Are Advertisers WASTING Their Money on Facebook?

A recent BBC report suggests companies are wasting money on Facebook (NASDAQ:FB) advertisements that are meant to gain “likes” from members, as many have no real interest in their products, while others have lied about their personal details, and still more user accounts are fake, run by computer programs to spread spam.

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Facebook (NASDAQ:FB) makes money by charging companies a fee to show ads designed to attract new “likes.” Once a user has clicked on a link, the company it belongs to can post content on their news feed, send them messages, and alert their friends to the connection. “Likes” are highly valued by these companies, some of which have attracted millions.

However, the BBC was contacted by a marketing assistant who has warned clients to be wary of the value of these “likes,” and who carried out an experiment that backed up his concerns.

To begin, Facebook (NASDAQ:FB) itself revealed earlier this year that about 5 to 6 percent of its 901 million users might be fake, representing up to 54 million profiles. According to Graham Cluley of the security firm Sophos, “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.

These fake accounts often create large networks for themselves, and “like” a lot of different companies and pages, but they’re not buying anything. A thousand accounts could be run by a single individual.

Of course, a Facebook spokesman said, “We don’t see evidence of a ‘wave of likes’ coming from fake users or ‘obsessive clickers’.” But Cluley noted that it’s in Facebook’s best interest to downplay the problem because the company derives so much of its revenue from advertisers.

Michael Tinmouth, as a social media marketing consultant, has a fair amount of experience with Facebook advertising. He said that, while his clients — mostly small businesses, including a luxury goods firm and an executive coach — garnered a lot of “likes” as the result of their ad campaigns, a closer look showed that many of those “likes” came from countries such as the Philippines and Egypt. Many of those profiles were highly suspicious, with names and details that appeared to be made up, and further, were liking thousands of pages, thus creating false impressions of an ad’s success for thousands of companies.

But Facebook (NASDAQ:FB) offhandedly brushes off what it would have advertisers believe is a non-issue. After one of Tinmouth’s clients refused to pay for his ads on the basis that they had no reached “real people,” Facebook told him that the majority were authentic, and refused to meet him to discuss a refund. Facebook told the BBC that 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.

In defending its ads, Facebook (NASDAQ:FB) said that most advertisers have raised no issue with them, but have rather been enjoying positive results from using Facebook. A spokesman noted that, “All of these companies have access to Facebook’s analytics which allow them to see the identities of people who have liked their pages, yet this has not been flagged as an issue.”

Facebook’s (NASDAQ:FB) stock finished Friday slightly lower at $30.72 per share.

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