LinkedIn Sued Over Ad Performance Fraud

Synergy RX PBM LLC (Synergy) filed suit against LinkedIn Corporation on Thursday, alleging that flaws in its advertising system led advertisers to both purchase more ads and pay more for those ads than they otherwise would have absent the deception. Synergy is seeking to hold the defendant accountable for alleged abuses of California’s False Advertising Law, negligence, fraud, and accounting violations.

The complaint explains that LinkedIn, wholly owned by Microsoft Corporation, charges advertisers for displaying ads to its members. Reportedly, ad sales are one of the professional networking company’s primary revenue streams. The filing states that advertisers pay for ads based on three metrics: each time an ad is displayed (impressions), each time a video ad is watched for a minimum duration (video views), or each time an ad is clicked (clicks).

LinkedIn allegedly sells ads through real-time online auctions wherein advertisers compete to show their ads to LinkedIn members, every single time a member logs in. The complaint explains that “[b]ids in each real-time auction are based on what different advertisers are willing to pay for a particular metric (i.e., impression, video view, or click), and then based on those bids and other factors, LinkedIn’s software programmatically determines (within milliseconds) which ad to show to a particular LinkedIn member and at what price.”

Allegedly, a LinkedIn-provided interface called Campaign Manager enables advertisers to both measure ad performance and “make informed decisions concerning ad spending.” The interface reportedly displays impressions, video views, and clicks per ad, in addition to derivative metrics. The complaint notes that advertisers “do not have access to the systems necessary to audit and verify the data underlying the metrics displayed in Campaign Manager…”

The filing recounts that on Nov. 12, 2020, LinkedIn announced that measurement errors discovered in August 2020 “inflated metrics tied to impressions and video views for more than two years, ‘potentially impacting’ over 418,000 advertisers during that timeframe.” For example, LinkedIn measured video views that continued to play off-screen and tallied impressions when members simply rotated their phones, Synergy explains.

The plaintiff argued that while LinkedIn could have taken earlier remediation steps, it did not, because the inflated metrics boosted its profits. Allegedly, while the defendant advised that it had issued credits to potentially impacted advertisers, it has never disclosed how it determined which advertisers were impacted or how credits were calculated.

Synergy contended that to itself and other similarly situated purchasers, ads appeared to perform better than they actually did for those two years. Because improved ad performance leads advertisers to buy more ads and pay more for them, Synergy argued, advertisers were doubly injured by buying an increased number of ads and paying higher prices for them than they would have absent LinkedIn’s inflated metrics.

In addition, the filing claims that LinkedIn has made other ad measurement errors too. According to credible expert and other publicly available sources, the complaint explains, “LinkedIn’s platform is plagued by fraudulent activity, including large volumes of invalid clicks.”

Synergy is seeking to certify a class of people and entities who paid for LinkedIn ads from Jan. 21, 2017 until the filing of the complaint. The plaintiff seeks not only monetary relief, but also injunctive relief, namely that the court require LinkedIn to implement auditing measures to ensure that its system promptly detects and fixes errors causing metric inflation.

Synergy is represented by Pomerantz LLP and Wohl & Fruchter LLP.