Facebook's (FB) Ad Metrics "Miscalculation" Woes Continue

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Facebook IncFB has again found a couple of more "miscalculations/discrepancies" in its advertisement metrics.

In a blog post, Facebook admitted that it "misallocated" the extra reactions per user, during live broadcasts, in the "Reactions on Post section, instead of "Reactions from Shares of Post section". Moreover, Graph API has helped it locate "discrepancy" between Like and Share counts on the mobile app.

Facebook added that it is not only working on fixing these glitches, but is also improving the way for reporting metrics. "We're improving our methodology for sampling and extrapolating potential audience sizes. This will help to provide a more accurate estimate for a given target audience and to better account for audiences across multiple platforms (Facebook, Instagram and Audience Network)." The company has assured advertisers not more than 10% changes in their audience size due to these errors.

In Sep 2016, Facebook first revealed that it has found a "mistake" in it ads metrics. It realized that it had been miscalculating the average time spent by users 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 again said that it found 'discrepancies" in calculation in four more metrics.



Facebook's disclosures sent advertisers and publishers into a tizzy. A couple of ad buying companies, Publicis Media and GroupM, a unit of WPP plc WPPGY , who were notified about the error by the company itself, openly expressed their discontent on the issue. Publicis Media was quoted saying, "This 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."

To alleviate the anxiety of advertisers and publishers, Facebook has increased third-party verification. The viewership of Facebook videos and Facebook Live has been incorporated in Nielsen Holdings Plc NLSN Digital Content Ratings. Also, the company said that it is collaborating with other partners like comScore, Inc. SCOR , Moat and IAS for enabling advertisers and publishers to verify data through the third party.

WSJ points out "advertisers don't like margin of error much." This is a concern as advertising is the mainstay of Facebook's total revenues, with over 90% contribution.

At present Facebook carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Year to date, Facebook has vastly outperformed the broader market. Shares of Facebook have grown over 14.3% compared with Zacks Internet Service Industry's gain of 2.1%.

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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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