Meta Makes Billions from Scam Ads

Scam ads hurt legitimate advertisers too…

According to a November report, Meta earns as much as 10% of its revenue from scam ads. That’s upwards of $16 Billion on scams and banned goods.

Now, in Meta’s defense, it’s impossible to completely eliminate scam ads. Meta says that they ban advertisers if they’re 95% certain that they’re committing fraud. Opening that up could mean banning advertisers who don’t deserve it. Otherwise, Meta will increase costs for those suspicious ads they let through.

Is Meta Incentivized?

But you have to wonder if Meta is incentivized to allow these ads. It’s not only that they may have made 10% of their revenue on them. By allowing these ads, it decreases the available inventory for legitimate advertisers. That drives up the costs for everyone — and increases Meta’s revenues.

Of course, Meta has incentive to eliminate them, too. The prevalence of scam ads makes people less likely to act on legitimate ads. As a result, fraud has a clear, direct impact on the rest of advertisers. They could increase costs while making people less likely to act on ads generally, which would make them less profitable.

So, sure, scam ads are obviously bad for users. But this could be really bad for legitimate advertisers, too. It will be interesting to see if this report motivates Meta to take this issue more seriously.