As Facebook’s stock continues to plummet to scandals surrounding the companies IPO numerous stories surface detailing advertising fraud.
The much hyped Facebook IPO put the company’s initial public offering in the limelight as billions of people watched the Wall Street darling which had defied gravity prepare for its big day of finally being traded as a public company.
But the reality was the rocket fuel that kicked Facebook into some far earth orbit beyond the stratosphere had burnt out long before the company went public and the companies founders where just looking to cash out for billions of dollars before the ship came crashing back to earth.
Wall Street Bankers Secretly Scammed Facebook IPO Buyers
Wall Street Banks scammed the public when they shared secret earnings estimates and valuations of Facebook with insiders much worse than they publicly reported.
FACEBOOK – MUPPET BAIT FOR THE MASSES
Facebook continues along its epic drop from its opening trading price of $42.05 to a new low of $30.98 of today as the SEC and FINRA are likely to open an investigation to circumstances surrounding Facebook’s public stock offering.
The plummet comes as Reuters revealed that Wall Street Banks scammed the public when the secretly cut their revenue estimates for Facebook during the IPO roadshow and only let their most lucrative retail investors now about the cuts.
By withholding the information from the public, millions of mom and pop retail investors were set up for a blood bath, and as quoted from the Yahoo! News article below, Facebook IPO buyers deserved to be “mad as hell” about it.
Those losses will only continue as financial news outlets report that the offerings IPO valuation of over $100 billion is up to 10 times higher than the price Facebook is actually worth.
[…]
As Facebook’s stock continues on its epic collision course with reality the public’s trust in the company has transformed into something that akin to a never was and more importantly has caused advertisers on the social network to take a second look at the astounding results the company had seemed to be delivering.
Now that is turning into a huge problem as independent investigation after investigation by numerous media sources reveals that the effectiveness of advertising on Facebook is more over-hyped than the IPO itself.
Just as the IPO was mired with fraud so is advertising on Facebook as marketer’s slowly being to realized their getting scammed out of their advertising dollars for what has now been revealed as computerized bot networks clicking on ads and fake phoney profiles being used to like their products and services.
For starters Tech Crunch reports Limited Run, new start-up company, is ditching Facebook altogether, after they verified — using several third-party analytic services and finally their custom code — that 80% of the pay-per-click ad traffic was coming from automated robots.
If that wasn’t bad enough the bots aren’t even the good kind that try to hide the fact they are bots.
Instead, they are the shitty kind that anybody can script with single line of code, which is what made them so easy to detect.
When a real user visits a website, their browser will download additional resources as directed by the pages, such as images, style sheets to make everything look pretty, and even scripts that add functionality to the pages.
These bots, instead just downloaded Facebook’s ad link and nothing else which is a behavior clearly done by a simple computer program is opposed to a real web-browser.
Of course, now that they have been outed, they will undoubtedly upgrade their code to either process the resources like a real browser would or – even better yet – automate a real browser with any of the numerous programs available to automate their behavior.
In fact, that appears that at least some portion of the fraud is already being committed is such a way.
As the BBC reports a fake virtual bagel company was set up that does absolutely nothing just to test Facebook advertising for fraud.
When the advertising campaign was launched thousands of fake profiles were used to like the companies ad on Facebook.
Upon investigating those profiles it was clear they were fakes from fraudulent information on their pages and activity on Facebook, such as repeatedly liking numerous ads per seconds amassing thousands upon thousands of likes while having no other legitimate activity on the site.
The BBC investigation was done to verify the results reported to them by a marketer which they BBC was able to easily reproduce.
Even worse, is when Facebook was approached to discuss the fraudulent activity to request a refund the company outright refused to discuss the issue with advertiser.
Instead they stated no other advertisers have complained and then blamed the fraud on the way advertiser set up his ad.
Despite Facebook’s claims The Search Engine Journal and the Daily Dot also report they conducted experiments similar to those ran by the BBC.
In both experiments the ad campaigns appeared to be successful and the user profiles appeared to be real.
However, further examination of the profiles again reveal the accounts were fake accounts that often had very little to no legitimate Facebook activity.
Instead, the accounts had again been used to do very little beside like Facebook ads and perform similar activities such fill out marketing surveys.
Here’s a quick overview.
Tech Crunch reports:
Startup Claims 80% Of Its Facebook Ad Clicks Are Coming From Bots
[…]
“A couple months ago, when we were preparing to launch the new Limited Run, we started to experiment with Facebook ads. Unfortunately, while testing their ad system, we noticed some very strange things. Facebook was charging us for clicks, yet we could only verify about 20% of them actually showing up on our site. At first, we thought it was our analytics service. We tried signing up for a handful of other big name companies, and still, we couldn’t verify more than 15-20% of clicks. So we did what any good developers would do. We built our own analytic software. Here’s what we found: on about 80% of the clicks Facebook was charging us for, JavaScript wasn’t on. And if the person clicking the ad doesn’t have JavaScript, it’s very difficult for an analytics service to verify the click.
What’s important here is that in all of our years of experience, only about 1-2% of people coming to us have JavaScript disabled, not 80% like these clicks coming from Facebook. So we did what any good developers would do. We built a page logger. Any time a page was loaded, we’d keep track of it. You know what we found? The 80% of clicks we were paying for were from bots. That’s correct. Bots were loading pages and driving up our advertising costs.”
More details on the tracking
I reached out to Limited Run co-founder Tom Mango, who provided a bit more context on the situation. Before building their own analytics program, Mango and his co-founder used six or seven outside analytics services including Click and Google Analytics. Those all showed “roughly the same stats” on the client side as Limited Run’s own analytics program — that 80 percent of visitors from Facebook clicks weren’t registering images from Limited Run’s site, which may indicate that it wasn’t truly being visited by a person. Next, Limited Run built tracking into the server side of their app, where any URLs coming in from their Facebook ad campaigns were logged to Limited Run’s database. Those requests weren’t loading any of Limited Run’s client side assets, either.
Also, Mango says, those visitors were showing up on Limited Run’s servers as “non-standard” user agents. “Essentially they were just not your standard Chrome / Firefox / Safari / IE / iOS user agents,” Mango said. “They were things you would see with random crawlers and bots.” We asked for more information on these — IP addresses on the purported bots, an example user agent string — and will be sure to update this with anything that Mango sends over.
When Limited Run reached out to Facebook, they say they were met with indifference. “Sadly, Facebook would only reply with automated response about how ‘all analytics services track differently’ when we tried to confront them,” Mango said. “To be clear, we spent roughly a month testing this and confirming everything. This wasn’t a weekend project.”
[…]
Source: Tech Crunch
The BBC reports:
Facebook ‘likes’ and adverts’ value doubted
A BBC investigation suggests companies are wasting large sums of money on adverts to gain “likes” from Facebook members who have no real interest in their products.
It also appears many account holders who click on the links have lied about their personal details.
A security expert has said some of the profiles appeared to be “fakes” run by computer programs to spread spam.
Facebook said it had “not seen evidence of a significant problem”.
[…]
Once a user has clicked on a link the company it belongs to can then post content on their news feed, send them messages and alert their friends to the connection.
Facebook makes money by charging companies a fee to show adverts designed to attract new “likes”.
Some companies have attracted millions of “likes”.
But the BBC has been contacted by one marketing consultant who has warned clients to be wary of their value, and carried out an experiment that backed up his concerns.
[…]
Puppet masters
[…]
“Spammers and malware authors can mass-produce false Facebook profiles to help them spread dangerous links and spam, and trick people into befriending them,” he said.
“We know some of these accounts are run by computer software with one person puppeteering thousands of profiles from a single desk handing out commands such as: ‘like’ as many pages as you can to create a large community.
[…]
A spokesman for the social network said: “We don’t see evidence of a ‘wave of likes’ coming from fake users or ‘obsessive clickers’.”
But Mr Cluley said it was in the firm’s interest to downplay the problem.
“They’re making money every time a business’s advert leads to a phoney Facebook fan,” he said.
‘Suspicious’ fans
Michael Tinmouth, a social media marketing consultant, ran Facebook advertising campaigns for a number of small businesses, including a luxury goods firm and an executive coach.
At first, his clients were pleased with the results. But they became concerned after looking at who had clicked on the adverts.
While they had been targeting Facebook users around the world, all their “likes” appeared to be coming from countries such as the Philippines and Egypt.
“They were 13 to 17 years old, the profile names were highly suspicious, and when we dug deeper a number of these profiles were liking 3,000, 4,000, even 5,000 pages,” he said.
Mr Tinmouth pointed out a number of profiles which had names and details that appeared to be made up.
[…]
One, going by the name Agung Pratama Sevenfoldism, showed his date of birth as 1997 and said he had been a manager at Chevron in 2010.
Mr Tinmouth said this seemed “unlikely”.
An experiment by the BBC appears to have confirmed this was not a one-off issue.
The BBC created a Facebook page for VirtualBagel – a made-up company with no products.
The number of “likes” it attracted from Egypt and the Philippines was out of proportion to other countries targeted such as the US and UK.
[…]
Payment dispute
Mr Tinmouth asked Facebook to investigate the issue of questionable profiles after one of his clients refused to pay for his adverts on the basis they had not reached “real people”.
The company told him that the majority were authentic, and refused to meet him to discuss a refund.
Facebook told the BBC that Mr Tinmouth appeared to have sent out scattergun advertising to a global audience without specifying a target group.
“We would never recommend that anyone conduct business in this way,” a spokesman said.
The BBC also spoke to a social marketing executive at one of the UK’s biggest companies who said he was increasingly sceptical about the value of advertising on the social network.
Detecting fakes
Facebook played down the issue of fake profiles.
“We’ve not seen evidence of a significant problem,” said a spokesman.
“Neither has it been raised by the many advertisers who are enjoying positive results from using Facebook.
More From The BBC:
Who ‘likes’ my Virtual Bagels?
Rory Cellan-Jones explores the merits of Facebook advertising, by setting up a bogus bagel company online.
For the past week, I’ve been running a very successful small business via Facebook. It is called VirtualBagel and more than 3,000 people from around the world have decided they “like” it – despite the fact that it does, well, absolutely nothing. But in running this non-existent firm I have learned quite a bit about the value of those “likes” prized by so many big brands, and the usefulness of Facebook’s advertising.
When social media consultant Michael Tinmouth told me of his concerns about the returns his small business clients were getting from advertising on Facebook, I decided I needed to mount an experiment. Could I persuade Facebook users to click on adverts for an imaginary business and like it?
[…]
I set up a page, with very basic information: “We send you bagels via the internet – just download and enjoy.” The fuller description talked of a dream of delivering virtual bagels over the internet to a world of virtual eaters. But nothing more.
Next, I created my first advert, which is a fairly simple process. You choose your objective – mine was to reach people who were most likely to “like” my page – how much you want to spend – I opted for $10 (about £6.50) – and where you want it seen.
[…]
Then I pressed the button and waited. Within minutes people were starting to “like” my meaningless site, and within 24 hours I had 1,600 likes – and had spent my $10. Where were they from?
It seemed VirtualBagel was hugely popular in Egypt, Indonesia and the Philippines, but just about nobody in the US or the UK had any interest. And amongst my likers were some interesting characters, notably Ahmed Ronaldo. He was from Cairo – the city where my page is still most liked – but seemed to work at Real Madrid, and his profile consisted of nothing but pictures of Cristiano Ronaldo.
What was more interesting was what else he liked besides VirtualBagel – more than 3,000 pages, ranging from a retailer called Titchy Kitch London to Mr H Menswear to Pets World. What exactly was going on?
Over the next few days, I tinkered with my advert, removing a number of countries so that I was just targeting the US, the UK and India. The “likes” continued to mount, though very few came from the US or UK. After four days, my page was “liked” by nearly 3,000 people.
Then for one final day, I decided to advertise solely to UK Facebook users. The results were frankly disappointing – new “likes” slowed to a trickle. After spending a total of $60 (£40) VirtualBagel had built an audience in Egypt and India, but was not making an impact in the lucrative UK or US markets.
[…]
But when I restricted the advert to UK users, the click through rate fell to 0.059% – about a 10th as many. And in the one day that advert ran, I achieved just 17 “likes” for my $10.
So, it seems that Facebook adverts can be very effective in generating interest in your business from certain countries but not in the US or the UK. And I think my experiment raises a lot of questions.
Who are these people in some countries who are clicking in an apparently random way on thousands of Facebook adverts and earning the network a small fee each time?
Is Facebook worried that there seem to be a number of fake profiles in certain countries generating fake “likes” and so devaluing the worth of its advertising system?
Is the network being as active as it should be in addressing a problem which is generating lots of revenue for its bottom line?
Now Facebook, it is important to say, feels my experiment is worthless because I have simply failed to target my advert in a way which delivers useful results. The company also says it sees no significant issue with fake profiles and is acting to discourage the practice.
[…]
Source: BBC
MSN Money reports:
How real are Facebook ads and likes?
A BBC study agrees with GM: Facebook ads don’t work, and thousands of ‘Likes’ are bogus.
In May, it came out that General Motors (GM +1.81%) was abandoning paid advertisements on Facebook (FB -6.22%), but will continue to use the site to connect with customers. Last year, the auto maker spent $40 million marketing on Facebook, and only $10 million went directly to the social network.
The BBC caught up with a marketing consultant who thinks that there is reason to doubt a great number of Facebook connections, especially the “Likes” that are generated by fake accounts. Though it might seem nice to have thousands of fans on Facebook, you must consider that a company’s Facebook presence doesn’t seem to have much of a connection to actual sales, and that Facebook makes money every time the “Like” button is pressed, it isn’t all good.
A bogus company called Virtual Bagel was set up by the BBC. Within hours of setting up a company that has no products at all and buying $10 worth of advertising targeted at the UK and US market, the brand took off, mostly in Egypt, Indonesia, and the Philippines.
Why did so many people, so far away, get into this non-existent company? Because they were fake. And very obviously so. One fan in Cairo that goes by the name of Ahmed Ronaldo, and works for the Real Madrid soccer club, is a nice case in point. The fellow does bear a striking resemblance to his alleged co-worker, Christiano Ronaldo.
“Spammers and malware authors can mass-produce false Facebook profiles to help them spread dangerous links and spam, and trick people into befriending them,” said Michael Tinmouth, a marketing consultant that is skeptical of the value of Facebook “Likes” for his clients.
“We know some of these accounts are run by computer software with one person puppeteering thousands of profiles from a single desk handing out commands such as: ‘Like’ as many pages as you can to create a large community.”
[…]
Source: MSN Money
Search Engine Journal reports:
Facebook Ads: What Are You Really Paying For?
About three weeks ago, I ran an ad campaign on Facebook for a fanpage that resulted in an increase of Likes from 100 to around 900. Success!
…or so I thought. After a week of posting content designed to engage the new audience and attract more new followers, the individual post Likes were averaging the same totals as prior to the campaign.
This was frustrating. My initial reaction was, “Hmm, maybe these ad-generated “Likes” that I’m getting are fake,” but all I had to go on was a few weeks’ worth of data and a hunch. That’s when I brought it up to Brent Csutoras of Kairay Media over a cup of coffee.
We came to the conclusion that there’s no way Facebook would stoop to generating fake Likes because of the enormous liabilities that would ensue. We blew it off and didn’t talk much about it again.
[…]
After a second conversation with Brent this past weekend, together we decided to take a closer look at a number of Facebook ad campaigns which had low enough Like numbers to spot anomalies.
When we got into the actual Likes of these profiles, we started to see where the potential fraud was happening. These particular accounts all seemed to have an enormous number of Likes, with many totaling more than 10,000 and at a “Liking” rate of more than 500 a month.
In the first two weeks of July 2012, the profile below had accumulated more than 750 Likes:
We found lots of profiles with the same pattern:
With this additional data from above compared against the BBC study, we are much more confident that something is going on with Facebook ads. But what exactly is it?
[…]
Source: Search Engine Journal
The Daily Dot reports:
Facebook “Likes” boosted by bots, study claims
A new BBC investigation suggests that it might not be a good idea for companies to spend on Facebook advertising due to the likelihood of getting “Likes” from fake accounts.
[…]
The results of these findings were confirmed by Michael Tinmouth, a social media marketing consultant who experienced similar results. Tinmouth discovered that a disproportionate number of “Likes” for clients’ pages were coming from the aforementioned countries and consisted of 13 to 17 year olds that “were liking 3,000, 4,000, and even 5,000 pages.”
While most users have likely received a Friend Request from a bot, Facebook downplayed the following.
“We’ve not seen evidence of a significant problem,” a spokesperson for the social network told the BBC. “Neither has it been raised by many advertisers who are enjoying positive results from using Facebook.”
[…]
Source: The Daily Dot