The US Media Rating Council (MRC) has warned Facebook it could lose its accreditation since it has failed to address advertisers concerns as there are "deficiencies in how its reports on the effectiveness of advertising on its products, especially video ads.
The concerns arose from an Ernst & Young audit over how Facebook measures and reports data about video advertisements, reports The Wall Street Journal. If Facebook loses this "key seal of approval that gives companies the confidence they are getting what they pay for when it comes to advertising with the social networking giant", it would be troublesome for the company which collected more than $17 billion in ad revenue in the first quarter of 2020.
"The Committee felt strongly that the lack of response and detailed action plans by Facebook within 60 days would lead them to take negative action," according to an MRC letter to Facebook.
"This feedback should be considered a strong message to Facebook,' the letter read.
The ad-measurement watchdog has warned Facebook that it could be denied accreditation based on how it reports on the effectiveness of advertising on its products, specifically its video ads. A Facebook spokesperson said: "These exchanges are part of the audit process. We will continue working with MRC on accreditation, as we have since 2016".
The MRC "is looking for proper accounting for video in a compliant manner," the letter read. Accreditation from the US agency is a signal to advertisers of its trustworthiness.
Facebook declared Q1 earnings this week where revenues rose 18 per cent at $17.74 billion and operating income jumped 78 per cent on higher margins and net income more than doubled.
Facebook now has 1.73 billion daily active users (DAUs) and 2.6 monthly active users (MAUs). The average revenue per user (ARPU) is $6.95. The social networking giant said it counts 2.99 billion monthly users across its family of apps, compared to 2.89 billion in the previous quarter.