Remember When I Said that Facebook Engaged in Systematic Fraud?*

In advertising, there are two philosophies behind advertising, contextual advertising, where you base you ads on what the user is doing, or looking at, or looking for, when you serve the ad, and behavioral advertising, where the advertiser tracks the user across the internet by creating a dossier of everything that they do.

They are called tracking-based and contextual advertising respectively. 

The claim of the trackers has always been that they create more effective ads as versus contextual advertising, though the best evidence seems to show the exact opposite.

To me, the “advantage” of tracking based advertising is that it creates tremendously high barriers for new market entrants, because they have to replicate the massive databases of user information of the incumbents.

It appears that Facebook’s managers on their advertising side are similarly dubious of the claims of tracking-based ads, alleging that Facebook’s claims are fraudulent.

Get the cuffs, Ponch:

Facebook is currently waging a PR campaign purporting to show that Apple is seriously injuring American small businesses through its iOS privacy features. But at the same time, according to allegations in recently unsealed court documents, Facebook has been selling them ad targeting that is unreliable to the point of being fraudulent.

The documents feature internal Facebook communications in which managers appear to admit to major flaws in ad targeting capabilities, including that ads reached the intended audience less than half of the time and that data behind a targeting criterion was “all crap.” Facebook says the material is presented out of context.


The documents emerged from a suit currently seeking class-action certification in federal court. The suit was filed by the owner of Investor Village, a small business that operates a message board on financial topics. Investor Village said in court filings that it decided to buy narrowly targeted Facebook ads because it hoped to reach “highly compensated and educated investors” but “had limited resources to spend on advertising.” But nearly 40 percent of the people who saw Investor Village’s ad either lacked a college degree, did not make $250,000 per year, or both, the company claims. In fact, not a single Facebook user it surveyed met all the targeting criteria it had set for Facebook ads, it says.


The lawsuit goes on to quote unnamed “employees on Facebook’s ad team” discussing their targeting capabilities circa June 2016:

One engineer celebrated that detailed targeting accounted for “18% of total ads revenue,” and $14.8 million on June 17th alone. Using a smiley emoticon, an engineering manager responded, “Love this chart! Although if the most popular option is to combine interest and behavior, and we know for a fact our behavior is almost all crap, does this mean we are misleading advertiser [sic] a bit? :)” That manager proceeded to suggest further examination of top targeting criteria to “see if we are giving advertiser [sic] false hope.”


The complaint also cites unspecified internal communications in which “[p]rivately, Facebook managers described important targeting data as ‘crap’ and admitted accuracy was ‘abysmal.’”

I would argue that Facebook’s whole advertising model is fraudulent.

*See here for earlier posts.

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