A giant digital sign can be seen on the campus of the Facebook corporate headquarters in Menlo Park, California on October 23, 2019.
Josh Edelson | AFP | Getty Images
Documents released in court on Wednesday allege that Facebook executives wiped an employee who suggested changing an ad metric to make it more accurate because they thought the change would affect sales .
The documents are part of an ongoing class action lawsuit originally filed by a small business owner in 2018. They have to do with Facebook’s “potential reach” which allows advertisers to see an estimated audience of how many people their campaign could potentially have while setting bids and budgets. The unsealed filing was first reported by the Financial Times.
According to the lawsuit, Facebook executives had known for years that the “potential reach” feature was excessive and misleading, but they did not act and actively tried to hide the issues. It is said that Sheryl Sandberg, COO of Facebook, confirmed in an email in the fall of 2017 that she had known about problems with “Potential Reach” for years.
The suit says “potential reach” is misleading because it describes itself as a measure of “people” when at best it is a measure of accounts. It is said that Facebook purposely did not remove duplicate or fake accounts from this metric. The lawsuit also alleges that a Facebook analysis in early 2018 found that removing duplicate accounts from Reach Creature would result in a 10% drop in numbers.
A product manager working on “Potential Reach” allegedly suggested changing the metric so that it no longer includes the words “people” or “reach” and makes it clearer that it is based on accounts. However, the lawsuit states that Facebook’s leadership team rejected it “because the” revenue impact “would be” significant “for Facebook.”
“As the product manager at Potential Reach put it:” It is income that we should never have achieved because it is based on incorrect data, “the lawsuit reads.” Another employee said ‘[t]The status quo in ad valuation and reporting is deeply wrong. ‘The only question was:'[h]How long can we get away with overestimating the range? ‘”
Facebook generated advertising revenue of $ 84.2 billion in 2020, making it one of the largest digital advertising players in the US and worldwide.
“These allegations are unfounded and we will vigorously defend ourselves,” a Facebook spokesman replied via email to the new allegations in the lawsuit.
Hours after this story was published, Facebook added in another statement emailed that the documents “were chosen to match the plaintiff’s narrative”. The company added that “Potential Reach” is an estimate, not a guarantee of campaign results, as the company depends on how many people actually see or click on an ad. The statement also states that since before 2018 it was clear how the “potential reach” was calculated in the ad interface.
In March 2019, after the original lawsuit was filed, Facebook announced that the “Estimated Potential Reach” had changed based on the number of people who saw an ad on a Facebook product similar to the one they wanted in the last 30 days Advertiser Audience equals placement criteria versus estimates based on people who have been active users for the past 30 days.
A description of Facebook’s “Potential Reach” feature on Thursday’s website stated that it “estimates how many people your ad can potentially reach, based on the targeting and ad placement options you choose when creating an ad”. It also states that the feature is “not an estimate of how many people will actually see your ad and will change over time.”
The lawsuit cites an example when Facebook told advertisers in August 2018 that it had a “potential reach” of 230 million adults when, according to the census data cited in the lawsuit, only 170 million were using Facebook.
The Facebook website for this feature states that estimates “are not suitable for the census or any other source” and will vary based on factors such as the number of accounts a person uses or the number of visitors to a given geographic location at the same time can.