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Facebook Agrees to MRC Audit Following Ad Data Discrepancy

Facebook Inc.FB recently agreed to evaluation of its advertising metrics by measurement watchdog Media Rating Council (MRC). This is quite unsurprising in the light of the confessions by the tech giant regarding its miscalculations of ad measurements last year.

Last September, Facebook first indentified a "mistake" in it ads metrics. The company realized that it had been overstating the average time spent by users on watching videos. The company only took into account the video with views greater than three seconds, excluding the ones with the views of lesser time, thereby leading to greater than actual average view metrics. Following this, in Nov 2016, Facebook revealed that it had found 'discrepancies" in calculation in four more metrics followed by two more in December.

Facebook, Inc. Price

Facebook, Inc. Price | Facebook, Inc. Quote

Facebook had been facing pressure from advertisers and publishers to gain approval from MRC. Further, per media reports, Carolyn Everson, the global marketing solutions' vice president for Facebook has conveyed to the Association of National Advertisers that Facebook will be providing "granular data" to third parties like Integral Ad Science and Moat for making it easier for advertisers and publishers to verify data through the third party. Notably, the viewership of Facebook videos and Facebook Live has already been incorporated in Nielsen Holdings Plc NLSN Digital Content Ratings. She also added that the advertisement audits for the company will be "administered" by MRC.

It is to be noted that Facebook earns the bulk of its revenues (over 90%) from the interactive and engaging platform it provides to advertisers. Advertisements accounted for 97.3% of revenues in 2016. Reportedly, Facebook is testing a new ad platform - mid roll format - whereby publishers will be able to put in ads in a video (which has a minimum duration of 90 seconds) after a user has played it for 20 seconds or more. Facebook might share revenues with publishers in a 45:55 ratio, similar to the pact with Alphabet's GOOGL YouTube.

Therefore, to alleviate the concerns of advertisers and publishers, Facebook has increased third-party verification.

Zacks Rank & Stock Movement

At present, Facebook has a Zacks Rank #3 (Hold). Moreover, we note that Facebook has outperformed the Zacks categorized Internet Services industry in the last one year. The company's shares increased 31.41% compared with the industry's gain of 17.80%.

Key Pick

A better-ranked stock in the wider technology space is Oclaro Inc. OCLR , which carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

In the trailing four quarters, Oclaro recorded a positive average earnings surprise of 75.00%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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