Facebook and Instagram Aren't Refunding Small Businesses Fast Enough After Ad Glitch

Meta Platforms Inc. has started refunding advertisers’ money for a major glitch last month that caused businesses to significantly overspend for their promotions on Facebook and Instagram. But some smaller clients are still waiting to hear whether the social media company will make good on their losses.

Large accounts — those that may spend more than $200,000 per month — often have a direct customer service line at Meta or even a designated account representative to call in the event of an error. The smaller customers, which make up the vast majority of the spending on Meta’s ads, don’t have the same access. Instead, they have been forced to try and recoup thousands of mistakenly spent dollars through chatbots, or to learn about the status of potential refunds second-hand, according to multiple ad agencies that represent hundreds of clients in total.

On the morning of April 23, an error on Meta’s automated ad platform caused some advertisers to spontaneously spend more than intended on Facebook, or to use their budgets in inefficient ways. In the weeks since the glitch, advertisers and their agencies have reached out to Meta for refunds, but the company has responded slowly, if at all. “It’s just radio silence,” said Tyler Garner, head of media buying at digital marketing agency GrowRev.

Some advertisers did receive refunds from Meta beginning on May 12, although the amounts have been doled out inconsistently and it’s not clear why some businesses received more money back than others. In the past, advertisers that spent a lot on Facebook or had personal connections at the company had better luck getting refunded, according to several agency representatives.

“We identified and resolved a technical issue in our automated systems that caused ad delivery issues like faster campaign spending and more variable costs,” Meta said in a statement. “We fixed this as quickly as possible and apologize for any inconvenience it may have caused.”

Meta has more than 10 million active advertisers trying to reach users on Facebook, Instagram, WhatsApp and Messenger. During the pandemic, as reduced store traffic meant small businesses became even more reliant on social media to reach customers, Meta also reduced its use of human contractors whose job it was to answer filed complaints. The company hasn’t fully rebuilt that capacity and is instead depending on artificial intelligence chatbots to provide users answers wherever possible. Later this month, the company plans to lay off more full-time employees in its business departments.

The results of cuts to customer service have shaken confidence in the company. Small advertisers rely on Facebook ads to perform consistently and efficiently. If a small advertiser spends $5,000 on ads, they might earn back $10,000 in sales, said Barry Hott, an independent advertising consultant who has worked with brands like Microsoft, Harry’s and AT&T. But if one day the advertiser only makes back $5,000, then “basically, you just got robbed by Facebook,” he said. And a smaller brand will have “almost no voice,” he added.

It’s a tumultuous time for Meta’s advertising business. In the past year, the tech giant’s ad sales have been squeezed by an uncertain economy and a change in Apple’s iOS privacy policies that made promotions less effective. The pressure on revenue led to three straight quarters of sales declines, as well as two major rounds of layoffs and a company-wide “efficiency” mandate.

Competition for advertisers’ dollars is meanwhile fiercer than ever. Amazon.com Inc., streaming video services like Hulu and social platforms like TikTok are all fighting for their slice of the budgets alongside Meta and Alphabet Inc.’s Google — particularly with small businesses.

Meta’s ad glitch caused large proportions of advertisers’ campaign dollars to be spent all at once with an abnormally fast rate, making their marketing less effective, according to advertising agency executives. One business said it had its worst return on Sunday advertising spending on record, ultimately posting 85% lower sales than the previous Sunday and 76% lower than two weeks prior, one of the people said.

One e-commerce advertiser, who said his entire daily budget of $13,000 was spent in three hours during the glitch with no results, said chat support offered advice on modifying his budget for next time, instead of a path toward a refund. He asked to remain anonymous for fear of retribution from Meta.

“The impact more than anything is the damage it can have in clients’ cash flow,” Garner said. That is crucial for paying for future ads and staff wages while meeting monthly sales targets, he said. He considers Google ads safer for small budgets, as that platform tends to provide refunds within 2 to 3 days of an error. “They’re proactive on the matter,” he said.

Meta’s refund process is known to be a black box, said Arturo Villalobos, whose advertising agency Salvo Media represents clients that spend anywhere from $20,000 to $1.5 million per month across Facebook and Instagram. Refunds for ad glitches are typically cents on the dollar, and Meta doesn’t tell advertisers how it calculates the payout. “There’s no way for us to know, was that the full refund? Or are you giving me a small portion of what was actually inefficiently spent?” Villalobos said. “The sad thing is, we’re just looking at a screen that has a bunch of numbers and we’re kind of relying on Facebook to feed us accurate information.”