Facebook Inflated Video Metrics, Upsetting Advertisers And Marketers

Major advertisers and marketers are "upset" with Facebook Inc FB after the social media company disclosed it vastly overestimated the average viewing time for video ads on its platform.

According to The Wall Street Journal, Facebook said in a post on its "Advertiser Help Center" that the metric it uses to count as a video view is artificially inflated because it only factors in video views of more than three seconds.

Publicis Groupe, an ad buying agency that has spent roughly $77 billion in ads on behalf of marketers throughout 2015, was told by Facebook in late August that it may have overestimated average time spent watching videos by between 60 and 80 percent.

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WSJ added that a source familiar with the matter confirmed that GroupM, the ad buying unit of WPP, was also contacted by Facebook to discuss the discrepancy.

Facebook said it will introduce a new metric to resolve the issue. In a statement made to WSJ, the company said it "discovered an error in the way we calculate one of our video metrics" and that the "error has been fixed."

Nevertheless, shares of Facebook appear to be reacting to the downside as the stock was trading lower by nearly 2 percent early Friday morning at $127.77.

Investors have reason to be concerned if the new revelations will prompt marketers to re-examine their decision on how much it will now spend on Facebook compared to other video ad sellers, including Twitter Inc TWTR.