Facebook needs to remedy dodgy data calculations to realize growing TV ambitions

Source:Global Times Published: 2017/9/10 19:33:39

Facebook could do with some new friends in data. Its estimated audience doesn't square with an official US demographic tally. A growing list of counting problems could spell trouble as the $500 billion social network pushes into streaming and other higher-value material.

Brian Wieser at Pivotal Research clearly has broader concerns about Facebook. He is the only one of 46 analysts following the company who recommends that investors sell the stock, according to ratings culled by Thomson Reuters. He also found that Facebook touts the ability to reach 101 million 18-to-34-year-olds in the US. According to the US Census Bureau, there are only 76 million of them. Some factors might partly explain the yawning gap. Age is self-reported, so groups may not perfectly align with the official national tally from seven years ago. Facebook also might be capturing non-residents, visitors or users holding multiple accounts. What's more, advertisers aren't billed according to the estimated figures anyway.

Even so, the bloated numbers fit a troubling pattern. Last September, for example, the company found it had been flubbing calculations on how much time users spent watching videos. It was one of several such mistakes discovered over the past year.

Madison Avenue finds itself in a difficult spot. Media planners and big spenders like Procter & Gamble should have more negotiating power with Facebook. They also could shift some digital dollars to Google. But the company led by Mark Zuckerberg is dominant online and the Internet search giant has had its own problems, including putting ads next to questionable material.

The bigger issue for Facebook is that it wants to compete in television. Most recently, it was willing to splash out $600 million for rights to Indian cricket matches, according to press reports. That sum represents nearly 14 percent of its entire ad-revenue haul for the Asia-Pacific region last year.

Facebook lost the auction to Rupert Murdoch, but it is illustrative of the company's ambition. If it's serious about successfully winning some significant portion of the $75 billion spent on US broadcast advertising, it can't merely self-police its audience. Allowing outsiders such as Nielsen to measure its data marks a step in the right direction. For now, though, Facebook's own fuzzy math blurs its TV picture.

The author is Jennifer Saba, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. bizopinion@globaltimes.com.cn

Posted in: INSIDER'S EYE

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