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Facebook’s ad model a scam?

thetrader's picture




 

By www.thetrader.se

When Facebook was listed earlier this year, we suggested the stock would be trading around 1o USD before any serious investor would feel the urge to start buying. Having dropped close to 50% from the IPO price, Facebook is surely making investors nervous. The stock has speculative weak hands stuck with stocks they don’t want. Rinsing out those will take longer than many anticipate. After disappointing many last weeks, Facebook continued the free fall today. From Bloomberg.

“There were obviously some people who didn’t want to sell on the first day in anticipation that you would see some stabilization and the stock price sort of return a little bit,” saidMark Harding, an analyst at JMP Securities LLC who has a market outperform rating on the stock and doesn’t own it. “Perhaps they’re disappointed by the lack of a recovery, and maybe now they’re using the opportunity to perhaps pare back.”

But perhaps possibly much more disturbing facts regarding Facebook’s ads is this article “sotfly” suggesting the ads business could be a scam.

 

Hey everyone, we’re going to be deleting our Facebook page in the next couple of weeks, but we wanted to explain why before we do. 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. So we tried contacting Facebook about this. Unfortunately, they wouldn’t reply. Do we know who the bots belong too? No. Are we accusing Facebook of using bots to drive up advertising revenue. No. Is it strange? Yes. But let’s move on, because who the bots belong to isn’t provable.

While we were testing Facebook ads, we were also trying to get Facebook to let us change our name, because we’re not Limited Pressing anymore. We contacted them on many occasions about this. Finally, we got a call from someone at Facebook. They said they would allow us to change our name. NICE! But only if we agreed to spend $2000 or more in advertising a month. That’s correct. Facebook was holding our name hostage. So we did what any good hardcore kids would do. We cursed that piece of shit out! Damn we were so pissed. We still are. This is why we need to delete this page and move away from Facebook. They’re scumbags and we just don’t have the patience for scumbags.

Thanks to everyone who has supported this page and liked our posts. We really appreciate it. If you’d like to follow us on Twitter, where we don’t get shaken down, you can do so here:http://twitter.com/limitedrun

For the (still) best dummies explanation of FB check the video here

Page here.

Courtesy Yves.

 

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Wed, 08/01/2012 - 12:52 | 2669216 YesWeKahn
YesWeKahn's picture

More and more people realize that Facebook is a scam. This is good.

Wed, 08/01/2012 - 12:42 | 2669173 Widowmaker
Widowmaker's picture

Facebook is nothing but a police state pre-crime identification tool that facilitates people stacking their own deck against themselves.

Muppets willingly forfeit their privacy, incriminate themselves and everyone they know, while the dirty secrets of all online "providers" (SPYS) is that security "enfarcement" pays the bills!

The Nazi SS was a great racket, too.

Ads?  Who the fuck thinks ads are effective to support the company?  The same company that has a material interest in concealment of fact of how data is really used... it goes to two places -

WALL STREET AND ENFORCEMENT

 

Wed, 08/01/2012 - 13:15 | 2669303 whstlblwr
whstlblwr's picture

they watch us, but so what. We now have a way to share with each other in numbers about THEM.

Thu, 08/02/2012 - 00:40 | 2671172 californiagirl
californiagirl's picture

Silly me, but I thought that people who post pictures and every little detail of their lives on social media are narcissists who want to be watched by everyone.

Wed, 08/01/2012 - 12:38 | 2669164 DarthVaderMentor
DarthVaderMentor's picture

Where's the handcuffs?

Wed, 08/01/2012 - 12:38 | 2669162 chrispycrunch
chrispycrunch's picture

Wake me up when FB hits $15. I am sure the ECB will somehow be involved in propping up its shares then.

Wed, 08/01/2012 - 12:29 | 2669126 Divine Wind
Divine Wind's picture

 

 

Does anyone know if In-Q-Tel was involved with FB?

For those not familiar, In-Q-Tel is the VC arm of the CIA.

 

Wed, 08/01/2012 - 19:13 | 2670575 bank guy in Brussels
bank guy in Brussels's picture

Yes re In-Q-Tel -

« ... funding into Facebook ($US12.7 million) came from venture capital firm Accel Partners. Its manager James Breyer ... served on the board ... of In-Q-Tel, a venture capital firm established by the Central Intelligence Agency in 1999. One of the company's key areas of expertise are in "data mining technologies". »
http://adventofdeception.com/facebook-ciacover-nwo-agenda/

The CIA always recruits at Harvard, and they selected Mark Zuckerberg from the large group of ultra-Zionists there, to be the CIA dude getting wealthy from Facebook.

Zuckerberg is CIA, as is fellow arch-Zionist and internet hoaxter, the criminal Jimmy 'Jimbo' Wales, posing as the 'founder' of the CIA's Wikipedia

'Satire' but truthful - Onion News Report on the CIA's Facebook project:
http://www.youtube.com/watch?v=cqggW08BWO0

'Ex-Agent: CIA Seed Money Helped Launch Google', retired intelligence agent Robert David Steele interviewed by Paul Joseph Watson, and speaking of the CIA's Dr Rick Steinheiser and his connections with Google:
http://www.infowars.com/articles/bb/google_cia_seed_money_launched_googl...

Wed, 08/01/2012 - 14:09 | 2669524 DarthVaderMentor
DarthVaderMentor's picture

I believe that they were an early investor or mentor.

Wed, 08/01/2012 - 12:16 | 2669069 passwordis
passwordis's picture

 Another Jewish company scamming the goyim?  I don't believe it!.

 

Below is an antisemitic website which claims the Jews own the net. For the record, just because the owners/CEOs and top executives of the largest websites on the net like Google, Facebook, Wikipedia, Yahoo!, MySpace, eBay are  ALL JEWISH means nothing.  Jews just "work harder" than the lazy gentiles.  That's what I learned from the media.

http://www.fourwinds10.net/siterun_data/media/internet/news.php?q=126202...

Wed, 08/01/2012 - 13:16 | 2669306 whstlblwr
whstlblwr's picture

You must be from Belgium.

Wed, 08/01/2012 - 12:09 | 2669046 disabledvet
disabledvet's picture

BLOOD RAYNE BITHEZ!

Wed, 08/01/2012 - 11:58 | 2668981 CVfriendship
CVfriendship's picture

Wait....so that ex-GM marketing guy was right about on pulling ads from Facebook? 

Maybe that'll save his......nevermind.

Wed, 08/01/2012 - 11:47 | 2668923 i_call_you_my_base
i_call_you_my_base's picture

There are techniques to combat click-fraud. If they don't make best efforts they will be sued as Google was. This could reduce ad inventory and revenue by a big cut, perhaps 20%. Ouch.

Wed, 08/01/2012 - 11:46 | 2668919 Financial_Guard...
Financial_Guardian_Angel's picture

PPC advertising has jumped the shark.

We tried it, against my recommendation, and it was nothing but a money pit. Everyone on the receiving end of the funds had every imaginable excuse in the book for what happened and why it didn't work. all of their suggestions involved throwing more dollars toward a "solution". 

In reality, their "solution" was nothing more than a solution designed to keep the stream of cash flowing into their pockets. 

It kind of reminds me of how central bankers work... and then I started to feel queasy.

Wed, 08/01/2012 - 12:52 | 2669219 Divine Wind
Divine Wind's picture

 

 

It is as if you were describing the experience of my company.

During the last 12 years we have attempted it several times. ROI sucked bigtime.

On the other side, we have found that well designed ads, placed on hand selected sites, for a set rate, has been wildly successful and cost effective at pulling clicks.

 

Wed, 08/01/2012 - 11:41 | 2668886 Never One Roach
Never One Roach's picture

Why risk money in FB when there's Zynga out there waiting for your hard earned $$$$$$.

Wed, 08/01/2012 - 11:35 | 2668841 shutdown
shutdown's picture

 

 

I'm tired of Facebook.

Wed, 08/01/2012 - 11:29 | 2668814 adr
adr's picture

I remember back in 1999 when I was in college, there were all these companies that would pay you money for clicking on internet ads. Pretty soon you could download programs that would click ads while you were gone sitting in class and while you slept. Some guys on my floor actually wrote some bot programs themselves.

You got paid something like $.03 a click. By running the clickbots some guys made a couple grand until the company shut them down.

Internet advertising has always been bullshit.

Wed, 08/01/2012 - 11:26 | 2668802 WTF_247
WTF_247's picture

As soon as Google started using "social media activity" as an aspect of search, the ramp up of bot accounts and manipulation went on overdrive.  I would guess that 20-30% of the facebook accounts are fake. There are lots of people who control 10s of 1000s of accounts.  For a small fee they will get you 1000s of likes to a web page or your fan page in just a day or so.

Twitter is no different - that one is probably even higher with bot accounts.

All these social media companies know about the issue but leave it alone.  After all its all about "subscribers" since many are net money losers.  If you aggressively weed out the bot/fake accounts, all a sudden your monthly new subs go off the cliff and your established base gets cut way, way down.  Then it would tank potential revenues from companies looking to advertise since the "eyeballs" to look at their junk ads just went way down.

Internet marketing is a very low barrier to entry way to make money.  You can either be Proctor and Gamble and spend millions and millons on PPC advertising or you can learn to do it using Twitter, Facebook and other free tools to drive traffic to whatever it is you are trying to sell or make money off of.  Since most of the world does not run billion dollar firms with huge advertising budgets, other methods are used.  

I have no problem with people trying to make a buck and using social media to do it.  It is just fraudulent for these companies to know about the problem but not tell advertisers or pretend to have methods in place to combat it when in reality they do next to nothing.  I think if they did stop it the whole model would collapse.  The only company that seems to really try to crack down on fake clicks/bots is Google - the others could give a crap.

Wed, 08/01/2012 - 11:44 | 2668905 Beam Me Up Scotty
Beam Me Up Scotty's picture

Add in all the kids using FB that have no money to buy anything on the internet and you are talking about alot of FB users being worthless to advertise to.  Not only that, but my 17 year old daughter said most kids don't even use FB anymore because parents/schools were looking at their accounts all the time.  They all use Twitter now to communicate.

But hey, if FB says they have a billion users, who should argue with them?

Wed, 08/01/2012 - 13:20 | 2669319 whstlblwr
whstlblwr's picture

Now there are more parents on FB, and guess what they have money. Well the ones who aren't broke.

You can also segregate out groups and only show info to people you select.

Wed, 08/01/2012 - 10:43 | 2668624 mark mchugh
mark mchugh's picture

But....but the click-fraud model's worked for Google.

http://acrossthestreetnet.files.wordpress.com/2012/07/facebook-earnings.png

 

Wed, 08/01/2012 - 10:32 | 2668569 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Our whole financial & money system, fractional reserve banking, is a scam, so why not Facebook?

Wed, 08/01/2012 - 10:28 | 2668550 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Bots ruined the stock market, why not Facebook????

Wed, 08/01/2012 - 10:23 | 2668528 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Facebook CEO Mark Zuckerberg announced today:
"U got Zucker-punched! I sold all my shares the 1st day. I was literally laughing all the way to the bank!"

Wed, 08/01/2012 - 10:21 | 2668518 orangedrinkandchips
orangedrinkandchips's picture

Of course it's Faceplant running those bots that click, click, click, $, $, $

 

I wonder if google clicks are the same or has Goog done something to make it more real?

 

scam!!!

 

yet another scam....human nature never changes.

Wed, 08/01/2012 - 10:13 | 2668481 nah
nah's picture

crap in crap out

Wed, 08/01/2012 - 10:11 | 2668472 spanish inquisition
spanish inquisition's picture

Is it a hard program to write? It would be nice if they posted it so anyone could use it to measure any click advertising they buy. I would guess the new social click advertising model is about to crash

Thu, 08/02/2012 - 09:15 | 2668465 MeelionDollerBogus
MeelionDollerBogus's picture

Clearly these attacks on Facebook, a stalwart of Progressive American Patriotism, are the acts of Libertarian free-market 1%'ers who would like nothing more than to see innovation fail to push gold by yet another avenue

Boating accidents, bitchez

Toiletbook ... the flush ....

and this link for the next big chart move

Wed, 08/01/2012 - 10:04 | 2668442 JohnKing
JohnKing's picture

As it relates to click fraud, facebook is a piker in comparison to google.

Thu, 08/02/2012 - 09:25 | 2671820 MeelionDollerBogus
MeelionDollerBogus's picture

I disagree. I use adblock and noscript to lock out all ads for every site. I let through a few select - a couple on zerohedge and all on google. Google's very good at matching an ad precisely to a search so as it happens I have no need to block those ads. Prefectly able.

Wed, 08/01/2012 - 10:02 | 2668434 malikai
malikai's picture

I restate my firm support for this solid performer at $0.01.

Wed, 08/01/2012 - 09:54 | 2668388 Downtoolong
Downtoolong's picture

I've thought from the beginning that the entire promotion campaign for Facebook going public was nothing but a Disneyland Type Fantasy scam. Maybe that's why Sheryl Sandberg, Facebook’s COO is on the board of Disney, and spends so much of her time running around coddling charities and humanitarian causes. It’s a nice cover to hide the truth of what they are really up to inside Facebook, behind the curtain so to speak.

 

I suspect in the end the only ones who will get to actually live the Facebook  fantasy are the insiders who are once again cashing out, taking their money and running. Why own the Muppets if you can’t lie to them, rob them, and screw them when it suits you.

 

 

 

Wed, 08/01/2012 - 10:59 | 2668667 malikai
malikai's picture

All the money was made on that first day when we heard that giant sucking sound coming from Margin Stanley.

Thu, 08/02/2012 - 09:58 | 2672000 MeelionDollerBogus
MeelionDollerBogus's picture

all the long money

short this bitch and get the same riches yourself

Wed, 08/01/2012 - 09:56 | 2668382 TrumpXVI
TrumpXVI's picture

Yeah, I'm not surprised in the least.  Essentially this means that FB isn't an advertising media, it's a PR media; totally different animal (PR exposure typically is very difficult to verify or quantify).

I've said it before and I'm gonna keep sayin' it, FB is worthless!

Wed, 08/01/2012 - 10:30 | 2668559 john39
john39's picture

the NWO invested quite a bit of time and energy in FB... may be worthless in traditional investing terms... but the return on capital in terms of mind control, surveilance and propaganda is priceless.

Wed, 08/01/2012 - 12:21 | 2669096 nonclaim
nonclaim's picture

There's also the "Who 'likes' my Virtual Bagels?":

http://www.bbc.co.uk/news/technology-18819338

Wed, 08/01/2012 - 09:48 | 2668371 apberusdisvet
apberusdisvet's picture

The question of who's behind the bots is important, especially if you have the suspicion that FB has been co-opted by psyops fascists to gain info on everyone.

Wed, 08/01/2012 - 10:29 | 2668557 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

psyops fascists = the US government

Wed, 08/01/2012 - 09:42 | 2668346 q99x2
q99x2's picture

Hit the $20 handle moments ago. Going down.

Wed, 08/01/2012 - 09:57 | 2668403 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

BIDERSHART ALERT....BIDERSHART ALERT....BIDERSHART ALERT....BIDERSHART ALERT....

Wed, 08/01/2012 - 11:57 | 2668976 Bicycle Repairman
Bicycle Repairman's picture

2000 = pets.com

2012 = facebook

Cue the dog sockpuppet.

Wed, 08/01/2012 - 10:58 | 2668664 veyron
veyron's picture

Biderman apparently took an 18% loss: http://cl.ly/image/463b0v2T0Z14

Wed, 08/01/2012 - 11:28 | 2668810 Precious
Precious's picture

Don't worry.  Twitter will save us.

Wed, 08/01/2012 - 11:27 | 2668807 SilverTree
SilverTree's picture

That old peter schiff vs Biderman video was an eye opener.

 

http://youtu.be/MIFGfgKHrwU

Wed, 08/01/2012 - 12:07 | 2669013 vast-dom
vast-dom's picture

80% bots = FRAUD. due diligence falls on FuckBook. if there is report and analytics are generated to support bot revenue distortions more at rigged ad revenue, then FuckBook must return ALL monies and retool their ad billing.

 

FRAUDBOOK, ANYONE WITH AN ACCOUNT AND/OR INVESTMENT IS A DOUCHE THAT DESERVES WHAT THEY GET.

Do NOT follow this link or you will be banned from the site!