4 ms·

Fair point. As the adverts are sold in an auction, shouldn't the cost per click reflect the proportion of fraud? E.g. if value of true click is $1 and 50% of

by rfergie 13y ago

Fair point. As the adverts are sold in an auction, shouldn't the cost per click reflect the proportion of fraud? E.g. if value of true click is $1 and 50% of clicks are fraudulent then CPC should surely approach $0.50?

mcherm 13y ago
So long as the fraud is uniformly distributed, that is true. But more significant is the fact that you really can't estimate your costs and benefits correctly when the vendor (Facebook) is giving you incorrect or fraudulent data.
- rfergie 13y ago
  I agree with what you say about the estimation of costs. The benefits to site owners normally take place outside of Facebook and so should be measurable regardless of what Facebook do. In the case where the benefit is within Facebook then the buyer is purchasing likes or similar and then they are in for a world of hurt (in my experience) because of the difficulty in valuing what is being bought. In this case the advertiser presumably knows the value of what is bought. Then valuing a click involves working back from that towards a CPC bid based on the conversion rate of the traffic source. As you say, things get interesting when value is not evenly distributed and are complicated further when incrementality is taken into account. But who said it was meant to be easy?
ameister14 13y ago
That only happens with greater transparency. Essentially, you have to recognize the fraud to evaluate prices properly, and my impression is that most people don't.
- rfergie 13y ago
  That is true. If you only evaluate the effectiveness of advertising based on the number of clicks you get then you will be unable to set bids to take fraud into account.
jimmytidey 13y ago
Yes, assuming everyone prices everything perfectly rationally and knows what they are buying. I expect a good deal of Facebook expenditure is people trying make it work for them, and assuming they are doing it wrong. In the long run perhaps the price will reflect a lower value.

by rfergie 13y ago

mcherm 13y ago

So long as the fraud is uniformly distributed, that is true. But more significant is the fact that you really can't estimate your costs and benefits correctly when the vendor (Facebook) is giving you incorrect or fraudulent data.

rfergie 13y ago
I agree with what you say about the estimation of costs. The benefits to site owners normally take place outside of Facebook and so should be measurable regardless of what Facebook do. In the case where the benefit is within Facebook then the buyer is purchasing likes or similar and then they are in for a world of hurt (in my experience) because of the difficulty in valuing what is being bought. In this case the advertiser presumably knows the value of what is bought. Then valuing a click involves working back from that towards a CPC bid based on the conversion rate of the traffic source. As you say, things get interesting when value is not evenly distributed and are complicated further when incrementality is taken into account. But who said it was meant to be easy?

ameister14 13y ago

That only happens with greater transparency. Essentially, you have to recognize the fraud to evaluate prices properly, and my impression is that most people don't.

rfergie 13y ago
That is true. If you only evaluate the effectiveness of advertising based on the number of clicks you get then you will be unable to set bids to take fraud into account.

jimmytidey 13y ago

Yes, assuming everyone prices everything perfectly rationally and knows what they are buying. I expect a good deal of Facebook expenditure is people trying make it work for them, and assuming they are doing it wrong. In the long run perhaps the price will reflect a lower value.