Comment by save_ferris | Hacker News Reader

Comment by save_ferris | Hacker News Reader

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This was an interesting piece. The author pretty clearly states upfront that he's been criticizing MZ for years, which I found to be strangely refreshing as opposed to trying to claim a neutral position.

As far as the account fraud is concerned, I've wondered about this throughout the tech industry for pretty much my whole career. Most companies I've worked for have done all kinds of things to pad usage and retention stats in order to appease investors, ranging from ethically innocuous to "holy shit I need to start looking for a new gig". Online advertising in particular has been the worst at this in my professional experience.

What's being communicated to the advertiser isn't the whole truth: it's a selectively, surgically crafted subset of the truth. The first time I saw "The Big Short", I couldn't help but think about how similar the ad company I worked for behaved like the credit rating agencies. We knew that if our reporting showed that we were ineffective, we'd lose customers, so we did all kinds of things to make the reporting look good.

The accusation that one of the largest companies in the world is doing pretty much the same thing doesn't surprise me at all.

I have some knowledge of folks who have ad spend on facebook. For niche / targeting spend, facebook was totally amazing at least a year or two ago. The returns on facebook far surpassed the returns these companies saw elsewhere. I don't use facebook, so was surprised by that.

Do people really not evaluate return on ad spend against revenue?

In this case the client saw a direct link between marketing and revenue and I'm not sure why they would care if some of the views were from fake accounts. Views on the bus stop ad might be from someone homeless or other unlikely purchasers.

"Facebook reported advertising revenue at $16.6 billion for the final quarter of last year, up 30 percent year-over-year."

I guess all these companies are idiots for advertising on Instagram and facebook (I find this totally hard to believe)

I think the main point the author was trying to make is that Facebook isn't being kosher when it comes to dealing with fraudulent accounts, which isn't necessarily adversely impacting the advertising side of things. My guess is that advertisers overall are happy with their FB ad campaigns, and FB is being less and less transparent with investors when it comes to user growth. Both of those scenarios could pretty easily coexist.

Facebook user growth should be flat or negative - a bunch of people yelling at each other.

Is there any independent audit of any advertising platform's data at all? Like Facebook tells me that 10,000 people saw my ads and I have no real way of verifying that. And I'm supposed to believe that Facebook is being honest even though Facebook has all the incentive to falsify numbers

Game companies that buy ads for mobile installs-- a huge advertising market-- pay per install. Of course fraudulent companies create fake installs from fake accounts. But when you get an app installed a thousand times it is possible to judge the quality of those installs. Where they are, if they are real people, etc. It is clear that the results vary wildly and from my subjective perspective ad fraud is at least as bad as it has ever been.

Yeah, I always find it bizarre when people make these naive claims. Of course number of impressions are a proxy for reality, but when the rubber hits the road advertisers know what value they are getting. They are leveraging the microtargeting and the cookie tracking an God knows what else zuck has cooked up. Facebook, Google etc are fundamentally profitable places to advertise -when done intelligently. Smart, repeat advertisers pay Facebook a lot of money for this privilege.

Arguments like this always strike me the same way as the arguments about real-estate around 2007: “Smart bankers would never invest billions in bad loans”.

Maybe advertisers know what they’re getting. Or maybe they think they know but are actually willfully ignorant of something important because it goes against “common knowledge”.

Without some kind of third party auditing it’s impossible to tell, and I haven’t seen anything like that from Facebook.

The problem is you cannot audit as much as you would like. The important part is a real human sees the ad. (human with the desirable characteristic is a secondary factor). However you cannot measure the effects of an ad easily because there are too many confounding factors: people who buy because of a previous ad, people who would buy anyway, people who will buy in a few years.

We do know the companies that have cut advertising too much have lost market share. However when you have a lot of ads it is hard to figure out which ad made the difference.

Isn’t that basically the point of Nielsen? They go to a lot of trouble to get trustworthy stats about TV viewership so that advertisers can make informed purchase decisions wrt. both stations and programs.

Several companies have tried to fill that role online, but not to much success.

The basic attention token (https://basicattentiontoken.org/) seems to have the right characteristics and incentives to fill this role. Any ideas why the others have failed so far? It’s hard to insert yourself as a value-adding middleman in an existing marketplace unless consensus agrees the current configuration is in crisis. It’d be interesting if anyone could find a way to do this for Amazon’s commingled counterfeit inventory, for example.

I don’t know much about the current state of adtech, so I’d be hard-pressed to make specific recommendations. As a broadcast medium, TV stations had basically no data about the number of viewers that they had; Nielsen instrumented a representative sample of consumer TVs and the sold that data to both stations and advertisers.

That is the issue with closed ad inventory. On ad exchanges (which are slowly dying), you can use a host of third party companies (such as Integral Ad Science) to run more or less sophisticated verifications on the quality of the inventory.

-even though Facebook has all the incentive to falsify numbers

It's worse than that: Facebook has little short-term financial incentive to reject third parties who proliferate fake FB profiles.

The author claims to have invented Facebook, yet has presented no compelling evidence whatsoever for anything beyond "I did actually know Zuck when he created Facebook". He's not at all credible in my opinion.

In another post on his blog he "proves" he "invented" Facebook with this link:

https://newsroom.fb.com/news/2009/05/facebook-and-think-comp...

>Starting in August 2003, Think released a web based student portal called houseSYSTEM through a Harvard student group. This software was designed to make life easier for students, faculty, and alumni. By September 2003, houseSYSTEM featured a section (devised and implemented by Greenspan) called “The Universal Face Book” (sometimes called “The Face Book”).

Which is an odd claim because I was under the impression that "face books" weren't an original concept.

It's not an original concept, it originated in print, and inspired the name[0]. So basically, he's claiming that he contributed to a web portal that included the _name_ "Face Book", hence he invented Facebook.

[0] https://en.wikipedia.org/wiki/Face_book

It was all about the MAU, and that's not a GAAP metric. Evaluate the company based on your own metrics and make your own conclusions.

If this person wants to short facebook because they don't think it will maintain earnings 26 years or whatever P/E multiple it is currently trading at, that's fine.

The simple fact is that companies can grow and evolve. When Cisco got started, they sold switches. Eventually people stopped buying that switch, so they made a different one. Then they saw that people needed routers. And wifi. And teleconference.

FB is far from a static company with an unchanging platform - definitely not a ponzi scheme, unless you consider every company that funds current expenses with expected growth a ponzi scheme. I'm going to take a stance on the author; he is a nut job.

Re: Most companies I've worked for have done all kinds of things to pad usage and retention stats in order to appease investors

My violin for investors getting screwed is much smaller than that for consumers getting screwed. (Oh wait, I have Amazon stock. Crap!)

Yup, but a lot of those fake accounts are also created by click farms, which are more prevalent in Asia.

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