Facebook Lied About Video Metrics and It Killed Profitable Businesses

October 15, 2019 15:00 UTC

If you think Facebook’s mishaps ended with the Cambridge Analytica scandal, you’re dead wrong.

Months after the scandal erupted, the social media giant was in the hot seat again for knowingly inflating its video metrics for more than a year, according to a lawsuit. The complaint stated that the average viewership metrics were inflated by as much as 900%.

According to The Atlantic, Facebook defined a “view” as a user watching a video for at least three seconds. From the perspective of a retailer, “this was like counting window shoppers as customers.” In comparison, YouTube defined a “view” as 30 seconds or more of watching.

Facebook’s metrics counted views without any user engagement. | Source: Twitter

The terribly inaccurate numbers led many advertisers to put most, if not all, of their marketing resources on Facebook. These organizations believed that they were getting better engagement on the social media platform compared to other channels. As a result, countless hours of manpower and funds were wasted as advertisers chased views that were slightly longer than a blink.

Even though Facebook is set to pay $40 million to settle the lawsuit involving inflated video metrics, the damage has already been done. Independent businesses like College Humor, Funny or Die, and NZ on Air were collateral damage to Facebook’s need to dominate at all costs.

Facebook Lied Big Time to Compete With YouTube

A $40 million settlement is not even a slap on the wrist as the social media channel generated over $55 billion in advertising revenue. Mark Zuckerberg and his crew made so much money at the expense of those who paid to use their platform.

For instance, Adam Conover, a former employee of College Humor, took to Twitter to narrate how Facebook eviscerated a booming online comedy industry. In a series of tweets, the now podcaster explained how Facebook’s inflated metrics lured College Humor and Funny or Die to divert resources from other channels into the social media platform.

Adam Conover wants authorities to shut Facebook down. | Source: Twitter

In the beginning of his tweetstorm, Conover provided background on how College Humor (CH) was doing well. The company was making money before Facebook made big claims.

CH had a profitable strategy in place. | Source: Twitter

This profitable setup would be torn apart after the company heard the news of unbelievable viewership numbers on Facebook.

CH was no longer using Facebook to funnel viewers to their website. | Source: Twitter

As CH relied heavily on Facebook to get viewership, their site visits plummeted. Consequently, ad rates and video budgets followed suit.

CH became dependent on Facebook and they suffered as a result. | Source: Twitter

That lie forced many organizations to the brink of collapse. Some even went under.

Falsification of viewership metrics killed businesses. | Source: Twitter

Other Businesses Suffered

It was the same case for NZ on Air. They saw their videos rack up views from tens of thousands to hundreds of thousands on the social media platform. Thus, the broadcast company spent millions of dollars. They created dozens of new jobs to cater to their viewers on Facebook. They even rerouted funds from sources such as TV, radio, display, print and outdoor. Then they found out that their viewership data was a lie.

A New Yorker article about Facebook revealed that the top brass of the social media company including Zuckerberg shared a core belief that people would come around even if they criticized your calls. Let’s see if advertisers would come around and trust Facebook again after this debacle.

This article was edited by Sam Bourgi.

Last modified: October 15, 2019 14:52 UTC

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@kirilnikk123

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Follow the author on Twitter @kirilnikk kirilnikk123@gmail.com