While I doubt malicious intent on FB's part there's certainly a financial incentive to ignore this problem. How would their earnings reports change if they stopped charging at least some advertisers for 80% of clicks?
It would be a very, very short term financial incentive.
Advertisers monitor to see performance on the other end, and when the campaigns don't yield actual success they move on.
The only real exception to this are mega-brands that advertise just to build namespace. Everyone else expects direct action from some hefty percentage of their ads.
You act as if "everyone else" sees results from FB ads. They don't. This is a well known problem. They have a high rate of adoption from new sign-ons, and also a high level of departure. While the first number is greater than the second number, they are ok. Either they will manage to improve value and keep more of the advertisers, or one day the Ponzi scheme implodes.
You act as if "everyone else" sees results from FB ads. They don't.
Most ads target a specific outcome: You buy a product, create an account, joining a mailing list, etc. Even the most technically incompetent advertisers establishes these fundamental metrics such that they can say "I spent $1,000,000 on Facebook ads and only got ten signups. I spent $1,000,000 on iAds ads and got ten million signups." That sort of thing.
Are you saying it's short term because advertisers would notice? Sure some advertisers would notice. However I doubt the majority are capable of performing the OP's analysis (which could use some scrutiny).
Imagine a 100 person company with 5 people dedicated to advertising. Leadership says to increase on-line presence. Some recent college grad on the advertising team buys FB ads. Next month leadership is pleased that they're advertising on Facebook. Also leadership is pleased that sales increased x%. The FB ads could be completely worthless. Some non-trivial percentage of clicks could be from bots and no one would notice.
