scorecardresearch
Follow Us:
Sunday, October 17, 2021

Advertisers count the costs of Facebook’s outage

One company that advertises exclusively on Facebook watched its revenue plunge 70% during the outage from the same period a week earlier, Herrmann said. Sales slipped 30% at another company, which spends $40,000 a day on ads.

By: New York Times |
October 6, 2021 2:19:51 pm
The outage was an unpleasant reminder to many advertisers of Facebook’s powerful influence on their ability to do business. (Reuters)

Written by Tiffany Hsu

For more than five hours Monday, while Facebook and Instagram were dark, David Herrmann fretted about ads.

Herrmann, a freelance media buyer, said that everyone he worked with relied heavily on the platforms, which soak up the bulk of the $80 million to $100 million in ad spending he manages each year.

One company that advertises exclusively on Facebook watched its revenue plunge 70% during the outage from the same period a week earlier, Herrmann said. Sales slipped 30% at another company, which spends $40,000 a day on ads.

“I was more or less checking Facebook consistently throughout the day, hoping it would come back,” he said. “But without clear direction from Facebook, we just had to wait.”

The outage was an unpleasant reminder to many advertisers of Facebook’s powerful influence on their ability to do business.

Ads fuel Facebook, with more than 10 million advertisers contributing more than 98% of its revenue. In the three months ending in June 30, it pulled in an average of $78 million in ad sales every six hours, much of it from small companies, organizations and individuals.

But a deluge of criticism in recent years has caused many of Facebook’s customers to sour on the company. Frances Haugen, a former project manager for Facebook turned whistleblower, testified before senators Tuesday that the company was aware of the harms caused by its services, such as Instagram’s negative effects on teenage girls. Facebook has also faced advertiser outcry over its handling of hate speech, misinformation, privacy and more.

Graham Mudd, Facebook’s vice president of ads and business product marketing, wrote on Twitter on Monday that the outage affected Facebook’s ad platform and apologized “for the disruption this creates for our customers.” Facebook said later in the day that “advertisers were not and will not be billed for ads during the outage.”

Media buyers noted that Facebook went dark at the beginning of the most important period for many advertisers, as they kick off holiday campaigns during a season that is expected to be complicated this year by supply chain struggles and pandemic restrictions.

“There may be heads on pikes by the end of this,” Cory Dobbin, the founder of the Aaron Advertising digital agency, wrote on Twitter.

Many businesses rely exclusively on Facebook to reach customers, Dobbin, who manages roughly $50,000 a day in advertising spending, said in an interview. The majority of his clients’ spending goes to Facebook, with the rest to Google, Snap and other platforms.

“The name of the game for many advertisers, if it wasn’t already, is diversification,” he said. “This is a perfect example of why you can’t rely on a single channel to bring in all of your revenue.”

The outage added to growing concerns about Facebook. Omnicom Media Group, which manages more than $30 billion in global marketing spending a year, sent an update to clients on Monday noting that Facebook had been in touch to defend itself after Haugen appeared on the CBS program “60 Minutes” on Sunday.

Omnicom had sent a message to clients addressing a series of articles from The Wall Street Journal about Facebook. The ad company pointed to a report that Facebook misled its oversight board by claiming that its XCheck program, which exempted at least 5.8 million high-profile users from normal enforcement rules, was used only sparingly and that data from the system could not be tracked.

“These discrepancies raise a more significant question about the level of accuracy and sincerity of Facebook’s responses to inquiries — both internal and external — on these types of matters,” Omnicom wrote in the note, which was obtained by The New York Times. “The problem with what has come to light in this report is that there is essentially a parallel justice system within Facebook that operates with no public accountability or transparency.”

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Technology News, download Indian Express App.

  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
Advertisement
Advertisement
Advertisement
Advertisement