Funny About That

The Wall Street Journal is reporting that Facebook has been significantly over-estimating the amount of time its users spend watching videos on the site:

Big ad buyers and marketers are upset with Facebook Inc. after learning the tech giant vastly overestimated average viewing time for video ads on its platform for two years, according to people familiar with the situation.

Several weeks ago, Facebook disclosed in a post on its “Advertiser Help Center” that its metric for the average time users spent watching videos was artificially inflated because it was only factoring in video views of more than three seconds. The company said it was introducing a new metric to fix the problem.

I found the company’s statement beautifully coy:

“We recently discovered an error in the way we calculate one of our video metrics,” Facebook said in a statement. “This error has been fixed, it did not impact billing, and we have notified our partners both through our product dashboards and via sales and publisher outreach. We also renamed the metric to make it clearer what we measure. This metric is one of many our partners use to assess their video campaigns.”

The error may not have “impacted” billing but it did have an effect on the value of the service. The WSJ noticed that, too:

Due to the miscalculated data, marketers may have misjudged the performance of video advertising they have purchased from Facebook over the past two years. It also may have impacted their decisions about how much to spend on Facebook video versus other video ad sellers such as Google’s YouTube, Twitter, and even TV networks.

Media companies and publishers are affected, too, since they’ve been given inaccurate data about the consumption of their video content across the social network. Many use that information to help determine the types of content they post.

I doubt there was anything particularly nefarious about it. I just think the numbers they produced using their algorithm fit their expectations and/or business model so they didn’t examine them closely enough. If the numbers the algorithm had produced were 60% below expectations, they’d’ve been on it like a hawk.

I noticed that the WSJ mentioned ad buyers and marketers, media companies and publishers but not investors. In post-close trading Facebook’s stock was down sharply and that seems to be continuing. Any bets on how much money Mark Zuckerberg will lose today?