Falling shares, advertiser complaints and millions of fake accounts plaguing Facebook

2 Aug 2012

It’s not a great week for Mark Zuckerberg’s lot, with Facebook shares hitting a record low right when a serious complaint from an advertiser claiming that 80pc of clicks on its Facebook ads were coming from bots went viral.

Yesterday, Facebook’s shares closed at US$20.88, 45pc below the initial price of US$38 at the company’s initial public offering in May.

It seems that the share price has been falling ever since the social network’s first results announcement since going public came with disappointing figures, showing a net loss of US$157m. Since then, Facebook has also released detailed figures on its users, revealing that 8.7pc of its accounts are fakes.

In Facebook’s vast pool of members, this equates to 83.09m accounts that are duplicates, misclassified or undesirable. Facebook is working hard to ensure all accounts on its network are for real people, and this appears to be a key priority. “If we find fake accounts, we disable them immediately,” a spokesperson told Search Engine Watch.

The same spokesperson also explained how Facebook attempts to detect and filter activity that appears to be coming from a bot, such as repetitive clicks.

Company claims 80pc of ad clicks came from bots

Despite these measures, Facebook has come under fire from one company that has had enough. Limited Run, a service providing online shopping platforms to the music industry, posted on its Facebook Page on Monday a lengthy complaint and explanation for leaving Facebook. The post – which can no longer be viewed as, true to its word, Limited Run has disabled the account – detailed how the company came to believe that 80pc of the ad clicks it was paying for were coming from bots.

“Facebook was charging us for clicks, yet we could only verify about 20pc of them actually showing up on our site,” the post read. Thinking this was an issue with the company’s analytics service, Limited Run checked the stats with six or seven others, including Click and Google Analytics, but still came up with the same results.

Continuing its investigation, the company then decided to build its own analytic software, which revealed that 80pc of these clicks came from users that didn’t have JavaScript enabled, which makes verification difficult. “What’s important here is that in all of our years of experience, only about 1-2pc of people coming to us have JavaScript disabled, not 80pc like these clicks coming from Facebook,” the firm noted.

Still without an answer, Limited Run then created a page logger that would track their page every time it was loaded. This led to the discovery that the unaccounted-for clicks were coming from bots.

A page name change for US$2,000 per month

Limited Run attempted to alert Facebook to this problem but was fobbed off, but this alone is not what led to Monday’s angry status update.

After discovering this problem and receiving no satisfactory response from Facebook, the company was then allegedly told it would have to increase its advertising spend by US$2,000 per month in order to change its page name. The company has recently been rebranded from its former name of Limited Pressing, and this refusal was the straw that broke the camel’s back..

The post citing both complaints received thousands of likes on Facebook and was widely reported on, prompting an official statement from Facebook. “We’re currently investigating their claims,” it read. “For their issue with the Page name change, there seems to be some sort of miscommunication. We do not charge Pages to have their names changed. Our team is reaching out about this now.”

A bad week to be Facebook

Though Limited Run is careful not to accuse Facebook of creating bots that drive up advertisers’ costs – and such an assumption is foolish when any number of explanations are still valid – the issue is still a black mark against the social network in a week where investors are paying close attention.

Limited Run, however – which has gotten plenty of attention for its new name since – would rather just get back to work. “When we posted about leaving Facebook on Monday, we only intended our small group of customers and followers to know what was happening, and why. We had no clue it was going to explode like it did,” the company said in a blog post.

“We’re just a very small company, that wants nothing more than to go back to work. We don’t want to be known for this.” And we’re sure Facebook don’t want to be known for it either.”

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.