Thursday, September 8, 2011

Facebook sued by marketing firms over billing

A group of social marketing firms have filed a class-action lawsuit against Facebook, alleging that Facebook has intentionally violated industry standards for measuring click-throughs in order to inflate their advertising revenues.
In 2009, the Interactive Advertising Bureau released a set of recommended guidelines in an attempt to get online metrics to reduce fraud and better reflect what advertisers and marketers wanted - users who are interested in visiting their sites.  What they didn't want is to have to pay for fraudulent clicks (coming from bots or other suspect sources) or for more than one click-through per user in a short period of time.  The IAB guidelines were partly in response to stories of offshore "click farms" that employed individuals to repeatedly click links to inflate usage numbers, and the increase in automated systems searching the Net and gathering information.
The suit alleges that Facebook did not use available industry lists of bots and spiders to filter out their clicks, went against the advice of their engineers (and industry standards) to shorten the length of time between clicks recorded by individual users, and refuses to be audited under IAB standards by any outside group, or to reveal its standards for measuring clicks..
This suit stems from one originally filed in 2009 - in that case Facebook asked for a dismissal, citing language in its terms and conditions that it was not responsible for fraudulent actions by third parties.  That judge ruled that Facebook could be sued for Facebook charging for "invalid" clicks, but not for "fraudulent" ones.
At the very least, the breadth of the class-action suit raises questions about the degree to which Facebook overcharges, compared to other online media that follows IAB guidelines.  That can impact Facebook's viability as an advertising and marketing medium.  The failure to be release details about its own measurement standards is perhaps the most glaring problem - for metrics to be considered valid and reliable, the specifics of measurement needs to be public. Otherwise, the value of the metric and measure becomes uncertain, and reduces demand.

Source - Facebook Isn't Going To Like This: Papers Allege It Violates Industry Click StandardsOnlineMediaDaily

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