
This Man's $600K Facebook Disaster Is a Warning For All Small Businesses - warrenmar
http://www.sfgate.com/technology/businessinsider/article/This-Man-s-600-000-Facebook-Ad-Disaster-Is-A-5258472.php
======
Silhouette
It amazes me that Facebook don't get sued more often, if our experience with
their ad management is at all representative. The UI is terrible, and plenty
of the statistics it shows appear to be broken in unfathomable ways.

Estimated audience sizes? Nonsense.

Suggested ranges for bids? Sometimes change by almost an order of magnitude
between submitting the ad details and checking the dashboard a few minutes
later.

Preview your ad as viewers will actually see it to make sure you've got the
image size right? ::hilarious laughter::

Figures for click-through rates? I don't know why you'd only want to pay for
actual clicks to your site and not other things like people clicking like on
your ad or your page. After all, someone liking an ad that will be gone
tomorrow is surely worth as much to you as someone actually visiting your
site.

What times will your ad run? We'll assume you're in the US even though you
explicitly told us you're in the UK. And then we'll also price everything in
dollars, so you pay a conversion fee on every bill. And no, you can't change
this once your account is set up.

Just set it up the same way as last time, we were satisfied with that? Sorry,
the system has changed again and you have to start over.

Maybe we could use a third party ad manager to try to overcome some of these
difficulties? Sure, but they're all going to work a bit differently, and the
options they present won't match what you see on Facebook's own ad management
pages.

All of this is based on various experiences as a small business advertiser,
and in most of the cases I'm thinking of the real numbers still worked out
favourable despite all the problems and the frustration of trying to get
everything working so the campaigns went ahead. But if Facebook treats larger
customers spending serious money the same way, it's not hard at all to see why
we hear stories like this from time to time and why legal action can result.

~~~
antr
Here is my company's Facebook Ads horror story:

18 months ago my company decided to run an ad campaign on various platforms:
FB, Twitter, Google search and direct buys of banner ads.

On all platforms, the campaign was targeted to most EU countries +
Switzerland. For business reasons we were not interested in promoting this
outside these countries.

On Facebook, out of all options, we decided to promote a post, targeted to EU
countries, this post included a custom bitly link to our campaign's website,
etc. A few hours after launching the campaign, we checked on the post:
likes/engagement, CTR, bitly link, etc. We were shock to see that almost 90%
of all likes to the post and clicks where made from Brazil. Facebook had been
promoting our post in Brazil and not (marginally) in the countries we
specified – I clicked on a long list of Facebook profiles who had liked our
promoted post and these were primarily from the Sao Paulo region. I double
checked bitly's stats with the our analytics to check who landed on our site
via the campaign link. Again, c. 90% from Brazil.

The first thing after that finding was to check that the campaign was
correctly setup, and it was. We immediately stopped the campaign and reached
out to FB via a form (they have no email nor telephone) telling them about the
issue, we included screenshots and other relevant information. We never heard
from Facebook. We spent around €2,000 on a useless campaign targeted to an
audience which wasn't our target market. We have never used FB again.

~~~
oscardelben
> We immediately stopped the campaign and reached out to FB via a form (they
> have no email nor telephone) telling them about the issue, we included
> screenshots and other relevant information. We never heard from Facebook.

How is that even legal?

~~~
downandout
Bad customer service is usually not illegal. However, credit card companies
are legally bound to issue a chargeback and refund the money if you inform
them that you did not get what you paid for and the company refused to work
out a mutually acceptable compromise. In this case, he should have disputed
the €2,000 charge.

~~~
sheetjs
On the other hand, I'm sure that FB has something in the terms or customer
agreement saying that the locations are recommendations and that the ads may
be shown anywhere, even if you only request a certain region.

------
tlrobinson
Here's a good (but long) video that goes in depth into why they believe this
happens
[https://www.youtube.com/watch?v=oVfHeWTKjag](https://www.youtube.com/watch?v=oVfHeWTKjag)

The theory is pay-for-likes click farms click everything they see, including
legitimate "like" ads to avoid detection. This increases the number of fake
profiles liking your page, which decreases the percentage of users liking your
posts, which decreases the number of users posts are shown to (unless you also
pay to promote your post...)

~~~
johnvschmitt
Yes, this is a much better description of the problem.

FB is a really bad ad platform. Yes, you can use it & get good results, but
that takes more luck & skill than other platforms.

From the article: "FB estimates that ~1% of their users are fake generating
fake likes". But, if those accounts have 10-100 times more likes than real
accounts, you can see that the polluting effect can dominate the overall
activity.

~~~
rikf
It should be possible to determine fake from real accounts using various
statistics like number of likes per account average number of time between
likes etc etc, with all the brainpower at Facebook I am surprised they haven't
significantly mitigated this problem. This is not a problem that can ever be
completely solved as its a typical arms race between good and evil but i am
surprised at how badly Facebook appears to be doing as others have noted
perhaps its because it in there best interest or maybe its just more visible
on Facebook then it would be on google addwords or similar.

~~~
fblp
Yes, we wrote about this at
[http://fbk.io/stopfakelikestoday](http://fbk.io/stopfakelikestoday). In short
Facebook could compare behaviour as you suggested (they've got a whole bunch
of data scientists). An even more robust way would be making their phone
number verification more thorough.

------
x0054
What I find interesting is that apparently YouTube can differentiate between
fake and real views. But Facebook can not differentiate between fake and real
likes. Difference, YouTube pays you, but you have to pay Facebook. Hmm...

~~~
tptacek
My understanding is that Google has made it pretty difficult to generate bogus
Youtube accounts.

~~~
vecter
Bogus YouTube accounts aren't necessary to generate fake views.

~~~
Flammy
Fun fact: 83% of visitors to YouTube are not signed into a google account.

Lots of those ads are based primarily the video content or other instantly
detectable things like geography, language, etc.

------
DivByZero
Reading this story honestly I would summarize it like this: "User don't know
anything about Facebook Ads. Decide to test them. Test with $400k in 4 days.
Totally waste his money".

Facebook is not perfect ... and click fraud is a huge problem. This does not
means that Fb Ads does not work or return a negative ROI. You simply need to
know the medium you are advertising on and use it wisely.

Thanks god we live in 2014 ... we can track everything ... real things like
sales, leads, subscriptions. WHY people keep advertising to go after vanity
metrics such as Number of likes or clicks. Who cares about the clicks.

Part of them are fake? Sure! Facebook should do more? Sure! Can you still earn
money tracking you Facebook Ads overall Cost per sale instead of the cpc? Damn
sure!

~~~
maresca
I'd agree right up until the point where he went to Facebook HQ in Toronto for
training on the ads. If it were someone wasting a few grand, I'd understand.
Once someone is actually trained in a certain product by the company selling
it, wastes half a million, and sees this kind of result, it crosses over to
the realm of fraudulent.

~~~
DivByZero
I agree on this point that with Facebook training you should have at least
some experience but I guess he didn't learn that much :)

$6/400k is like a medium sized agency monthly budget. It's not something you
learn to manage in 1 or 2 days training.

You never scale a campaign to that level until you've done weeks if not months
of testing and fine tuning with every possible ad's creatives and demographic
audience. Starting at $100k/days means whatever goes wrong it's already too
late to fix it ... you don't have the time to do any serious testing and
optimization.

Moreove it's not that easy to spend $100k/day in canada ... I deal with many
Startups and Brands that get Facebook Ads right and their usual problem is
they've found the right mix ads/audience to have a very good ROI but they
cannot scale it to spend those amounts.

Spending $100k per days probably means that he was targeting the whole canada.
Whitout any specific targeting on interests, demographic informations etc. If
that's the case and he was getting 150k clicks per day out of a $100k budget
he should be pretty happy :)

~~~
ufmace
That's what sounds odd about this whole issue. They don't say what the
company's marketing budget was, how big a portion of that budget this campaign
was, and exactly what their goals are from their campaigns, but I think it
would be hard to arrange those numbers in such a way that it would make sense
for them to run a ~$500k ad campaign in a medium nobody there had any
experience in. Come on guys, run a couple of dozen hundred dollar campaigns to
get a feel for how to target them and what returns you can reasonably expect
from them. I would expect that nobody spends that kind of money on any kind of
ad campaign without knowing a lot more about what the returns from it will be
and whether that justifies the expense.

------
kevingadd
Other metrics reporting ~100-150k vs Facebook reporting 600k+ clicks seems
well beyond the level of error that would be produced by not tracking things
in the exact same way.

Coincidentally, FB metrics reporting 2-5x what the target site's metrics show
would be very easily explained by bots generating traffic to FB's servers
without actually redirecting over to the target site...

~~~
zerd
Exactly. Facebook probably sends 302 Temporary Redirect, counts it as a click,
and the bot simply does not follow the Location header.

Are there any ways to avoid this?

~~~
alextingle
They should put a web bug on the target page to confirm the redirect was
completed.

~~~
mcherm
Except that the contract prohibits doing this sort of "third party audit".

~~~
alextingle
I mean _Facebook_ should put a web bug on the target page.

~~~
mcherm
But Facebook is benefiting from the problem! At least in the short term, until
it harms their reputation in the advertising market.

------
mgkimsal
"Clearly, the vast majority of businesses that use Facebook for marketing are
pleased with the experience. Facebook's growing revenues, up 63% last quarter,
indicate it is only getting more successful at selling advertising, not less."

Clearly? Just because they're getting better at selling doesn't mean the
people are actually pleased with the experience. And as this article points
out, "selling" is the same as "collecting payment".

~~~
jamesaguilar
I guess I wouldn't go all the way to "clearly," but if a line of business in a
highly visible market is growing, that _often_ indicates that the product it
is selling is useful. The buyers are motivated and have the capability to test
the product's efficacy. It would be quite a thing if Facebook ads generally
did not work and somehow Facebook was successfully growing the ad business
anyway.

~~~
uptown
It all depends whether their customers are repeat advertisers or not. If
they're able to continue growing their first-time advertisers, but few of
these businesses are satisfied, repeat advertisers - then I wouldn't say
"clearly" is appropriate.

~~~
sparkzilla
AKA: The Groupon Effect

------
colinplamondon
One key here - eCPC dramatically ramps as a campaign goes on, given the same
target demographic.

If he was targeting a demographic like women in SE Asia, 18-35, then his test
campaign would have first seen cheap clicks. Facebook's algorithms would find
the cheapest users within that demographic, who are the least in demand by
other advertisers, for whatever reason. CPC's would be low right off the bat,
with a $200-300/day campaign.

Then, when he just suddenly increased to $100,000/day, he would have
absolutely tore through the cheap available impressions within a matter of
minutes, leaving only the more expensive users, with much higher CPC's.

As soon as the CPC skyrocketed, he should have pulled the plug on the
campaign. But, it sounds like, there was a bad mix of both him being
inexperienced with online advertising (needing training in their office) and
FB sales reps encouraging him to let it ride.

If he had slowly increased budgets, from $300/day to $500/day to $1,000/day,
he probably would have started to see a spike in CPC as soon as he moved it up
to $1,000/day, and a vertical "holy crap KILL THIS CAMPAIGN" spike in CPC when
he hit $1,500/day - $2,000/day.

It's really hard to manage campaigns at that volume - and there's entire teams
of people needed to manage a campaign at the level of $100,000/day.

This reminds me of those Groupon horror stories. The small businesses were
wrong to not running the numbers on deals that would clearly absolutely
destroy them. But, the sales people at Groupon were even more in the wrong by
taking advantage of those small businesses to turn a quick profit.

~~~
downandout
But you specify the maximum that you are willing to pay per click. Presumably
he knew what he could pay per click for average users while maintaining
profitability, and set the maximum accordingly. He doesn't seem to have a
problem with his cost per click.

The point of the post is that the "users" became increasingly less valuable as
the volume of clicks he purchased rose. It shows that you cannot obtain large
numbers of legitimate clicks/likes through FB ads. As the reach of the
campaign grows, the _percentage_ of authentic users clicking on ads appears to
rise dramatically. That is a huge problem. My personal belief is that the
percentage of fake accounts and bot activity is far in excess of Facebook's
estimates, and there is little that they can do about it.

~~~
colinplamondon
Agreed with that - I know that in my campaigns, I prefer having a bunch of
smaller campaigns, which I can track the performance on at a very incremental
level.

One twist is also that a lot of advertisers don't do CPC bids with FB. I know
for Mobile Installs, the default is optimized CPM, without a specific CPM bid.
Just throwing it to the FB algorithm wolves, and seeing where it lands.

I've found that has better results than CPC, CPM, or CPI bids, but, because
it's entirely in the hands of Facebook, I have to watch it like a hawk. If I
look away for a few days, the costs can get out of control.

------
rrradical
Seems odd that Facebook didn't pursue the huge bill he wouldn't pay. Is it too
much to assume they wouldn't want the details to come out in court?

~~~
cmapes
This is a key point. I'm sure Facebook carries a trade credit insurance policy
and those policies require collections and court if a person/entity doesn't
pay. So in other words they certainly ate the bill if they didn't make him
pay.

The only logical reason to do this is fear of the truth coming out in court
and the ensuing press coverage to damage their stock value.

Anyone have an idea about FB's liability if they were subpoenaed for fraud and
the investigators found internal emails discussing the fake click problem and
their decision to ignore it. Seems criminal to me.

~~~
gus_massa
Even if FB thinks that they have a total legit case, they can fear the
exposure of the misinformation and FUD in the discussions in the court and
press coverage.

------
auctiontheory
What doesn't ring true about this article is that the advertiser would spend
$100K/day without building up to it with a whole lot of testing first.

Facebook may have declined requests for comment, but we are still only getting
one side of the story, and I cannot completely believe this one side. There's
more to it.

~~~
pconf
>There's more to it.

That is alluded to in the 5th from last paragraph: "Facebook's terms of
service forbid third-party verification of its clicks". What reason, other
than fraud, would they have for such a clause?

------
ypodeswa
Why the hell would you ramp from virtually zero spend on FB to spending
$100K/day, especially if you're a "small business"? Quite frankly, this guy
seems like a bit of an idiot - ramp slowly! That is an absolutely insane
budget for FB ads.

------
im3w1l
Summary: Man runs online magazines, revenue from ads. Advertises himself on
facebook, hopes to make more ad revenue than he has to pay. Spends $100k/day
for a few days. Notice that google analytics says he hasn't got as many hits
as facebook says they referred. He stopped the campaign. Disputed bill.

------
maresca
After seeing a few stories like this, it seems facebook advertising makes
sense for one thing: buying likes. When one of us sees a site with 11.2K
likes, we would know better. But the average user might not.

Fake it until you make it.

~~~
interpol_p
I know of a developer that did this. They purchased the cheapest possible
Facebook ads and targeted them towards the largest audience. They received
hundreds of thousands of "likes" for a relatively small investment ($1000 or
so). Most of the people who liked their page had profiles from developing
countries.

They then used the number of likes they had amassed (~200k) to get funding for
their new product. It worked. Everyone took them much more seriously when they
mentioned how many fans they had on Facebook. They were even able to attract
licensing deals from some fairly big brands because their Facebook page looked
so impressive.

~~~
mildtrepidation
This is a scam. He's using scammers to scam other people. Maybe that's obvious
to everyone here, but I think it's worth stating explicitly that while this
behavior is being enabled by the state of advertising on Facebook, it's still
unethical and dishonest.

~~~
_delirium
An interesting aspect is that someone could be essentially perpetrating this
scam while legitimately being innocent of malevolent intent. I don't know if
that's the case in the story recounted above (I suspect not), but I have met a
small business that ran a "successful" Facebook ad campaign to get more likes,
and who are happy with the result, where I strongly suspect the quality of the
likes is really low. They genuinely think they ran a successful ad campaign
with good ROI, and I don't think the intent was to puff up their profile.
Afaict they haven't used the number for anything either, but it could well
lead to unintentionally misrepresenting their popularity to future potential
investors/clients/etc.

Of course, this starts to some extent from Facebook: the small businesses
reporting their "successful ad campaign" are more or less passing on the low-
quality metrics that Facebook gives to them. Some businesses are aware that
these metrics are crap, but then Facebook itself is also aware...

------
callmeed
The click discrepancy is what always has bugged me about Facebook ads (well,
aside from the poor CTR). I've tried small FB ad campaigns since they've had
the service and they ALWAYS report significantly higher clicks than what GA
reports as coming from Facebook.

------
gregpilling
From the article "Facebook works hard to get rid of fake accounts. In its
annual report, the company said that only about 0.4% - 1.2% of all active
users are abusive accounts that create fake likes."

I find it incredibly hard to believe that only 1.2% of FB accounts are
creating fake likes. Go to Fiverr.com and get 5,000 likes for $5.

------
therobot24
this type of story seems to appear over and over again, i don't know much
about facebook advertising, but with so many stories of fake account clicks i
would expect facebook to comment at least once on the subject

------
snorkel
They should fire their own media buyer rather than blame Facebook. When buying
any type of advertising you first have to buy a small campaign and measure the
ROI (ie. new customers gained, not likes and followers and other social
metrics bullshit, but customers) from that campaign before investing more in
that same channel. They threw big money at a bad channel without testing it,
that's their fault.

If their goal was just to buy likes and followers then that's just twice as
idiotic: the goal should always be to gain customers. That's the only ROI
metric you should be looking at. So if you buy small test campaign on Facebook
and you didn't gain any customers then don't spend any more money on Facebook.
It's that simple.

------
poopsintub
It sounds like the all too common case of a business owner who has no idea
what they're doing.

------
yesplorer
For starters, if you really have to go to Facebook's office to be trained on
how to spend money on their ad system, I'm not sure you are knowledgeable
enough to be spending $100,000 a day on those ads. I doubt Facebook was going
to teach you how to optimize your campaign in order to spend less money than
you would.

As stories like these continue to pop up, it is important that FB take action
to protect their brand. How about simply refine the target audience for ads?
for instance, in order for a user to be served ad; you must have a minimum
number of friends, say 50, you must have a minimum number of say 3 pictures of
yourself, you must have a reasonable level of activity on the site for over
the last X period whether 3, 4 or 5 month period.

A combination of such measures in some ways will clearly weed out most of the
fake account and honestly even if there is a genuine account who doesn't match
any of these criteria, then it's obvious they aren't even engaged on the site,
so why ruin the experience further for them with ads?

Ultimately, FB's objective is to please advertisers and the natural flow is
that they will end up pleasing shareholders. But focusing of the hard
accounting numbers in the short term at the expense of goodwill of the
marketers paying your bills is simply suicide. Once a significant number of
advertisers distrust the platform and stop spending on it, its' 1.2 billion
users will mean nothing and that is where the shareholders will start dumping
them for the next company.

~~~
jonknee
> For starters, if you really have to go to Facebook's office to be trained on
> how to spend money on their ad system, I'm not sure you are knowledgeable
> enough to be spending $100,000 a day on those ads. I doubt Facebook was
> going to teach you how to optimize your campaign in order to spend less
> money than you would.

Facebook has been aggressively trying to ramp up revenues, a personal touch is
a good way to do that. It sounds like he had a number of highly popular
Facebook pages and was likely contacted to come in for some in person training
to get to his pages to the next level. If anything that offer is just a
testament to his pre-existing success on Facebook, they would lose a lot of
money if they invited everyone to the office.

I've been with Google AdSense for a long time and from time to time I get
pitches about going to training or having phone conferences to help optimize
more, I have to imagine this is similar. Sometimes it's helpful, sometimes
it's not.

~~~
yesplorer
well he might have been successful running those pages but when it comes to
spending half a million dollar, I think that comparison becomes apples and
oranges sort of. There was nothing really stopping him from spending those
amount in piecemeal.

What about limit the budget to $10,000 per day, check and analyze the results
then see where you can fine-tune it then probably improve it? I bet by the
time he spend the first $100,000 he would have come to the realization that
something is wrong.

The claim is that he's already successful so why the rush to spend such
significant amounts on generating likes?

------
rokhayakebe
I do not have data to back this up, from my observation, most people do not
know what is or is not an advertisement unless it is flashing. Even then,
there is a not-negligible percentage that does not know. People just click to
find out what things are, not because they are interested in the message.
Perhaps a simple way would be to ensure that user does not come back to the
page within x seconds, otherwise you should not pay.

------
reppic
Reading that last sentence gave me an idea for a SaaS company that (for a
small monthly fee) marks and lets you purge suspicious fans of your page. Too
bad it's impossible to get a list of your page's fans:
[https://developers.facebook.com/x/bugs/147185208750426/](https://developers.facebook.com/x/bugs/147185208750426/)

------
al2o3cr
Terrible title. Better one: "This Man's $600k FB Disaster Is a Warning For All
Morons Who Try Arbitraging Ad Networks"

------
sidcool
The article does mention, rather inconspicuously, that most of the advertisers
seem happy with Facebook. I am no fan of facebook or their advertising model,
but to me the title seems a bit editorialized.

------
hrjet
There could be three explanations for fake FB likes:

1\. As mentioned in the story, click farms trying to cover their tracks by
clicking FB ads.

2\. Competitors creating fake profiles and fake likes. It seems like a cheap
way to drain out the advertisers budget.

3\. FB itself creating the fake accounts / likes. I know it is implausible,
but there is a profit motive, so I guess the possibility should be considered.

------
drakaal
Even if Facebook was a scam... You don't put $600k in before you know what you
get out of every dollar you put in.

This is why you outsource your SEO/SEM/ Social Marketing. (To someone
reputable who is results driven/incentivized )

He needed someone to say, "hey look you put $5 in you got 10 cents out. Time
to move on" before he got to $600k in spend.

------
duskwuff
There's one part of this I still don't get, though. Where's the motive in
running Facebook "like" farms?

~~~
sheriff
The motive for running the farm is because some people will pay for the likes.

The motive for someone running a farm to also send likes to non-customer pages
is to make it harder for Facebook to detect the fraudulent likes.

------
mcfunley
> "At one point, data from Facebook indicated his ads had delivered 606,000
> clicks, but the site itself registered only 160,000 incoming clicks"

My initial reaction is that this guy is confusing "clicks" with "visits" or
possibly "unique visitors." Counting things is hard.

------
richardw
Facebook needs to charge different click prices depending on the quality of
the profile. clicks from 10-friend profiles that are only a year old and like
every page they hit, aren't as valuable as clicks from profiles that are more
organic and have been around for years.

------
TallboyOne
Only an idiot would spend $600k in a few days without testing. That's just
painful to read.

------
genofon
As highlighted before in the top topic on reddit of the past weeks (VIDEO)
[http://www.youtube.com/watch?v=oVfHeWTKjag](http://www.youtube.com/watch?v=oVfHeWTKjag)

------
jokoon
I hope this gets traction, I really do want the facebook stock to drop.

------
raphaelj
I don't understand why someone would put resources to make fake likes/clicks.

What's the deal ? A concurrent who wants to discredit Facebook' Ad service ?

------
cwaniak
Well, if you your whole business model depends on "Facebook likes" 100%, you
are asking for it…

------
flowerntea
fake

