Is Facebook Overstating Its Audience Reach?

Facebook is facing new questions about its audience-measurement estimates — but the social-media giant says the latest hubbub isn’t cause for marketers to be concerned.

Facebook appears to be dramatically overstating its potential to reach certain U.S. user age segments, according to Brian Wieser, senior research analyst at Pivotal Research Group, who published his analysis in a note Tuesday.

According to Facebook’s Ads Manager, the social powerhouse claims it is able to reach 41 million people ages 18-24, 60 million 25-34-year-olds and 61 million 35-49-year-olds. The problem? For the first two age brackets, the figures are well above July 2016 estimates from the U.S. Census Bureau, which calculated about 31 million adults 18-24 and 45 million ages 25-34. (The Census Bureau estimated 61 million adults 35-49, the same as Facebook’s claimed reach.)

In a statement, a Facebook rep said the audience-reach estimates in Ads Manager “are not designed to match population or census estimates.” The estimates are based on multiple factors, including user behaviors, user demographics and location data. “We are always working to improve our estimates,” the rep said.

Moreover, the company pointed out, the demographic-segment totals in Ads Manager aren’t used to transact business — no ads are bought or sold based on those estimates.

Still, any inaccurate data from Facebook is bound to attract attention, given that the company over the past year has disclosed several errors in how it reports certain metrics. For example, it discovered measurement bugs including one that overstated the “organic” audience of Facebook Pages, and last fall revealed that it had overstated the average time spent viewing videos for two years.

Facebook already pulls in a huge amount of ad revenue, reporting $9.3 billion in sales for the second quarter. Now it has launched a bid to sweep up more advertising dollars that would have traditionally gone toward TV, with the rollout in the last week of the Watch video guide to U.S. users and original shows from partners.

“While we think the company is positioning itself to compete for TV budgets with TV-like content, we think that the large marketers who dominate TV advertising will only do so after applying significant scrutiny to the metrics associated with Facebook campaigns,” Wieser opined.

To Wieser, questions about how digital-media players like Facebook report metrics reinforce the value of third-party measurement services from vendors including Nielsen and comScore. The analyst maintained a “sell” rating on Facebook, with a year-end 2017 price target of $140 per share on the stock.

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