Facebook under scrutiny for inflated ad reach in US

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The latest finding undermines Facebook’s pitch to advertisers

On Tuesday, Brian Wieser, a senior analyst in online advertising at Pivotal Research Group, called Facebook out for claiming to reach 41 million young adults between the ages of 18 to 24 in USA, even though recent census data only counts 31 million people in the U.S.in that age range.

Late Tuesday, Pivotal Research analyst Brian Wieser sent shockwaves across the digital ad ecosystem by publishing a note saying that Facebook's ad targeting system says it can reach 25 million more people than are reported by the most recent United States census. The problem? For the first two age brackets, the figures are well above July 2016 estimates from the U.S. Census Bureau, which reports about 31 million adults 18-24 and 45 million ages 25-34.

"While Facebook's measurement issues won't necessarily deter advertisers from spending money with Facebook, they will help traditional TV sellers justify existing budget shares and could restrain Facebook's growth in video ad sales on the margins", wrote Brian Wieser, an analyst for Pivotal Research.

Facebook said in a statement that its audience estimates did not match census data, but added that this was by design as ad reach numbers "are created to estimate how many people in a given area are eligible to see an ad a business might run".

A Facebook spokesperson told the Post that its numbers "are not created to match population or census estimates". Of 44 analysts with ratings on Facebook, only Wieser and Société Générale's Simon Baker have sell ratings on the stock, according to FactSet data.

In a statement, a Facebook spokeswoman said that its estimates "are based on a number of factors, including Facebook user behaviors, user demographics, location data from devices, and other factors".

Facebook's projected reach has no effect on the delivery and billing of ads, the spokesperson added.

Wieser highlighted the apparent discrepancy between Facebook's ad manager for marketers and U.S. census figures in a note distributed to clients on Tuesday. About 5.6 million non-residents entered the United States in January, according to the most recent month's data from the United States Commerce Department, notes Reuters.

Facebook no doubt knows this, which is why it launched a blog a year ago, Metrics FYI, to be more upfront about any errors or bugs it finds in its advertising system. The social media giant also admitted in a blog post shortly after the election that it exaggerated the amount of time users spend consuming news on Facebook, as well as the number of people businesses reached with unpaid, regular posts on their Facebook pages. Competition keeps companies in check, since marketers could ostensibly take their ad dollars elsewhere. But the social network has been accused of inflating the figures when it comes to how many people see video ads on its platform.

On Tuesday, Facebook shares closed down 0.76% at $170.72.

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