Walmart is breaking Facebook’s rules for advertisers and overwhelming the social network with spam ads, Rich Greenfield, a media equities analyst at BTIG, wrote in a note to investors seen by Business Insider.
Greenfield cut his rating on FB to “sell” in part because of what he thinks are flaws in Facebook’s mobile ad strategy.
But he also pointed out that Walmart may be flooding users’ news feeds with misdirected likes for Walmart through an abuse of Facebook’s rules.
Put simply, Facebook prohibits advertisers from selling space to third parties. If you want to advertise on Facebook, you must pay Facebook directly. You cannot pay Walmart to host an ad on its Facebook page for you.
Yet Greenfield noticed:
On September 26, Walmart added a post to its brand page for a new ABC television show called, “The Neighbors” … Given that “The Neighbors” is not a product sold in Walmart stores, the only conclusion we can come up with for why this would appear on Walmart’s Facebook page is that it is a form of co-op marketing …
Walmart appears to be selling page posts on its Facebook page to third-parties, the same way a retailer does in a weekend circular.
Rich Greenfield / Twitter
The effect of this, Greenfield believes, is that users hit “like” on the post for “The Neighbors,” but trigger a “like” for Walmart. Thus Walmart ends up with an abundance of likes. (Walmart has 22 million likes, he writes.)
The many Walmart fans on Facebook trigger an over-abundance of Sponsored Stories and friend-triggered Page Like ads, Greenfield says. He calls it a “deception”:
In September 2012, we began to notice how Walmart shifted its Facebook “Like” acquisition strategy to deception, with ads that appeared to run counter to Facebook’s social mission.
… Walmart ads have started to include pictures that have nothing to do with Walmart and when you click “Like,” thinking you are liking the picture as Facebook users do with their friends all the time, you are actually Liking Walmart …
Here’s another example of Walmart apparently doing a co-op ad with Colgate.
Neither Facebook nor Walmart responded immediately to messages requesting comment. We’ll update this post if they do.
There’s another interpretation of Greenfield’s data, of course. Twenty-two million people is a lot of fans. It is one of every fifty users. It is inevitable that most users with more than a few dozen friends will have a Walmart fan in their news feeds. Thus, what Walmart has done is not spam, it’s simply what happens when a successful advertiser fully maximizes its reach within Facebook.
And, of course, as BI revealed a few days ago, Walmart is roughly the ninth biggest advertiser on Facebook.
Disclosure: The author owns Facebook stock.