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Facebook Inc. is offering millions of dollars in credits to some advertisers after discovering a problem in a tool that tells advertisers how effective their ads are 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 problem has skewed the data that advertisers use to decide how much to spend on the business.
This isn’t the first problem Facebook has discovered in its systems for measuring advertiser campaigns, and it’s unlikely to hurt Facebook’s ad revenue. But some ad buyers have said the latest blunder has hurt confidence in the company’s metrics at a time when many businesses are going through the pandemic trying to cut costs and ensure their ad spend is on target. efficient.
Omnicom Group Inc.’s media agency, OMD Worldwide, is examining how the error affected some clients’ investments before accepting credit, said Florian Adamski, global managing director of OMD.
“It is not an easy solution,” he said. “It’s not like, pay a few thousand or millions of dollars and it’s over. It goes a lot further and we have to figure out how to fix the damage done and make sure it doesn’t happen again.”
“If there is no governance or neutral third party reviewing our investment tools, I don’t sleep well at night and my clients cannot sleep,” he added.
The problem is particularly acute for certain categories such as retail, where marketers spend up to 5% to 10% more on Facebook and other performance-focused advertising channels to recover lost business during early stages of the pandemic, said the chief executive. a digital agency that spends hundreds of millions of dollars advertising on Facebook every year.
“Being able to pinpoint where the sales are coming from is extremely important at the moment,” said the executive. “Every dollar spent needs to be tied to data points and performance. If we can’t track that, it becomes more difficult to justify spending when customers are trying to manage their costs as effectively as possible – and media spending is a problem. cost that must generate income. “
Facebook’s credit offer extends to certain advertisers who used the tool when the error was not detected, from August 2019 to August 2020.
“While improving our measurement products, we found a technical issue that impacted some conversion tests,” a Facebook spokesperson said in an email. “We have fixed this problem and are working with advertisers who have had an impact on the studies.”
At a large buying agency, the size of ad credits will be around 0.5% of the affected customers’ annual budget at the time of the glitch, according to a memo the agency sent to customers and obtained by the Wall Street Journal.
“More than past measurement issues with Facebook’s advertising platform, this error has the potential to be extremely serious,” the agency wrote in the note to clients. “The fact that this led to a systematic overestimation of ad performance, combined with the one-year error duration, likely misinformed media budget allocations. These misallocations came at the expense of efficiency. media from advertisers and Facebook competitors. “
Facebook, which said it corrected the error in September, informed advertisers this month, according to a note Facebook sent to customers. The company bases the amount of credits it grants to advertisers on an analysis that shows how much the error may have affected their actual investments in the period following the elevator study.
Some ad buyers are also questioning the analysis Facebook uses to determine advertiser pay – criticizing the tech giant for not being transparent enough in how it determined who receives ad credits and how, exactly. , compensation has been calculated, as well as details of the steps. Facebook makes sure that mistakes like this don’t happen again.
“This cannot be simply covered by a one-time offsetting in credits,” said OMD’s Adamski. “He needs this reconciliation for each client on how he influenced the investment decisions we made.
Marketers are unlikely to turn away from Facebook despite the incident, said Kevin Simonson, vice president of social media for digital marketing agency Wpromote LLC, which spends over $ 100 million a year on ads Facebook on behalf of customers.
“This particular mistake would impact the strategy regarding what creatives to use and which audiences to spend, which might be important to some extent, but it won’t be important to an extent that causes any markings (in our time). not to do Facebook, “Simonson said in an email.” It’s more to what degree. “
News of the glitch was reported last week by industry publication AdExchanger.
Write to Alexandra Bruell at [email protected] and to Sahil Patel at [email protected]
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