Facebook Video Metrics Lawsuit Results in $40 Million Settlement

On October 7th, Facebook agreed to pay advertisers $40 million in a proposed settlement that would end a class-action lawsuit alleging the social media giant provided marketers inflated video metrics. The suit accuses Facebook of overstating the average time users spent watching a video and providing these inaccurate metrics to advertisers over a period of 18 months in 2015 and 2016.

While the class action acknowledges that Facebook disclosed this calculation error in 2016, it alleges that the company has not taken responsibility for the breadth of the problem. The amended complaint states:

“In addition to Facebook knowing about the problem far longer than previously acknowledged, Facebook’s records also show that the impact of its miscalculation was much more severe than reported. The average viewership metrics were not inflated by only 60%-80%; they were inflated by some 150 to 900%.” 1

The Facebook video metrics lawsuit claimed 1.35 million advertisers could have been affected and lost money due to the bloated metrics. Both sides announced a settlement was being developed in June. Facebook denied the claims made against it in the case but agreed to pay the $40 million settlement, the majority of which would go to marketers who purchased ad time on Facebook’s video platform.

Facebook Overstates Video Metrics

In September 2016, Facebook released an apology explaining that the company had found an error in the way it calculated one of its video metrics – the average time users spent viewing videos and paid video ads.

“The metric should have reflected the total time spent watching a video divided by the total number of people who played the video. But it didn’t – it reflected the total time spent watching a video divided by only the number of “views” of a video (that is, when the video was watched for three or more seconds). And so the miscalculation overstated this metric.”David Fischer, Vice President of Business and Marketing Partnerships at Facebook 2

The statement further explained that the company had fixed the error, put notices up, and determined the flub did not have and would not have an impact on billing. In 2018, the Facebook video metrics lawsuit was filed which suggested that Facebook knew about its inflated video view metrics as early as 2015 and hid it from advertisers and brands for over a year.3 Facebook’s inflated video views could have led both advertisers and media companies to bet too much on Facebook video.

In a recent Twitter thread, former CollegeHumor employee Adam Conover shared a harsher judgement of Facebook, attributing its inflated viewership numbers as the reason many online comedy video sites pivoted to Facebook in favor of their own websites and YouTube to devasting results.

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  1. Eriq Gardner, The Hollywood Reporter – Facebook Backs Away From Covering Up an Alleged Cover-Up
  2. David Fischer, Facebook Business – An Update on Facebook Video Metrics
  3. Kelsey Sutton, Adweek – Facebook Hid Inflated Video Ad Metrics Error for Over a Year, Advertisers Allege