Lawsuit Questions Whether Facebook Ads Really Work
The 2.23 billion monthly active users of Facebook are very familiar with the ads that appear in their feeds, alongside selfies from friends, baby and pet pictures, and the latest memes.
As NPR reports, Facebook earned over $13 billion in ad revenue last quarter.
But how many people actually click on those ads — let alone spend money as a result?
As NPR noted, back in the “Mad Men” era of advertising, it was much harder to tell whether ads were reaching their target audiences. Television audience sizes and demographics could be estimated by services like the Nielsen ratings, but how many people see a billboard?
Additionally, advertisers have long struggled to put their ads in front of the RIGHT people — the ones who need (and can afford) their goods or services — for the lowest possible price.
Facebook advertising is supposed to accomplish that.
Facebook advertisers can target ads based on geographic location, age, gender, income, education, and interests.
Facebook has also faced scrutiny for facilitating ad targeting that appears to violate anti-discrimination laws, as I blogged about here.
Facebook advertisers can “boost” posts on their pages in order to reach more people. (An un-boosted post won’t even reach all the people who “follow” that page.)
But InvestorVillage, which aims to be “a Force for Good in the Investment World,”has filed suit claiming that Facebook ads don’t really work as they’re supposed to.
According to the plaintiff’s lawyer, Facebook claims to reach a target audience with 89% accuracy.
To test this, InvestorVillage spent $1,600 on two Facebook ad campaigns. These ads were targeted at people with a college education, with incomes of at least $250,000, and with an interest in the stock market.
The plaintiff found that at least 40% of the ad “likes” came from people outside the target demographic.
A 2017 survey of small business owners found that 62% of them felt that their Facebook ads were missing their target audiences.
Facebook’s advertising terms admit that Facebook "cannot guarantee in every instance that your ad will reach its intended target or achieve the outcome you select."
As Wired reports, the algorithm that decides which ads are served to which people is rather complicated and may not accurately reflect what people are currently interested in.
If you hover your cursor over an ad, Facebook can tell you why you’re seeing it.
For example, I was surprised to learn that I was being targeted for Maserati ads, perhaps based on research I did on luxury cars for a writing project last year.
To change the types of ads they see, people can adjust their ad preferences.
For example, people who have issues with alcohol can hide ads that relate to alcohol for six months, a year, or permanently.
People who have lost a child or a pet can hide ads that relate to parenting and pets.
People may also be surprised to discover the long list of (often irrelevant) Facebook advertisers to whom their names have been sold.