The ad model that is being disputed is CPM which advertisers typically pay a specified amount for every 1,000 page views or ad impressions.
Unified ECM based in Beverly Hills, California has started a class action lawsuit accusing Facebook with unfair advertising practices.
The case that has been filed in the Californian Northern District Court is Unified ECM, Inc v. Facebook, Inc. and the case was filed on July 27th 2009 and is case number 5:2009cv03430.
Facebook also based in California has been named in the lawsuit filed by Unified ECM for overcharging advertisers for ad space on Facebook’s website. The basic overview of the website is that they claim Facebook is actually overcharging advertisers based on the reported number of consumers that actually view the ads on a daily basis.
The ad model that is being disputed is CPM which advertisers typically pay a specified amount for every 1,000 page views or ad impressions. Using the Facebook advertising platform it is possible to set the amount you want to spend each day and how much per thousand views.
The lawsuit allege that Facebook only offers two options to chose from when buying advertising space, CPC or CPM. The interesting point is that this model is the same as the Google Adwords platform so does that mean Unified ECM is also accusing Google with unfair advertising practices.
The CPC or CPM model is common among most web marketing platforms, only affiliate marketers sometimes offer a CPA model. The CPA model is where you nominate how much you would pay for a lead or a sale can be very expensive but offers a higher ROI.
The other element of the lawsuit is that Facebook is not being proactive enough to monitor or prevent ‘click fraud’. If you are using the CPM model click fraud is not an issue as you not being charged per click. It would be like complaining to a radio/tv station that you believed people were not dealing with the fact that people turned down the volume during ad breaks.
CPM works on the impression or eyeball model, the more people who see or have the option to interact with your ad the more you pay, with Facebook having around 250,000,000 active users that is a large potential audience.
The idea that you can launch a class action lawsuit because you are not happy with a websites advertising model lacks intelligence. This seems more of a marketing stunt on behalf of Unified ECM to get exposure through its press release outlining the legal action they have taken.
I would assume that Unified ECM did not take the time to research their possible audience for the Facebook campaign. So if they failed to use the daily budgets for the campaign and made a generic campaign it is their own fault and not a unfair advertising model, this is a failure to understand the platform not a conspiracy.
If you are thinking of running a similar campaign speak with a web marketing agency or your local digital agency. The benefits of using an agency that understands PPC campaigns is that they can research the likely costs, potential audience reach and also examine your competitors current campaigns.