Do Not Advertise On Facebook Until You Read This

I wrote this blog posting. I am not claiming that these are bots or that Facebook is defrauding us in the strict legal sense. After a bunch of research, I believe they are real people, as Facebook asserted to me and to the BBC among others. However, I believe Facebook is misleading advertisers and behaving unethically by not disclosing this fairly widespread, unusual and costly user behavior, one that hits the campaigns of less sophisticated small advertisers particularly hard.<p>The problem has two main parts:<p>1) The click behavior of these users is _extremely_ unusual and unexpected according to the beliefs of the advertisers and advertising experts I have shared these finding with. Most people think that 'no one clicks on FB ads.' So when they learn there are profiles of real people that click 5-6 likes in a minute, dozens of times a day adding up to thousands of times a year, they immediately exclaim 'no one does that, they must be bots, you must be wrong.' But they are real people. And unless you are extraordinarily careful (see here: <a href="http://wp.me/p2dKfK-7x" rel="nofollow">http://wp.me/p2dKfK-7x</a>), Facebook naturally charges the same for their clicks as for everyone else, even though their clicks are nearly meaningless from an advertiser perspective.<p>2) These real people were taught this behavior by the new Facebook timeline interface, which a) makes the number of 'Likes' extremely prominent, b) encourages rapid liking of ads by refreshing the ads immediately as they are clicked and c) uses these likes to change the content that appears in the stream of stories.<p>Perhaps a better one of my postings to read is this one, where I estimate how widespread the problem may be from an advertiser perspective <a href="http://wahanegi.com/10-percent-of-fb-revenue/" rel="nofollow">http://wahanegi.com/10-percent-of-fb-revenue/</a>. To save you time, here is the main bit, a quote from one of these users after I asked them why they like ads in batches of 5-6 throughout the day:<p>"Yes, I do remember why I liked things in batches. Facebook suggests things for you to like in the right column on some pages. As soon as you click to like one of them, it replaces it with another suggestion. I’m quite happy to like thousands of things on Facebook as it improves the kind of stories and ads that come up in my news feed and again in the right column. I would rather see things I am interested in than things I’m not."<p>Makes sense for him. But not so much for a small advertiser who just paid Facebook a few hundred or a few thousand bucks so that Facebook could use the ads like click-bait for: people aiming to hone their Edge Rank content preferences, people who are bored and enjoy choosing which ads they like best in the list, or people who want to get their Likes 'score' higher because it gives them a sense of accomplishment.<p>Trust me, once an small advertiser learns that there are two types of people on Facebook, and they get charged the same amount for clicks from each, they are not happy. Especially after Facebook customer service gives them the Heisman.<p>;)

This is a new spin on an old phenomenon. For banner advertising, a <i>tiny</i> percentage of the population (&#60; 10%) contributes a <i>massive</i> percentage of all display ad clicks (&#62; 80%). She's disproportionately a lower-middle to lower-income older American female in the Midwest who plays the lottery and subscribes to Reader's Digest. <i>Totally</i> not joking. A word often used to describe this segment is "compulsive clicker."<p>Online publishers are well aware of this and, well, do not go out of their way to highlight this fact on their rate cards. Instead they'll provide their audience information and often do not mention that they know their typical click is not representative of their audience. Given that they're the "whales" of the CPC business model, they're frequently <i>not</i> quality-priced down to zero, unless they so dominate an advertiser's campaign that the advertiser complains.<p>There are related issues with almost all online advertising. One should be very attentive to the default settings at one's major advertising network of choice, because the default settings almost always group the prime rib cut of the attention market with the pink slime and sell it at prime rib prices. (Examples: there are strong differences in pricing with regards to user location. Many advertising platforms, ahem, make it very straightforward for American advertisers to advertise their wares to users in developing markets. All you have to do is not opt out.)

I haven't advertised on Facebook myself, but this is is an interesting concept. If it's broadly true and that Facebook essentially has two "classes" of users, then it's up to them to price them segment and price them effectively for advertisers.<p>This reminds me of Paul Graham's essays about Viaweb's acquisition by Yahoo[0][1], and how Yahoo seemed mostly uninterested in PG's algorithms for Revenue Loop. To quote: "In 1998, advertisers were overpaying enormously for ads on web sites. In 1998, if advertisers paid the maximum that traffic was worth to them, Yahoo's revenues would have <i>decreased.</i>"<p>I remember when AdSense ads used to be images and Google replaced them with text links, essentially reducing the clickable surface area of the ads. This essentially slashed revenue in the short term with the theoretical long-term benefit of reducing accidental clicks and increasing the value of the clicks they did send to advertisers, who should then be willing to pay more. As a now public company, it will be interesting to see which path Facebook follows.<p>[0] <a href="http://paulgraham.com/6631327.html" rel="nofollow">http://paulgraham.com/6631327.html</a> [1] <a href="http://www.paulgraham.com/yahoo.html" rel="nofollow">http://www.paulgraham.com/yahoo.html</a>

I seem to be greatly misunderstanding the issue here, and thus I apologize in advance if this seems like a massive, and possibly dismissive oversimplification but the complaint here is that there are overeager users who are clicking on ads, not knowing what they're clicking, and because of this the author/campaign manager is owed a refund?<p>Unless Facebook, using the logs they've requested can conclusively <i>prove</i> that these are bot profiles aimed at disrupting the Ad Platform (which is something I would assume Facebook would already be keenly aware of and taking excruciating steps to stamp out, as Ads play a big role in their bottom line), why exactly does the author feel he's entitled to a refund just because people click the ad who might not be interested in the product?<p>Again, unless Facebook can show these were malicious bots or that their targeting algorithm has malfunctioned and displayed ads to profiles that do not meet the demographic criteria setup by the campaign manager and thus, ads are being displayed to users they shouldn't be and resulting in erroneous clicks, what's gone wrong?

I suspect at least some of these "booklicant" users are people attempting to build up fake profiles that look real.<p>They do this by liking a lot of advertisers, which makes their profile look more populated.

If you post an email chain, please, post the messages in timestamp order.<p>It's a little annoying when you need to scroll all the way down to identify the beginning of the discussion, and then have to read from bottom to top to see the exchange as it unfolds.

I read though this missive - and the first thing that came to my mind was the definition that "more than six clicks a minute is considered invalid" - and I tried to recall if there was a time in the past year that I clicked on six display ads in a day.<p>I then realized that, when I'm searching to purchase something on Google, I may click on half a dozen ads in a minute - but realistically, each of those has a chance at getting $20-$40 worth of revenue (and the potential, as in the case of monoprice, of hundreds, if not thousands of dollars of revenue after I discover the site)<p>I'm wondering if anybody has done a definitive study on the conversion value of a "click" on google versus Facebook, both in terms of brand recognition, immediate conversion (purchase), and long term conversion (delayed purchase) - that study, if definitive, would probably adjust GOOG/FB by 10s of billions of dollars - clearly a leading indicator of future revenue.

I have a feeling if this thing does not stop spreading, then expect Facebook stock to drop by 50% on their next earning report...<p>Advertisers will cut their budget and that will kill Facebook revenue. Well, maybe start a short position?

This is how you do it:<p>(a) Estabish what you spend on ads per visitor.<p>(b) Establish what you earn per visitor coming from ads.<p>(c) Only if (a) minus (b) is positive, continue running the ads.<p>However, Facebook should have a look at this issue. It is the reasong why Google's AdWords is so successful, and most other self-service ad programs fail. AdWords is very good in filtering everything that does not represent a value for the costumer (the advertising web site).

Can anyone here tell me if this bot problem is common on other ad networks, or is the 80% bot click rate much higher on Facebook? Because maybe it's just a common hard problem to solve for ad networks. Or maybe it's Facebook who specifically have a problem. If it's the former, then advertising somewhere else wouldn't solve the problem for advertisers. But I cannot know for sure without knowing if this 80% bot rate is common in others networks too or not.<p>I do know that many people reported lower conversion rates on FB, but they usually attribute that to lower purchasing intent from real FB users, not from higher bot rate. Or are they simply mistaken?

That first email is 2,500 words. I'd be really impressed if anyone from Facebook actually read through the entire thing. It's appropriate for a blog post, but not for an email.

I don't know how FB currently charges, but if it's a flat rate per click, I'd think a reasonable solution would be make it proportional instead: this user spent 100% of their clicks during time period X on you, whereas that one spent only %10.<p>Then you would price based on the share of the user's attention you got, not on individual clicks.<p>Seems a lot simpler than retroactively invalidating clicks from users who pass some arbitrary threshold.

I doubt many businesses have real direct measured ROI from their Facebook ads. Right now people are still happy to experiment with brand/ community building. Eventually though without that direct ROI and the social hype everyone is going to give up.<p>There are a lot of businesses in the world to churn through but eventually, as a company like groupon for example are probably seeing, this drys up.