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Why Facebook Is Gearing towards Ad Transparency

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Updated

Protecting brand reputation

Facebook (FB) is keen to ensure that publishers meet high standards to earn money from the content they distribute through its social media platform. The company’s advertising monetization eligibility standards, released in mid-September, are designed to guarantee advertisers of their brand safety.

Alphabet’s (GOOGL) Google was rattled early this year when several big brand advertisers in Europe (EFA) and the United States (SPY) pulled their ads from YouTube over videos that presented a risk to their brand reputation.

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Transparency in ad reporting

While brand safety is a critical issue in the digital advertising age and Facebook is not taking chances with it, there is another simmering issue around online advertising: ad reporting transparency.

Calls have intensified for online advertising providers Facebook, Google, and Twitter (TWTR) to make the ad performance measurements they share with marketers more transparent. Facebook has, on several occasions, apologized to advertisers for giving them inaccurate ad measurements.

Third-party ad auditing

Such ad reporting errors have led advertisers to press for third parties to audit online ads to ensure more transparency in ad reporting. At a Goldman Sachs industry conference, ad-buying agency WPP reiterated the need for third-party auditing of online ads.

As it expands its video business, Facebook may see increased pressure for independent ad tracking on its platform. As shown in the above chart, advertising is Facebook’s primary source of income.

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