A potential class-action lawsuit against Facebook accuses the company of knowingly inflating video viewership data, and advertisers are not happy.
Online marketing agency Crowd Siren is suing Facebook over alleged misrepresentations of key video metrics, saying it had misled advertisers about the average time users spent online watching video clips. On top of this accusation, the suit also claims that the social media platform knew as early as 2015 that it was over-reporting the figures.
Previously, the small advertiser had sued over the initial 2016 admission by Facebook, but it has now amended its suit.
In 2016, The Wall Street Journal reported that Facebook had “vastly overestimated average viewing time for video ads on its platform for two years” by as much as “60 to 80pc”. Apologising for the error in a blogpost, Facebook said: “As soon as we discovered the discrepancy, we fixed it.”
Fraud and damages claims
Crowd Siren amended its complaint to add fraud claims and a punitive damages request against the company on 16 October in Oakland, California. It still maintains that Facebook acted fraudulently. According to the company, while Facebook executives were insisting that video consumption was growing fast, it was becoming apparent that some of the metrics used to calculate time spent watching video content were incorrect.
Nieman Lab got its hands on the court filings, which allege that engineers knew for more than a year that Facebook metrics were “overstating the average time its users spent watching paid video advertisements” and that “multiple advertisers had reported aberrant results caused by the miscalculation (such as 100pc watch times for their video ads)”. The suit also suggested that there was a notable lag between the discovery and correction of the faulty metrics.
The complaint said: “If Facebook had immediately corrected its miscalculation in a straightforward manner, advertisers would have seen a sudden and precipitous drop in their viewership metrics.” It added that marketers and advertisers “would be less likely to continue buying video advertising from Facebook”.
The metric itself was total time watched divided by views. Facebook inflated the metric for two years as it only counted videos as viewed if they had been watched for three or more seconds. By not taking into account shorter views, but still counting them towards the total time watched figure, it may have misled advertisers. Crowd Siren also said that Facebook failed to correct the errors quickly, which it alleges were known by the company in 2015.
Publishers may have been affected
While the accusations, if true, would have impacted marketing and advertising firms, media companies may have also been affected. Some news publishers figuring out how to allocate staff began a ‘pivot to video’ strategy, which may have been based on incorrect data. While publishers make their own decisions, these may have been influenced by Facebook’s discussions around the rise of video content. Publishers such as Mic, MTV News and Vocativ were among those that shifted resources from written content towards video.
A Facebook representative said that the lawsuit is “without merit”. It said that the company has filed a motion to dismiss the fraud claims. They added: “Suggestions that we in any way tried to hide this issue from our partners are false. We told our customers about the error when we discovered it and updated our help centre to explain the issue.”
The two sides will appear in court on 14 December 2018.