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It's amazing to me that more of this hasn't taken place. With valuations being driven by total # of users, where is the due diligence to verify these claims?
by beepboopbeep 9y ago
It's amazing to me that more of this hasn't taken place. With valuations being driven by total # of users, where is the due diligence to verify these claims?
- eanzenberg 9y agoValuation is more-so driven by ARPU so all this does is shift ARPU up. Also, there are network effects. It's unknown whether Instagram would be a better service (to investors) if all (half, a quarter, etc.) fake accounts were removed.
- sharkmerry 9y agoIf they know numbers are inflated falsely, arent they duping advertisers than? If using CPM and 50% of impressions are fake, that halves their revenue. Facebook, Twitter, etc, all the same
- ivan_gammel 9y agoI'd guess that it would be traffic-expensive for bots to produce impressions, unless its a distributed botnet or it is a question of survival for bot accounts.
- eanzenberg 9y agoI can't speak for instagram facebook etc. but the industry is continuing to move away from cost per impression (which can be duped by fake accounts) to cost per "action", where action happens further down the funnel (registration, 28-day retention, in-app-purchase, etc.)
- eric_h 9y agoYeah - we worked with a company that bought some traffic on a cost per impression basis relatively recently, and all of a sudden we had a significant burst in errors being reported. The user agent for the devices experiencing the errors were all an old version Firefox. Turns out that version of Firefox was the default for some version of Selenium, and all of that traffic was coming from bots running in data centers. Moral of the story, don't buy cost per impression from any company with anything but the best reputation, because that market is saturated with bots.
- sharkmerry 9y agoHow is that determined though? If I google for a brand name and the first link is an Ad by the company to their website and the first organic link is their website. Does google get credit for that lead if I click the ad vs the organic link? I was going to the brands website either way
- pinky1417 9y agoAssuming fake users don't add to revenue (by not clicking on ads, for example), shouldn't fake users depress ARPU? The numerator remains constant while the denominator increases.
- eanzenberg 9y agoLet's say they are making $100M revenue on 100M users, so ARPU $1 / user. But half of those users are fake. Their actual ARPU is $2 / user but to the outside world it doesn't matter, their $100M revenue hasn't changed.