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Fears About Effectiveness of Facebook's (FB) Ads Linger; Shares Remain Under Pressure

July 16, 2012 11:08 AM EDT Send to a Friend
A Mashable Business article from Friday on the amount of "fake" accounts and their impact on Facebook's (Nasdaq: FB) advertisements seem to be weighing on the stock Monday morning.

The Mashable piece highlighted a recent investigation by the BBC which showed fake Facebook accounts may be inflating the number of "Likes" on brand pages -- the pages where advertisers hope to get their most valuable clicks.

In the BBC's study, the Corporation set up a Facebook page for a made-up company, VirtualBagel, which offered no products. Soon after the page was created, more than 3,000 accounts had liked the company. Searching through those users, the BBC found an extraordinary number of the fans were, oddly, from either Egypt or the Philippines. Many had suspicious names and most had liked more than 3,000 different brand pages.

As the Mashable article pointed out, Facebook has previously said about 5-6 percent of its account are fake.

The report underscores recent fears by both shareholders and advertisers about the effectiveness of advertising on the world's most prominent social network. Just before Facebook went public in mid May, GM (NYSE: GM) announced it would be pulling its ads from Facebook.

Shares of Facebook pushed below the $30 level for the first time since June this morning, now down about 4 percent to $29.49.




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