Leading Independent Growth Consultant Jack Felstead Uncovers How Facebook Is Costing Businesses Billions World Wide

Jack Felstead, a Leading Independent Growth Consultant with over 14 years’ experience within the advertising industry, has taken an in-depth look at how Facebook could be costing businesses thousands in sales through data-gathering and targeted ads.

United Kingdom - October 7, 2022 —

Businesses around the world are losing billions of pounds to Facebook (Meta) due to its misleading attribution model and dubious targeting methods, often without realising it. Facebook are essentially charging their advertisers a commission for every transaction that takes place on their advertiser’s website, and they’re doing it in a way many find very hard to detect.

When a person uses one or more of these apps, Meta accesses their personal data. From their age, gender and location, through to their payment details, marital status and even as far as the school they attended and where they currently work, Meta collects it all. 

In short: Meta knows everything about all of its users. The same goes for the other tech giants we are all so aware of in our everyday lives. Google (Alphabet), Apple, Microsoft, Amazon, TikTok - the list goes on and on. This isn’t as scary as it sounds, as there are multiple laws, regulations and policies that keep this information safe and guarantee users certain anonymity and security.

However, it also means that these tech giants can use this data to their advantage, in this case, to show us all more relevant ads (for their own financial gain). As we all know, these tech giants have stock prices, shareholders, and financial targets (and some pretty hefty fines) to please.

Here’s the real issue.

Thousands of companies across the world depend on platforms such as Meta (Facebook, Instagram, WhatsApp, Messenger) and Alphabet (Google, YouTube, Gmail) to generate sales and revenue for their business.

All of these websites have one thing in common. They all have the Facebook Pixel installed on them. This means each and every user is “cookied” by the Facebook Pixel upon visiting a website (including many, many other pixels, from other ad/tech platforms and providers). This allows the website (and the pixel provider) to track vital information and data from the user, even after they leave their website.

These pixels also collect users’ data across multiple websites, devices and platforms, sharing information with one another, which essentially means that the pixel provider (in this case, Facebook) knows which sites you’ve visited, how long you’ve spent on them, what you purchased, and other key data points across multiple websites.

With every click, every swipe, every scroll, they gain more insight and data into our lives, what we like, what we don’t, and most importantly, what we want.

Facebook (and all the other ad platforms) will focus on showing ads to the people who are most likely to purchase, such as website viewers and existing customers. This means that the advertising giants charge a fee or "commission" to re-acquire their already secured customers again and again. This is the first issue.

Facebook’s default attribution setting is “7-day click or 1-day view”, which essentially means anyone who has clicked on an ad in the last 7 days or viewed an ad in the last 24 hours will allow any transaction to be attributed to the Facebook platform. The problem here is that Facebook quite often is not the channel responsible for the transaction, and therefore double counting revenue/results. This is the second issue.

The ad platforms lend themselves to showing ads to existing website visitors and customers, as these are more likely to buy. Many of these users may have originally discovered a website via other means and may well have bought from us via other channels, such as organic (or owned) channels, such as organic social media, email or directly via the website itself. Without having to pay a fee or commission to the ad platforms for each transaction.

This essentially means that Facebook (and other ad platforms) leech sales, revenue and margin from their advertisers, eating into their profits, greedily claiming and mis-attributing revenue to themselves, incentivising advertisers to spend more and more in order to generate more sales, when really all that’s happening is advertisers are paying an unnecessary commission to Facebook each time one of their customers purchases on their website.

This can quickly spiral into a black hole of losses, as advertisers see more and more “revenue” or “purchase conversion value” (as Facebook Ads puts it) flowing through into the platform as their business grows and acquires more customers, many of which are being cookied, tracked and reported on as sales in Facebook Ads, enticing the advertiser to “spend more to make more”, until one day the numbers don’t add up and profits have significantly diminished.

Too much dependency on ad platforms with false economies of scale: what I mean by this is, brands optimising towards fictitious sales figures and incorrect data within the ad platforms themselves, which as we’ve just seen above, is essentially made-up data. This leads to the next issues.

Decreased margins and incremental losses: brands are not only paying a premium to sell to their (existing) customers, many are also making a net loss for every single sale they generate from Facebook Ads, as the over-inflated revenue figures aren’t a correct representation of income (while the costs are), actual ROIs and Margins are a lot less than those reported on within the platform, resulting in spiralling losses as advertisers desperately spend more money on ads to try and make up for falling margins and profits.

Not enough focus on organic brand building and growth: many brands become so reliant on ad platforms to acquire and retain customers that they forget to build their own brand by building genuine, original and engaging content, across social media, organic search, offline/in person and via 3rd party collaborations and partnerships, all of which are great ways to build and grow a successful business, which can then be complimented or boosted by ads.

This is a huge global problem, and a big reason for which many businesses go bust, as they chase over-inflated revenue figures with more and more advertising spend, only for this to result in further losses, debts and eventually liquidation of the business.

However, it isn’t all doom and gloom.

Facebook, Google and all the other ad platforms can generate incredible results in terms of new customers, sales, profits and repeat customer purchase, if managed and optimised correctly. Advertisers can harness the power of these tools to their advantage, in order to sustainably grow and scale their businesses profitably, which some do successfully, but sadly many fail to do.

About Jack Felstead:

Jack Felstead is a Leading Independent Growth Consultant with over 14 years’ experience within the advertising industry, having worked with more than 130 brands over the years, including Addison Lee, Hays Recruitment, Lloyds Bank, Rightmove and Made.com. To learn more about why companies are potentially losing billions from advertising on Facebook, visit his website at https://jack.tm/. 

Please send any inquiries to Jack Felstead, based in London, who can be reached by phone on 07432596106 or by email at [email protected].

Contact Info:
Name: Jack Felstead
Email: Send Email
Organization: Jack Felstead
Phone: 07432596106
Website: https://jack.tm/

Release ID: 89082756

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