want You To Read These Emails

Data Analytics: The Three Most Important People in the Room

Bob Hoffman's Ad Contrarian Blog

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