Meta AI errors led to advertising budget losses

  • Meta's automated tools significantly inflated CPM, leading to significant overspending of advertisers' budgets.
  • Instead of making everything simpler and more efficient, Meta AI demonstrates unpredictable results and low performance metrics.
  • After cutting staff and replacing them with AI chatbots, advertisers faced worsened support.

On Valentine's Day, the #Meta advertising platform began to seriously malfunction. ErCi Williams, co-founder of a marketing agency from Philadelphia, set up one of Meta's automated tools to run campaigns for two different clients. However, upon checking the platform later that day, he discovered that Meta AI had spent about 75% of both clients' daily budgets in just a few hours.

Williams told The Verge that the CPM in these advertising campaigns was ten times higher than usual. A CPM that on other days was no more than 28 dollars skyrocketed to 250 dollars, much higher than the industry average. Moreover, these ads did not yield any results.

The Verge spoke with several managers who place ads on Meta platforms, who told a similar story. Meta's automated advertising platform spends budgets and fails to deliver results. Small businesses see their advertising budgets wasted, and some say that overspending forces them to abandon advertising on Meta.

"The main problem is that Meta's tools are opaque, and the reporting is scant," wrote Karl Baker, founder of a startup specializing in meditation called Mindfulness Works, in his message to The Verge.

Advantage+ Shopping is part of a suite of AI-supported advertising tools that Meta offers advertisers as a faster and more efficient alternative to self-service advertising campaigns. To create an advertising campaign, advertisers upload their creatives, select KPIs (e.g., to have more customers make purchases on Instagram), and then set a budget cap. In presentations, Meta touted Advantage+ Shopping campaigns as a simple and automated solution for online advertising on the principle of "set it and forget it." But it's not so, marketers say.

Campaigns launched through Advantage+ Shopping have been unpredictable: some days they work well, others not so much. The subreddit r/FacebookAds has become a kind of support service for Advantage+ Shopping customers. Recent topics include: "Advantage+ sucks," "Facebook is broken," and "Is it just me?"

What many marketers considered a one-off malfunction of Advantage+ Shopping has turned into a problem lasting several weeks. "Since February 14, [Advantage+] has repeatedly overspent and ignored the spending limits we set," said Karl Baker.

The issues continued into April. "We have a couple of clients for whom we have completely excluded the use of Advantage+ Shopping due to these anomalies," said Aniruddha Mishra, director of development at Miami-based digital marketing agency Node Media. He noted that for some clients, CPM on Meta was three to four times more expensive than a year ago.

Advertisers say getting explanations from Meta has also become more difficult. Over the past year, Meta has laid off thousands of employees and cut many customer support teams. As reported by Digiday, Meta's ad account management teams have been reduced, and many customer inquiries are now directed to AI chatbots. Several marketers who spoke to The Verge said that after the switch to the new mode of operation, the quality of Meta's support noticeably declined.

"The only thing we managed to get from Meta is an explanation that there was a malfunction on the platform on February 14. They also apologized for the inconvenience caused," said Williams. "They didn't tell us what really happened."

Ultimately, Meta refunded the money for the incident, but Williams explained that it took several attempts to get a coherent response from a company representative. The company returned the money almost a month after the incident.

Although some users suspect that Advantage+ Shopping "glitches" or "is broken," Meta insists that the tool is working as it should.

"I contacted Meta representatives and they told me they were not aware of any malfunction. That's very strange because all my acquaintances working in e-commerce have encountered this issue," said Adriel Darvish in a phone interview with The Verge, CEO of a luxury bag and jewelry sales service called Switch.

As the number of problems only grew, Williams' marketing firm completely stopped using Advantage+ Shopping in early April. Instead, they returned to the old way of running advertising campaigns on Facebook and Instagram manually. Going back to the pre-automated method of operation turned out to be not so labor-intensive.

"Maybe an extra 10-20 minutes to create ad sets, but nothing special," said Williams.

Meta first launched Advantage+ Shopping worldwide in the fall of 2022. A year before that, Apple introduced the App Tracking Transparency feature in iOS 14.5, giving users a simple way to opt out of tracking in apps. At that time, the Meta spoke out against this change, stating that it "will change the internet as we know it" and could endanger the future of many companies.

But Meta's real concern was undoubtedly the threat to its own advertising business, which due to Apple's changes decreased by $10 billion in 2021. Targeted advertising became less effective, as advertisers no longer had access to as much data, and it became more expensive. As a result, many advertisers reduced their budgets.

With automated campaigns like Advantage+ Shopping, Meta promised that AI and machine learning could effectively fill the large gap left by Apple's update.

Instead of tracking users, Advantage+ Shopping uses advertiser's own sales data to help target ads. But in doing so, advertisers effectively hand over the reins to Meta and no longer have access to the targeting management and detailed analytics they had before Apple's privacy changes.

While it took some getting used to with Advantage+ Shopping, the tool gradually improved. Advertisers noticed that their Meta-run AI-managed advertising campaigns were performing well and began investing more budgets into the platform. #Adweek reported that by April 2023, marketers who had left Meta for advertising on TikTok and new opportunities such as CTV, began returning.

Last year, advertisers were doing great with Advantage+ Shopping, especially when Meta began filling it with new features. "Currently, Advantage+ Shopping works so well for most clients that almost 50-70% of their advertising budget goes to Advantage+ Shopping campaigns. Over the past year and a half, Meta has done a lot. They deliver really high metrics if you know how to work with them correctly," says Mishra.

In a letter sent to The Verge on April 15, Meta representative Cash Ayodele reported that the company had fixed "several technical issues" with its advertising platforms. "Our advertising system is performing as we expected. We recently fixed several technical issues and are examining a small number of additional reports from advertisers to ensure the best outcomes for companies using our apps."

In a phone call on April 24, Meta's CFO Susan Lee stated that one Advantage+ Shopping had led to "a 28 percent reduction in the cost per click or goal." Lee said that the Advantage+ Shopping tools are demonstrating "very strong growth" and that they are improving conversion.

But marketers continue to complain about the platform's low performance. "The situation has improved for many, but not for all. It was a very turbulent end of the first quarter and the beginning of the second," wrote media buyer David Herrmann for The Verge.

The sharp increase in CPC and CPM is not only a problem for the Meta company. Online advertising in general is becoming more expensive due to, according to marketers, increased inefficiency, which automation only exacerbates. This significantly complicates life for individual advertisers. And solving this problem may be more difficult than fixing a "glitch" or a few errors in Advantage+ Shopping, especially since the millions that Meta, as well as Google, have poured into automated advertising, have not led to more successful advertising campaigns.

"The effectiveness of campaigns has not increased [over the last three years]," noted Arin Mayelan of Hawke Media.

When advertising campaigns become automated, as, for example, in Meta's Advantage+ Shopping, "everything remains behind the scenes," says Mayelan. Everything from free keywords, free audiences, and low-quality ads. Collectively, this leads to an increase in advertising costs for advertisers. "Inefficiency leads to an increase in CPC and CPM because you create artificial 'competition' where there might not have been any."

Meanwhile, Meta is experiencing no difficulties, and advertising revenues are only growing. On April 24, a #report on Meta's profits for the first quarter was published. The company's advertising business is doing just fine. Advertising revenues were $35.64 billion for the quarter, 27% more than in 2023.

To Publishers

This whole story underscores the importance of monitoring. You can't trust anyone, especially when your business depends on it.

Forecast

AI can also make mistakes. Stories like these raise mistrust among market participants. Platforms will continue to develop their AI tools, as well as work on increasing transparency and control. In addition, such stories may attract the attention of regulators.

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