Trust in Meta will likely nosedive following allegations the social media company misled advertisers by inflating the performance of its Shops Ads.
This week, former Meta employee Samujjal Purkayastha accused Meta artificially inflating return on ad spend (ROAS) by counting shipping fees as revenue, subsidising bids in ad auctions, and applying undisclosed discounts.
In a legal filing submitted to a UK employment tribunal, Purkayastha said the return of investment (RAOS)—an important metric advertisers use to determine an ad’s performance—had been inflated by 17-19 per cent, and that Meta knowingly chose not to inform advertisers.
Meta said that it was “actively defending these proceedings”, and that, “allegations related to the integrity of our advertising practices are without merit and we have full confidence in our performance review processes”.
Industry leaders believe the issue is serious and a wake up call to marketers who place blind faith in Meta’s metrics.
Although it won’t lead to an exodus of advertisers, particularly SMEs, it should lead to a flight to independent measurement tools outside of Meta’s controls, including marketing mix modelling.
An erosion of trust
Bench Media co-founder and COO Shai Luft said that walled gardens, such as Meta and YouTube, have wielded too much power in determining what success looks like on their platforms.
“For years, the walled garden platforms have controlled the scoreboards they play on, and every time a crack appears it exposes just how little independent validation there really is. Advertisers aren’t just buying impressions, they’re buying into the promise of measurable outcomes. If those outcomes are inflated, the credibility of the entire system takes a hit,” he said.
“The real danger for Meta isn’t that advertisers will suddenly slash spend, but that they’ll stop believing in its metrics. Once marketers shift their focus to independent, cross-channel benchmarks, Meta loses the power of being judge, jury, and executioner of campaign performance. When that happens, spend will flow to what delivers real impact – not what platforms decide to report.”
Yango general manager Amy Carr said that if the allegations are true, it amounts to “a breach of trust” and “a manipulation that creates an inaccurate picture of a campaign’s true profitability”.
She explains that return on ad spend is a “critical metric” agencies and marketers use to judge the “health of their business and the effectiveness of their marketing spend”.
“The immediate impact is a likely shift towards greater scrutiny and a deeper dive into first-party data. Advertisers and agencies will likely become more reliant on their own analytics platforms to verify the performance reported by Meta. The age of blindly trusting the platform’s numbers is over,” she said.
Carr said another potential fallout is advertisers will be more willing to test and scale budgets on other platforms that offer greater transparency and “a more direct line of sight to their own business metrics”.
Independent measurement
Everyone speaking to B&T believes that independent analysis and measurement should be “non-negotiable” when measuring the performance of advertising on walled garden platforms like Meta.
Lukas Temple, the managing director of the media and creative agency BCM, told B&T that this issue is not just about one platform’s alleged conduct, but rather “the systemic vulnerability of digital media’s measurement ecosystem”.
“When so much spend is concentrated in a handful of players, the industry can’t afford to treat transparency as optional. Advertisers must demand better data, independent verification and above all, strategic media planning rigour that isn’t so easily gamed,” he said.
Mutinex co-founder and global CEO Henry Innis said that he doesn’t read the inflation impasse as “as much as a big deal as most” and that it looks more like “a dumb mistake rather than malicious”.
“That said, I think there’s enough murkiness in platforms that combined with conflict of interest, it’s enough for the industry to continue to demand data definitions and measurement independent of the ad platforms to protect the integrity of reporting,” said Innis, who runs a global market mix modelling business.
Jordan Taylor-Bartels, who runs rival Prophet, said that it should surprise anyone that the likes of Meta and Google provide measurement frameworks that exaggerate the performance of their own products.
“These publishers are not natural arbiters – they’re motivated by driving their own bottom line. This meta whistleblowing reveals a systemic attempt (and seemingly a successful one) to mislead agencies and brands,” he said.
“Use independent models that have NO opportunity to be enticed by greed or corruption; which means the industry can simply focus on competence.”
Not Meta’s first rodeo
This is not Meta’s first metrics scandal. In 2017, an AdNews investigation discovered that Meta had artificially inflated the number of users it could reach across key advertising demographics, claiming it could advertisers could reach 1.7 million more 15- to 39-year-old users in Australia than the country’s official population. The issue proved to be a global problem and has led to several lawsuits in the US.
The fallout from that saga did little to dent Facebook’s ad sales and growth trajectory. At the time of this article was published, Meta’s share price hard hardly blinked since news of the allegations emerged.
Industry leaders believe Meta is too ingrained in the digital advertising ecosystem to face a mass exodus of advertisers.
“The reality is that Meta is a powerhouse in the media landscape and while accusations such as these will deliver a short term increase in scrutiny of performance, I cannot see it resulting in advertisers moving away from their platforms, unless there is significant support from analysis from third party measurement tools that prove bigger and better platform opportunities beyond Meta,” said Emilia Chambers, head of strategy at The Pistol.
A senior media buyer at one of the four largest holding companies, who spoke to B&T anonymously due to the sensitivity of the issue, does not believe that advertisers will flee Meta but the impact will vary depending on the type of client.
“It’s not like everyone didn’t know before that they’re essentially marking their own homework, and a lot of the data can’t be validated,” the media buyer said, adding that they are still waiting to hear from Meta about the issue.
“For the majority of our clients, there’s other measurement in place where I would say it is more concerning is I know that there’s a lot of really small e-commerce retail clients who rely on that format a lot, and it’s probably more concerning for them, where they’re reporting in the background is not as robust.”
Although this latest metrics scandal is unlikely to turn advertisers away from Facebook and Instagram, Luft believes it “weakens the halo around their reporting and forces brands to rethink how much of their budget is safe in a closed system”.
Carr advises advertisers to become more sophisticated in how brands measure success; more demanding of Meta to provide transparent, verifiable data; and more diversified in spreading advertising spend across a range of platforms rather than over-relying on a single channel.
Perhaps, argues Temple, this could even lead advertisers to address how much they spend on performance media platforms.
“The irony here is hard to miss,” he said. “As an industry, media planning has increasingly drifted toward reductive planning techniques, justifying spend by ‘proven’ metrics like ROAS, often at the expense of true brand growth. If those very justifications are found to be inflated or inaccurate, the entire logic collapses.”
