Facebook snubbed Potential Reach concerns to earn more, lawsuit claims

Facebook ignored an employee who wished to change its Potential Reach ad metric for accuracy. The social network chose not to, because it would affect revenue. This claim hit the court Wednesday last week. 

The plaintiff has an ongoing class action lawsuit against Facebook. The litigation began in 2018, when a small business owner charged the company for the ad metric.

The function works by giving advertisers an estimated number of people their campaign could reach after bidding or setting an amount. The Financial Times was first to report the unsealed filing.

The lawsuit goes on to implicate Facebook’s senior executives. It claims that they had knowledge of the inflated, misleading “potential reach” for years. But they snubbed it, and even wanted to hide the concerns.

The suit says Facebook COO Sheryl Sandberg admitted knowing about the issues surrounding the metric for years in an email back in 2017.

facebook potential reach

A misleading metric

The documents say “Potential Reach” misleads. It claims to measure numbers of people when it measures numbers of accounts. If that’s the case, the count includes duplicates and fake accounts. And the suit claims a Facebook analysis in 2018 found that removing duplicates from potential reach would drop 10 percent in revenue.

A Facebook product manager who worked on Potential Reach pitched the idea to exclude the words “people” or “Reach.” And that they make advertisers know the metric depends on accounts, not people. The suit says the social network’s metrics leadership forbid it, as the impact revenue would be significant. 

“As the product manager for Potential Reach put it: ‘it’s revenue we should have never made given the fact it’s based on wrong data,‘” the lawsuit reads.

“Another employee stated ‘[t]he status quo in ad Reach estimation and reporting is deeply wrong.’ The only question was, ‘[h]ow long can we get away with the reach overestimation.’” 

Facebook made $84.2 billion in ad revenue last year. It was among the largest digital ad firms in the U.S. and worldwide. 

After the filing of the original lawsuit in March 2019, Facebook said it would change its estimated potential reach. It clarified that it would base the metric on people shown with an ad on a Facebook Product in the past 30 days. It would filter further to those who fit an advertiser‘s target audience and placement. This differs from basing estimates on active users over the same period.

Facebook describes “Potential Reach” as an estimate of “how many people your ad could potentially reach depending on the targeting and ad placement options you select while creating an ad.” It explains that the metric “isn’t an estimate of how many people will actually see your ad, and may change with time.” 

Author: Francis Rey

Francis is a voracious reader and prolific writer. He has been writing about social media and technology for more than 10 years. During off hours, he relishes moments with his wife and daughter.

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