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I'm getting fed up with these post saying "Media X" is bad (where X is usually something to do with Facebook or Google display).

Two comments:

1. This media is sold in an auction. If the quality of the traffic vs what you pay for it is bad value then the bids are set too high. If I pay over the odds for something on ebay it isn't just ebay that is at fault.

2. Doing online advertising well is harder than Facebook and Google are incentivised to make clear. In some cases this stuff is very hard which is why there are people whose full time job it is to get it right.

As someone with some expertise in biddable media reading posts like this must be like a coder reading about how a programming language is flawed because the Todo app scaffolding doesn't quite do what the author expects.




The OP is not stating the approach is bad. I think the claim is that Facebook CPC is implemented somewhat fraudulently. What is promised is not what is delivered.


Fair point.

As the adverts are sold in an auction, shouldn't the cost per click reflect the proportion of fraud?

E.g. if value of true click is $1 and 50% of clicks are fraudulent then CPC should surely approach $0.50?


So long as the fraud is uniformly distributed, that is true. But more significant is the fact that you really can't estimate your costs and benefits correctly when the vendor (Facebook) is giving you incorrect or fraudulent data.


I agree with what you say about the estimation of costs.

The benefits to site owners normally take place outside of Facebook and so should be measurable regardless of what Facebook do.

In the case where the benefit is within Facebook then the buyer is purchasing likes or similar and then they are in for a world of hurt (in my experience) because of the difficulty in valuing what is being bought.

In this case the advertiser presumably knows the value of what is bought. Then valuing a click involves working back from that towards a CPC bid based on the conversion rate of the traffic source.

As you say, things get interesting when value is not evenly distributed and are complicated further when incrementality is taken into account. But who said it was meant to be easy?


Yes, assuming everyone prices everything perfectly rationally and knows what they are buying. I expect a good deal of Facebook expenditure is people trying make it work for them, and assuming they are doing it wrong. In the long run perhaps the price will reflect a lower value.


That only happens with greater transparency. Essentially, you have to recognize the fraud to evaluate prices properly, and my impression is that most people don't.


That is true. If you only evaluate the effectiveness of advertising based on the number of clicks you get then you will be unable to set bids to take fraud into account.




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