Facebook's Inflated Metrics: Why It Matters And What Could Happen Next

Shares of Facebook Inc (NASDAQ: FB) were trading lower by nearly 2 percent Friday following a Wall Street Journal report that the social media company overestimated the average viewing time for video ads on its platform.

Advertisers and marketers that rely on Facebook to deliver their message are upset and rightfully so. According to Gadfly's Leila Abboud, Facebook and Alphabet Inc (NASDAQ: GOOG) receive between nearly half of all online ad spending. Naturally, major brands not only want to make sure their advertising spending doesn't go to waste, but they need to know if it's reaching the right audience in the first place.

Related Link: Facebook Inflated Video Metrics, Upsetting Advertisers And Marketers

Abboud pointed out that as it stands, it's "difficult" for advertisers to compare the effectiveness of one dollar spent on Google's platform with one spent on Facebook or elsewhere. In addition, video ads are "particularly expensive" so Facebook's latest disclosure is "doubly troubling."

Abboud suggested Facebook could make itself more open and allow third-party auditors to verify how many people actually view an ad campaign on its platform. However, Facebook "fiercely" guards data on its users so this isn't necessarily a viable option.

Facebook and Google could use their "engineering brilliance" to develop tools that ad agencies and brands can use to track their campaigns. If the companies don't take immediate action to ease concern among advertisers there is a risk that the "break-neck pace" of growth in online video ads could slowdown and force national brands to re-allocate some of their ad spend back to the "tried and true medium of television."