Facebook, Inc. (FB)  

​Facebook Inflated Key Metric for Video Ads


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Robert Williams | FlashRatings | Friday, September 23, 2016 2:25 PM EDT
Stocks in Facebook (FB) slid Friday following news that the social-media giant had crossed some of its most important clients—big ad buyers—by using a grossly inflated metric for average video view-times over the course of two years.

Facebook only included users who watched video ads for more than three seconds in its metric for average time viewed. Users who played a video then quickly scrolled or clicked away were omitted.

In a letter to Publicis reported by the Wall Street Journal, Facebook told the ad buying agency that the earlier metric had inflated the metric by 60 to 80 percent. 

Ad buyers have reportedly pressured Facebook for a more detailed account since the company posted a message several weeks ago saying the metric had been corrected.

Shares in Facebook Inc. were down 1.25 percent at 1pm EST, but are still up by more than 25 percent in 2016. 

Facebook apologized Friday via a post on the network by Vice President of business and marketing partnerships David Fischer, who maintains that the miscalculation was an error and not an attempt to mislead.

“As soon as we discovered the discrepancy, we fixed it,” Fischer wrote. “We informed our partners and made sure to put a notice in the product itself so that anyone who went into their dashboard could understand our error.” 

Metrics that showed high levels of engagement with video ads on Facebook have prompted massive shifts in ad spending to the network over the course of recent years. 

Facebook is now likely to face increased pressure to open its data to outside firms for verification. 

In a letter from Publicis Media to its clients (reported by The Wall Street Journal), the firm said the news “once again illuminates the absolute need to have 3rd party tagging and verification on Facebook’s platform. Two years of reporting inflated performance numbers is unacceptable.”

Some analysts suggested that the snafu regarding a single metric would not pose a significant threat to ad revenues on the social network. 
 
"I don't think it's a serious issue. We've had different ways that people have tracked or reported video views. Snapchat does it a little differently. Facebook does it a little differently than YouTube," RBC Capital Market's Mark Mahaney said on CNBC's "Halftime Report" on Friday afternoon.