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Facebook Climbs to 1.59B Users, Beats Q4 Estimates with $5.8B Revenue

170 points by duartetb 11y ago

ChuckMcM 11y ago
It will be interesting to see how much of that revenue came at Google's expense.
- michaelwww 11y ago
  I realize both are competing for ad dollars and can be called competitors for that fact [1], but my own use of them really doesn't overlap. I use FB for interacting with friends and family, I use Google for interacting with the rest of the web. FB's search is not optimal and Google+ is well... it's not something my parents or my kids are going to use. There's not much overlap in my video viewing habits either. I don't sit down to watch a video on FB. How would I even find something to watch on FB? YouTube search is incredibly impressive and satisfying. I'm sure FB and Google would like to take more of each other's markets, but I don't see how they would do that. I may be projecting, but I think most people are satisfied with two great services and don't feel the need for one that does it all. [1] http://www.inc.com/peter-roesler/google-vs-facebook-3-things-to-expect-in-2016.html http://www.inc.com/peter-roesler/google-vs-facebook-3-things...
  - ChuckMcM 11y ago
    The impact would be lower CPCs for mobile ads. People moving their ad spend over to Facebook from Google. One of the interesting myths people used to believe in was that adding a new advertising platform would add more ad dollars to the digital economy. However, the pool of ad dollars is finite, the people who spend them have fixed budgets so when they shift them to new inventory they take them away from somewhere else. And the way that is reflected in Google's number is their auction system for ads gets lower bids as fewer people are competing for various spots.
    - michaelwww 11y ago
      Thanks, I figured I was missing something since I don't know much about the ad business other than what I read about in regards to the impact of ad blocking and efforts such as Brendan Eich's company to mitigate the problem.
- julianpye 11y ago
  Google is all about searching for results and Facebook is all about demography and thus brands. So Facebook is taking a lot of advertising budget to establish brands that used to be for print and television. Simple example: Diapers. By the time you have a baby, Facebook knows that you as a couple are expecting and you will see ads establishing relevant brands. You would never see those ads on Google, because at that time you're not searching for them. This used to be the business of television advertising. So you know the brand Pampers long before you ever think of buying a pack of them.
  - ruddct 11y ago
    You are correct, though it's worth noting that advertising spend as a % of (American) GDP has been constant for a long, long time [0]. FB and Google are probably still competing for money that was previously spent on TV/Radio/Periodicals, but still, everyone's competing for a slice of the same pie. [0] http://www.bloomberg.com/bw/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/bw/articles/2014-03-03/advertisings...
  - Mahn 11y ago
    I'll give another perspective: In my industry at least, Google has become incredibly expensive due to a few unicorns spending ridiculous amounts of money just to put competitors out of the game (because they have the money for that, even if it doesn't make sense from a unit economics point of view, and Google is cool with it). By contrast, Facebook remains very effective for the same kind of goals, at least for the moment. I get the feeling this isn't unique to my industry so yeah, I'd venture to say there is a lot money shifting platforms.
    - msellout 11y ago
      That's a contradiction. If some companies are "spending ridiculous amounts of money" on Google, that's evidence of increased revenue for Google. It's not hard to believe that both Google and Facebook are growing.
  - shostack 11y ago
    Can you elaborate on why you think Google wouldn't know before FB? Many (most?) people don't go posting anything about pregnancy before for ~3 months traditionally, and odds are you are going to be searching for symptoms when you first notice something is wrong health-wise. When a doctor or test confirms you are pregnant, I'd be willing to bet that users are immediately pulling up their favorite search engine to figure out next steps vs. blabbing about it to their BFFs on FB. Now, if you are basing it purely off of carpet bombing people targeting off of demographics, yes, FB probably has more solid data there as it is self-reported and not inferred. But you sure as heck won't get self-reported pregnancy info earlier than Google will know you are interested in it. If anything, I'd argue Amazon would have that data in a similar timeframe if people start looking up pregnancy books. This also entirely discounts the notion that there is 3rd party data sets at play which both Google and FB leverage to enrich their data. All of this is not to say your point on the brand advertising is incorrect--I actually agree with that as the "feed" has become the new television. But definitely do not agree on the specific example cited.
- pawelk 11y ago
  The biggest advertising agency holding WPP spent $1 billion with Facebook and $4 billion with Google in 2015 [1]. Both figures are up compared to 2014, by 56% on FB and by 38% on Google, so the growth of advertising budgets on Facebook was faster, but Google still dominated. What's impressive is that WPP alone brings in around 5-6% of both internet giants revenue. I wonder how the few multinational advertising giants (WPP, Omnicom, Publicis etc) compare to a long tail of local agencies and individual advertisers. [1] http://www.businessinsider.com/wpp-google-and-facebook-spend-2015-2016-1 http://www.businessinsider.com/wpp-google-and-facebook-spend...
jrcii 11y ago
Hopefully for their investors' sake that revenue isn't significantly driven by click fraud, a rumor that's been circulating for years http://thesocialmediamonthly.com/startup-ceo-alleges-massive-click-fraud-on-facebook/ http://thesocialmediamonthly.com/startup-ceo-alleges-massive... * Is anyone aware of evidence of the extent of click fraud on Facebook? I see a lot of discussion about it but not a lot of data.
- tn13 11y ago
  I dont have data but whenever I buy likes on page they seem to come from people who are totally fake.
  - hayksaakian 11y ago
    like fraud and click fraud are two separate issues. like fraud is highly pervasive, there's tons of evidence on it. source: https://www.youtube.com/watch?v=oVfHeWTKjag https://www.youtube.com/watch?v=oVfHeWTKjag click fraud less so. i've run marketing campaigns and you do see some clicks missing in google analytics, but it's not as bad as the like fraud.
  - cubano 11y ago
    You buy likes and then are surprised that they come from totally fake people?
    - cldellow 11y ago
      Facebook has a kind of campaign that is explicitly to garner likes, nothing illicit about it. There are multiple articles about the quality of the demographic you get when you use their official platform. Conspiracy theorists point out that likes are a very weak signal of interest, and thus it's hard to judge if you got good likes or bad likes. Facebook has a conflict of interest in choosing who to show your like ad to: if both Alice and Eve are willing to like you with equal probability, but Eve is less likely to be an engaged fan, Facebook should show your ad to Eve. You got your like, so you're happy, but your content is less likely to organically go viral, because Eve isn't as engaged as Alice would have been. Notably, not all of your fans will see your posts: Facebook no longer guarantees delivery to people who have liked you. Luckily, Facebook will help you run a campaign to target the fans of your page that you just paid to get.
sly_foxx 11y ago
Facebook is the biggest scam for most businesses. 1) They've pulled bait and switch when they decided to charge to reach users that have already liked your page. Most of those users liked your page because you've posted a link to FB on your site. 2) Click fraud is rampant [1] 3) They make money on copyrighted videos + ripping off YouTube content creators [2] [1] https://www.youtube.com/watch?v=oVfHeWTKjag https://www.youtube.com/watch?v=oVfHeWTKjag [2] https://www.youtube.com/watch?v=t7tA3NNKF0Q https://www.youtube.com/watch?v=t7tA3NNKF0Q
- yeukhon 11y ago
  To say Facebook is the biggest scam is too extreme. Click fraud exists on every single platform. Pay a hundred mechanical turk and they can click for you all day long.
- Mahn 11y ago
  I guess it depends on the industry but from my own personal experience, fraud is non-existent if your targeting decently specific (i.e. specific interests).
- arasmussen 11y ago
  Big spenders do a lot of due diligence to make sure that the money they spend is actually giving them a positive return. It's not like businesses just throw millions down the drain and hope it gives them results. Facebook is working great for them and it is not a scam otherwise businesses wouldn't be spending billions on advertising there every quarter.
  - ethanbond 11y ago
    Or, as pointed out in a comment above, everybody is lying to everybody and the only loser is the customer. The customer may still find advertising to be a net win, but they have no clue to what degree it is such.
- AJ007 11y ago
  You are wrong on #1. The biggest con was Facebook selling those "likes" to your competitors. #2 addressed elsewhere #3 YouTube started through copyright violations and continues to benefit from copyrighted content today (if the rightsholders do not try to enforce.)
cft 11y ago
Except that most of Americans between 16-22 (the oldest FB audience) have quit. The lagging indicators are the user acquisition in emergent markets and the revenue. In the case of Blackberry for example, the revenue peaked at least two years after the actual product was dead.
- jacobolus 11y ago
  Do you have further evidence/elaboration about this point?
  - cft 11y ago
    I have several accounts that I set up for research purposes with close to 5000 friends each, mostly 17-25. All friends became inactive in the last 4 years.
    - toomanybeersies 11y ago
      It could be that the people who accept friend requests from randoms with 5000 friends aren't very strongly attached to the service in the first place, and aren't the core market or the bread and butter of FB.
      - cft 11y ago
        No, no- these are the users of our app, when they added these accounts they knew the accounts were associated with our company.
    - hkmurakami 11y ago
      That sounds like you sent random friend requests to strangers (please correct me if I'm wrong). I'd expect that there would be some correlation between users who would accept a friend request from a stranger and the likelihood that they would go inactive.
    - morgante 11y ago
      So you're basing a pretty huge assertion on a tiny and non-random sample?
shostack 11y ago
The big question mark for me is whether FB will be the advertising giant to finally crack the attribution nut. You see, the age old problem of "I know I'm wasting half my budget, I just don't know which half" is still alive and well. These days, we have SO MUCH data about cross-channel attribution that it can be hard to plot a path forward (and that's if you are even aware of this concept and its implications). For those who are savvy, display and video CPMs might seem a bit inflated right now. There is a major opportunity to leverage analytics to prove to advertisers the incremental lift of their display and branding efforts. Dedicated attribution services like VisualIQ, Adometry, and Convertro have been getting snapped up by big advertisers, but so far nothing has really reached the SMB and mid-market level for solution pricing. I'd LOVE to spend more of my budget on FB and display, but when they mix view-throughs in with click conversions by default, that raises red flags. What is the value of a view-through? It is sure as heck not 100% attribution credit, which is what the default would place it at. Attribution is a super deep and very complex subject (and one I'm very passionate about). Getting better visibility is my top priority for 2016 as it is many other advertisers. Structuring proper tests is unfortunately not just a software issue, particularly with smaller businesses with less data as you need to control for many factors. That said, Google has fired the first shots in this fight with their awesome basic attribution tools in GA that they give away FOR FREE. I'm dying to see what they do with their Adometry acquisition and whether they will make that available to the masses. FB has a huge opportunity here and I know they've been making inroads in this area with Atlas, but I'd personally love to see them release "Facebook Analytics" as a direct competitor to Google Analytics, and make a real effort to prove the value of their inventory from an incremental lift/attribution standpoint. I'd LOVE to spend more on branding if I could be more certain of the actual impact it is making to allow me to justify the budget I'm putting towards it compared against more directly measurable options lower in the funnel (like some aspects of paid search, which has its own attribution issues). The tools just aren't there though. If FB can provide advertisers with the tools to more definitively say "this is making you money" and not just "oh, we summed up all these random stats and call it Engagement--look at the shiny engagement metric!" I'm confident they would find advertisers even more willing to open their wallets, shift spend away from the GDN and exchanges, and stop questioning or caring about click fraud since it would be a self-correcting issue (ie. high levels of click fraud would in theory result in lower perceived incremental lift if proper analysis was conducted). If you are at FB and touch Insights or anything related to attribution on Atlas, please dear god contact me--I live right near HQ and would LOVE to have a deep conversation on how to improve this for advertisers.
physcab 11y ago
Here's the thing that most people don't know unless they are in the "industry": * The gaming industry is most likely driving a lot of this growth. I'm sure Machine Zone and Supercell are doing between $5M - $10M a day on FB alone. * FB is re-defining attribution. They want to bring in big brands and are re-defining last-click to "Multi-touch". Their end game ofcourse is to say the reason why you decided to make a trip to Macys is because you first saw Macys content on FB. * FB requires developers to send them analytics when they want attribution for Ads. This means that not only does FB have info about the install, but they have all the data about the usage, in addition to all their demographic data. * FB still is the only reliable source for advanced targeting of ads. This has massive impact on ROI for performance marketers. * FB by far has the best tools for advertisers with so many bells and whistles that resellers like Nanigans can make a healthy margin just by managing the optimization. * FB allows any performance marketer to form a closed loop feedback system. Are CPI's on FB high? Yes. But if you know the LTV of your user (now possible with proliferation of analytics tools) you can afford to bid very high at volume (eg Uber) and still get a great ROI.
- spikels 11y ago
  Pretty sure gaming is NOT where Facebook's revenue growth is coming from. Almost all the growth has been coming from mobile advertising for a couple years now.
  - diziet 11y ago
    To be fair, gaming _is_ a big fraction of mobile advertising
  - physcab 11y ago
    Here's an exercise. Go to the App Store, click on Top Grossing. Out of the 150 apps displayed, how many are gaming-related? I counted 113. Thats 75%. I don't have the charts but you can compare this to a year ago period. My guess is that percentage has grown. This is not an accident.
    - wwwong 11y ago
sinatra 11y ago
I wonder how much of that revenue came from VC-backed startups that just want to acquire a user-base whatever the cost. Mobile app install costs $4+ for iPad and $2.5+ for iPhone. Even at a 100% install to launch rate and a 5% conversion rate, companies need to make $80 per paying users for the numbers to work. This just doesn't seem sustainable to me.
- julianpye 11y ago
  Very interesting figures. Can you share the sources?
- onewaystreet 11y ago
  Most of the app ads you see on Facebook are for games which is how they can justify spending $4+ (the big mobile game companies make billions in revenue).
- physcab 11y ago
  If you run a gaming company, you're most likely tracking everything you possibly can about who is spending in your game. If you are running a facebook campaign, you will buy either on volume (don't care what the price is, just give me the user, ie Uber), ROI (make sure the LTV of the user is less than the CPI), or profit (make sure we're still making money even after apple's cut) Facebook allows you to form a closed loop feedback system. If Uber knows the LTV of a customer is $100 and CPI's on FB are $10, go to the bank and get as many of those customers you can.
miles_matthias 11y ago
At my company we're realizing how great of an advertising channel Facebook is, in the fact that we can immediately narrow down our target audience to people who have liked a certain page. It's just very weird to me that a social network that everyone my age and younger never use. I never, ever post to Facebook and rarely look at it because it's just my family on it. I connect with friends over snapchat and meet new people on Twitter. Meeting new people is nearly impossible on Facebook. Maybe that's why it's such a great advertising platform with such great revenue? Everyone is on it (your whole family joined) and the only way for a company to get your attention is to pay.
- onion2k 11y ago
  There a psychological bias called the "false consensus effect" whereby people overestimate how similar other people are to themselves. It's backed up by things like confirmation bias where you tend to socialise with people similar to yourself so it feels like most people really are like you. The simple reality is that you just don't know enough people to draw any statistically relevant conclusions about society. It may well be the case that none of the young people that you know are on Facebook, but that really only says something about who you know, not about young people's attitude towards Facebook in general.
  - JBReefer 11y ago
    To your point, I'm also younger and have very few friends on Twitter. If anything, twitter is old and full of noise. My friends all use fb, Snapchat and IG
  - miles_matthias 11y ago
    Great point!
flexie 11y ago
So Facebook makes less than $3.7 per user per quarter or some $15 per user per year. Don't anyone find it amazing how little money they make per user (and still have a good business)? The article doesn't say how much time the users spend on FB, but they say that users spend 100 million hours monthly on watching videos. If we assume that's 50% of the time spent on FB, users spend 200 million *365 = 73 billion hours yearly on FB or in average a little less than 50 hours per user. For $15. So roughly speaking, Facebook makes $1 for every 3 hours a user spends.
- hmate9 11y ago
  $1 every 3 hours is pretty good no?
halayli 11y ago
FB stocks up 12% https://www.google.com/finance?cid=296878244325128 https://www.google.com/finance?cid=296878244325128
frik 11y ago
How many of the 1.59B users are still active, at least once a week? Not just have the app installed and receive just notifications but actually open the app or website? Facebook is mainly used by 30+ woman's nowadays, to share their baby, cat and dog photos. And is a huge ghost town with much of the profiles haven't been updated or have posts for multiple years. It's like MySpace in 2010. Facebook (and to some extend Google with its bullish Google+ auto-written posts based on Youtube comments, etc that no one wanted) single handed destroyed/burned the notion of social networks because of pure greed. Yet social network as in 2008/09 (at its peek) were great, than came the broken "newsfeed" that doesn't show all friend updates in chronologic order anymore, but selected featured filtered crap. [I am talking about Facebook the app or website - the social network. Not the messenger app nor WhatsApp nor Instagram]
- TheLogothete 11y ago
  If you bothered to read the article, you would know the answer to your question. All of those 1.59B users login to facebook at least once a month, which are reported separetly from the Messenger users, who are 800M. Imagine how the rest of your musings sound.
aj_nikhil 11y ago
Still very less given the amount and talent of people working there. I see a downhill graph over the years. Next Yahoo in making.
forgotusername2 11y ago
I was wondering what all those bots and fake clicks where about! now we now!
coldcode 11y ago
Apple makes more profit than all of Facebook's revenue times 3. Yet Apple stock goes down and Facebook, which has a price/revenue ratio that makes no sense whatsoever, goes up. Apple makes products people generally love, and Facebook makes money from ad and ad like things which people hate (and eventually will block). I really don't understand the stock market at all.
- pinkrooftop 11y ago
  Apple also provides a dividend
- aembleton 11y ago
  Stock isn't bought just based upon last quarters profits, but on how much investors think can be derived in the long term. Facebook have done better than investors expected. Apple have done worse than investors expected. What makes you think people hate Facebook ads? Facebook ads are the only ones that I have ever clicked on, and then made a purchase. I think they are well targeted and very effective.
danbruc 11y ago
I graphed Google search trends for different platforms [1] a few weeks ago. If Facebook is like the others, it crossed its peak three years ago and is dying ever since, something that matches my personal experience on Facebook. So where does this disparity come from, how can Facebook keep announcing new records while the search trend points downwards for about three years? Did they manage to break free from the correlation? Maybe because of the widespread use of its apps? Does the rise of WhatsApp play a role in the presented numbers? Don't get mislead by the normalization, Facebook has still more than six times the search volume compared to the peak of Myspace. [1] http://i.imgur.com/SGci58n.png http://i.imgur.com/SGci58n.png
- aembleton 11y ago
  * If someone has the Facebook app then they're not going to be heading there via Google. * Instant articles means they get a cut of advertising revenue from external sites such as Daily Mail and New York Times when users click on a shared story * It is plausible that they have improved their ad targeting algorithms so that those who want to see an ad are more likely to see it.
  - danbruc 11y ago
    If someone has the Facebook app then they're not going to be heading there via Google. On the other hand a lot of other searches contribute to the search volume and should track the popularity of Facebook, problems with the app, developers looking for API documentation, discussions of policy changes, people looking for jobs, news about the company and so on. So even if people are using the app the search volume should say something about the popularity. One thing I can imagine though is that a shift from the web to the app might decrease the search volume by such a large amount that it totally obscures the trend of the other kinds of searches I mentioned above.
    - aembleton 11y ago
      I expect most searches are from people typing Facebook into Chrome and hitting Enter. If those people are shifting more and more to the mobile app then they won't be doing that so much. Sure, they'll search if there are problems with the app, or they're after a job but that has got to be less than those trying to access the site.

170 points by duartetb 11y ago

ChuckMcM 11y ago

It will be interesting to see how much of that revenue came at Google's expense.

michaelwww 11y ago
I realize both are competing for ad dollars and can be called competitors for that fact [1], but my own use of them really doesn't overlap. I use FB for interacting with friends and family, I use Google for interacting with the rest of the web. FB's search is not optimal and Google+ is well... it's not something my parents or my kids are going to use. There's not much overlap in my video viewing habits either. I don't sit down to watch a video on FB. How would I even find something to watch on FB? YouTube search is incredibly impressive and satisfying. I'm sure FB and Google would like to take more of each other's markets, but I don't see how they would do that. I may be projecting, but I think most people are satisfied with two great services and don't feel the need for one that does it all. [1] http://www.inc.com/peter-roesler/google-vs-facebook-3-things-to-expect-in-2016.html http://www.inc.com/peter-roesler/google-vs-facebook-3-things...
- ChuckMcM 11y ago
  The impact would be lower CPCs for mobile ads. People moving their ad spend over to Facebook from Google. One of the interesting myths people used to believe in was that adding a new advertising platform would add more ad dollars to the digital economy. However, the pool of ad dollars is finite, the people who spend them have fixed budgets so when they shift them to new inventory they take them away from somewhere else. And the way that is reflected in Google's number is their auction system for ads gets lower bids as fewer people are competing for various spots.
  - michaelwww 11y ago
    Thanks, I figured I was missing something since I don't know much about the ad business other than what I read about in regards to the impact of ad blocking and efforts such as Brendan Eich's company to mitigate the problem.
julianpye 11y ago
Google is all about searching for results and Facebook is all about demography and thus brands. So Facebook is taking a lot of advertising budget to establish brands that used to be for print and television. Simple example: Diapers. By the time you have a baby, Facebook knows that you as a couple are expecting and you will see ads establishing relevant brands. You would never see those ads on Google, because at that time you're not searching for them. This used to be the business of television advertising. So you know the brand Pampers long before you ever think of buying a pack of them.
- ruddct 11y ago
  You are correct, though it's worth noting that advertising spend as a % of (American) GDP has been constant for a long, long time [0]. FB and Google are probably still competing for money that was previously spent on TV/Radio/Periodicals, but still, everyone's competing for a slice of the same pie. [0] http://www.bloomberg.com/bw/articles/2014-03-03/advertisings-century-of-flat-line-growth http://www.bloomberg.com/bw/articles/2014-03-03/advertisings...
- Mahn 11y ago
  I'll give another perspective: In my industry at least, Google has become incredibly expensive due to a few unicorns spending ridiculous amounts of money just to put competitors out of the game (because they have the money for that, even if it doesn't make sense from a unit economics point of view, and Google is cool with it). By contrast, Facebook remains very effective for the same kind of goals, at least for the moment. I get the feeling this isn't unique to my industry so yeah, I'd venture to say there is a lot money shifting platforms.
  - msellout 11y ago
    That's a contradiction. If some companies are "spending ridiculous amounts of money" on Google, that's evidence of increased revenue for Google. It's not hard to believe that both Google and Facebook are growing.
- shostack 11y ago
  Can you elaborate on why you think Google wouldn't know before FB? Many (most?) people don't go posting anything about pregnancy before for ~3 months traditionally, and odds are you are going to be searching for symptoms when you first notice something is wrong health-wise. When a doctor or test confirms you are pregnant, I'd be willing to bet that users are immediately pulling up their favorite search engine to figure out next steps vs. blabbing about it to their BFFs on FB. Now, if you are basing it purely off of carpet bombing people targeting off of demographics, yes, FB probably has more solid data there as it is self-reported and not inferred. But you sure as heck won't get self-reported pregnancy info earlier than Google will know you are interested in it. If anything, I'd argue Amazon would have that data in a similar timeframe if people start looking up pregnancy books. This also entirely discounts the notion that there is 3rd party data sets at play which both Google and FB leverage to enrich their data. All of this is not to say your point on the brand advertising is incorrect--I actually agree with that as the "feed" has become the new television. But definitely do not agree on the specific example cited.
pawelk 11y ago
The biggest advertising agency holding WPP spent $1 billion with Facebook and $4 billion with Google in 2015 [1]. Both figures are up compared to 2014, by 56% on FB and by 38% on Google, so the growth of advertising budgets on Facebook was faster, but Google still dominated. What's impressive is that WPP alone brings in around 5-6% of both internet giants revenue. I wonder how the few multinational advertising giants (WPP, Omnicom, Publicis etc) compare to a long tail of local agencies and individual advertisers. [1] http://www.businessinsider.com/wpp-google-and-facebook-spend-2015-2016-1 http://www.businessinsider.com/wpp-google-and-facebook-spend...

jrcii 11y ago

Hopefully for their investors' sake that revenue isn't significantly driven by click fraud, a rumor that's been circulating for years http://thesocialmediamonthly.com/startup-ceo-alleges-massive-click-fraud-on-facebook/ http://thesocialmediamonthly.com/startup-ceo-alleges-massive... * Is anyone aware of evidence of the extent of click fraud on Facebook? I see a lot of discussion about it but not a lot of data.

tn13 11y ago
I dont have data but whenever I buy likes on page they seem to come from people who are totally fake.
- hayksaakian 11y ago
  like fraud and click fraud are two separate issues. like fraud is highly pervasive, there's tons of evidence on it. source: https://www.youtube.com/watch?v=oVfHeWTKjag https://www.youtube.com/watch?v=oVfHeWTKjag click fraud less so. i've run marketing campaigns and you do see some clicks missing in google analytics, but it's not as bad as the like fraud.
- cubano 11y ago
  You buy likes and then are surprised that they come from totally fake people?
  - cldellow 11y ago
    Facebook has a kind of campaign that is explicitly to garner likes, nothing illicit about it. There are multiple articles about the quality of the demographic you get when you use their official platform. Conspiracy theorists point out that likes are a very weak signal of interest, and thus it's hard to judge if you got good likes or bad likes. Facebook has a conflict of interest in choosing who to show your like ad to: if both Alice and Eve are willing to like you with equal probability, but Eve is less likely to be an engaged fan, Facebook should show your ad to Eve. You got your like, so you're happy, but your content is less likely to organically go viral, because Eve isn't as engaged as Alice would have been. Notably, not all of your fans will see your posts: Facebook no longer guarantees delivery to people who have liked you. Luckily, Facebook will help you run a campaign to target the fans of your page that you just paid to get.

sly_foxx 11y ago

Facebook is the biggest scam for most businesses. 1) They've pulled bait and switch when they decided to charge to reach users that have already liked your page. Most of those users liked your page because you've posted a link to FB on your site. 2) Click fraud is rampant [1] 3) They make money on copyrighted videos + ripping off YouTube content creators [2] [1] https://www.youtube.com/watch?v=oVfHeWTKjag https://www.youtube.com/watch?v=oVfHeWTKjag [2] https://www.youtube.com/watch?v=t7tA3NNKF0Q https://www.youtube.com/watch?v=t7tA3NNKF0Q

yeukhon 11y ago
To say Facebook is the biggest scam is too extreme. Click fraud exists on every single platform. Pay a hundred mechanical turk and they can click for you all day long.
Mahn 11y ago
I guess it depends on the industry but from my own personal experience, fraud is non-existent if your targeting decently specific (i.e. specific interests).
arasmussen 11y ago
Big spenders do a lot of due diligence to make sure that the money they spend is actually giving them a positive return. It's not like businesses just throw millions down the drain and hope it gives them results. Facebook is working great for them and it is not a scam otherwise businesses wouldn't be spending billions on advertising there every quarter.
- ethanbond 11y ago
  Or, as pointed out in a comment above, everybody is lying to everybody and the only loser is the customer. The customer may still find advertising to be a net win, but they have no clue to what degree it is such.
AJ007 11y ago
You are wrong on #1. The biggest con was Facebook selling those "likes" to your competitors. #2 addressed elsewhere #3 YouTube started through copyright violations and continues to benefit from copyrighted content today (if the rightsholders do not try to enforce.)

cft 11y ago

Except that most of Americans between 16-22 (the oldest FB audience) have quit. The lagging indicators are the user acquisition in emergent markets and the revenue. In the case of Blackberry for example, the revenue peaked at least two years after the actual product was dead.

jacobolus 11y ago
Do you have further evidence/elaboration about this point?
- cft 11y ago
  I have several accounts that I set up for research purposes with close to 5000 friends each, mostly 17-25. All friends became inactive in the last 4 years.
  - toomanybeersies 11y ago
    It could be that the people who accept friend requests from randoms with 5000 friends aren't very strongly attached to the service in the first place, and aren't the core market or the bread and butter of FB.
    - cft 11y ago
      No, no- these are the users of our app, when they added these accounts they knew the accounts were associated with our company.
  - hkmurakami 11y ago
    That sounds like you sent random friend requests to strangers (please correct me if I'm wrong). I'd expect that there would be some correlation between users who would accept a friend request from a stranger and the likelihood that they would go inactive.
  - morgante 11y ago
    So you're basing a pretty huge assertion on a tiny and non-random sample?

shostack 11y ago

The big question mark for me is whether FB will be the advertising giant to finally crack the attribution nut. You see, the age old problem of "I know I'm wasting half my budget, I just don't know which half" is still alive and well. These days, we have SO MUCH data about cross-channel attribution that it can be hard to plot a path forward (and that's if you are even aware of this concept and its implications). For those who are savvy, display and video CPMs might seem a bit inflated right now. There is a major opportunity to leverage analytics to prove to advertisers the incremental lift of their display and branding efforts. Dedicated attribution services like VisualIQ, Adometry, and Convertro have been getting snapped up by big advertisers, but so far nothing has really reached the SMB and mid-market level for solution pricing. I'd LOVE to spend more of my budget on FB and display, but when they mix view-throughs in with click conversions by default, that raises red flags. What is the value of a view-through? It is sure as heck not 100% attribution credit, which is what the default would place it at. Attribution is a super deep and very complex subject (and one I'm very passionate about). Getting better visibility is my top priority for 2016 as it is many other advertisers. Structuring proper tests is unfortunately not just a software issue, particularly with smaller businesses with less data as you need to control for many factors. That said, Google has fired the first shots in this fight with their awesome basic attribution tools in GA that they give away FOR FREE. I'm dying to see what they do with their Adometry acquisition and whether they will make that available to the masses. FB has a huge opportunity here and I know they've been making inroads in this area with Atlas, but I'd personally love to see them release "Facebook Analytics" as a direct competitor to Google Analytics, and make a real effort to prove the value of their inventory from an incremental lift/attribution standpoint. I'd LOVE to spend more on branding if I could be more certain of the actual impact it is making to allow me to justify the budget I'm putting towards it compared against more directly measurable options lower in the funnel (like some aspects of paid search, which has its own attribution issues). The tools just aren't there though. If FB can provide advertisers with the tools to more definitively say "this is making you money" and not just "oh, we summed up all these random stats and call it Engagement--look at the shiny engagement metric!" I'm confident they would find advertisers even more willing to open their wallets, shift spend away from the GDN and exchanges, and stop questioning or caring about click fraud since it would be a self-correcting issue (ie. high levels of click fraud would in theory result in lower perceived incremental lift if proper analysis was conducted). If you are at FB and touch Insights or anything related to attribution on Atlas, please dear god contact me--I live right near HQ and would LOVE to have a deep conversation on how to improve this for advertisers.

physcab 11y ago

Here's the thing that most people don't know unless they are in the "industry": * The gaming industry is most likely driving a lot of this growth. I'm sure Machine Zone and Supercell are doing between $5M - $10M a day on FB alone. * FB is re-defining attribution. They want to bring in big brands and are re-defining last-click to "Multi-touch". Their end game ofcourse is to say the reason why you decided to make a trip to Macys is because you first saw Macys content on FB. * FB requires developers to send them analytics when they want attribution for Ads. This means that not only does FB have info about the install, but they have all the data about the usage, in addition to all their demographic data. * FB still is the only reliable source for advanced targeting of ads. This has massive impact on ROI for performance marketers. * FB by far has the best tools for advertisers with so many bells and whistles that resellers like Nanigans can make a healthy margin just by managing the optimization. * FB allows any performance marketer to form a closed loop feedback system. Are CPI's on FB high? Yes. But if you know the LTV of your user (now possible with proliferation of analytics tools) you can afford to bid very high at volume (eg Uber) and still get a great ROI.

spikels 11y ago
Pretty sure gaming is NOT where Facebook's revenue growth is coming from. Almost all the growth has been coming from mobile advertising for a couple years now.
- diziet 11y ago
  To be fair, gaming _is_ a big fraction of mobile advertising
- physcab 11y ago
  Here's an exercise. Go to the App Store, click on Top Grossing. Out of the 150 apps displayed, how many are gaming-related? I counted 113. Thats 75%. I don't have the charts but you can compare this to a year ago period. My guess is that percentage has grown. This is not an accident.
  - wwwong 11y ago

sinatra 11y ago

I wonder how much of that revenue came from VC-backed startups that just want to acquire a user-base whatever the cost. Mobile app install costs $4+ for iPad and $2.5+ for iPhone. Even at a 100% install to launch rate and a 5% conversion rate, companies need to make $80 per paying users for the numbers to work. This just doesn't seem sustainable to me.

julianpye 11y ago
Very interesting figures. Can you share the sources?
onewaystreet 11y ago
Most of the app ads you see on Facebook are for games which is how they can justify spending $4+ (the big mobile game companies make billions in revenue).
physcab 11y ago
If you run a gaming company, you're most likely tracking everything you possibly can about who is spending in your game. If you are running a facebook campaign, you will buy either on volume (don't care what the price is, just give me the user, ie Uber), ROI (make sure the LTV of the user is less than the CPI), or profit (make sure we're still making money even after apple's cut) Facebook allows you to form a closed loop feedback system. If Uber knows the LTV of a customer is $100 and CPI's on FB are $10, go to the bank and get as many of those customers you can.

miles_matthias 11y ago

At my company we're realizing how great of an advertising channel Facebook is, in the fact that we can immediately narrow down our target audience to people who have liked a certain page. It's just very weird to me that a social network that everyone my age and younger never use. I never, ever post to Facebook and rarely look at it because it's just my family on it. I connect with friends over snapchat and meet new people on Twitter. Meeting new people is nearly impossible on Facebook. Maybe that's why it's such a great advertising platform with such great revenue? Everyone is on it (your whole family joined) and the only way for a company to get your attention is to pay.

onion2k 11y ago
There a psychological bias called the "false consensus effect" whereby people overestimate how similar other people are to themselves. It's backed up by things like confirmation bias where you tend to socialise with people similar to yourself so it feels like most people really are like you. The simple reality is that you just don't know enough people to draw any statistically relevant conclusions about society. It may well be the case that none of the young people that you know are on Facebook, but that really only says something about who you know, not about young people's attitude towards Facebook in general.
- JBReefer 11y ago
  To your point, I'm also younger and have very few friends on Twitter. If anything, twitter is old and full of noise. My friends all use fb, Snapchat and IG
- miles_matthias 11y ago
  Great point!

flexie 11y ago

So Facebook makes less than $3.7 per user per quarter or some $15 per user per year. Don't anyone find it amazing how little money they make per user (and still have a good business)? The article doesn't say how much time the users spend on FB, but they say that users spend 100 million hours monthly on watching videos. If we assume that's 50% of the time spent on FB, users spend 200 million *365 = 73 billion hours yearly on FB or in average a little less than 50 hours per user. For $15. So roughly speaking, Facebook makes $1 for every 3 hours a user spends.

hmate9 11y ago
$1 every 3 hours is pretty good no?

halayli 11y ago

FB stocks up 12% https://www.google.com/finance?cid=296878244325128 https://www.google.com/finance?cid=296878244325128

frik 11y ago

How many of the 1.59B users are still active, at least once a week? Not just have the app installed and receive just notifications but actually open the app or website? Facebook is mainly used by 30+ woman's nowadays, to share their baby, cat and dog photos. And is a huge ghost town with much of the profiles haven't been updated or have posts for multiple years. It's like MySpace in 2010. Facebook (and to some extend Google with its bullish Google+ auto-written posts based on Youtube comments, etc that no one wanted) single handed destroyed/burned the notion of social networks because of pure greed. Yet social network as in 2008/09 (at its peek) were great, than came the broken "newsfeed" that doesn't show all friend updates in chronologic order anymore, but selected featured filtered crap. [I am talking about Facebook the app or website - the social network. Not the messenger app nor WhatsApp nor Instagram]

TheLogothete 11y ago
If you bothered to read the article, you would know the answer to your question. All of those 1.59B users login to facebook at least once a month, which are reported separetly from the Messenger users, who are 800M. Imagine how the rest of your musings sound.

aj_nikhil 11y ago

Still very less given the amount and talent of people working there. I see a downhill graph over the years. Next Yahoo in making.

forgotusername2 11y ago

I was wondering what all those bots and fake clicks where about! now we now!

coldcode 11y ago

Apple makes more profit than all of Facebook's revenue times 3. Yet Apple stock goes down and Facebook, which has a price/revenue ratio that makes no sense whatsoever, goes up. Apple makes products people generally love, and Facebook makes money from ad and ad like things which people hate (and eventually will block). I really don't understand the stock market at all.

pinkrooftop 11y ago
Apple also provides a dividend
aembleton 11y ago
Stock isn't bought just based upon last quarters profits, but on how much investors think can be derived in the long term. Facebook have done better than investors expected. Apple have done worse than investors expected. What makes you think people hate Facebook ads? Facebook ads are the only ones that I have ever clicked on, and then made a purchase. I think they are well targeted and very effective.

danbruc 11y ago

I graphed Google search trends for different platforms [1] a few weeks ago. If Facebook is like the others, it crossed its peak three years ago and is dying ever since, something that matches my personal experience on Facebook. So where does this disparity come from, how can Facebook keep announcing new records while the search trend points downwards for about three years? Did they manage to break free from the correlation? Maybe because of the widespread use of its apps? Does the rise of WhatsApp play a role in the presented numbers? Don't get mislead by the normalization, Facebook has still more than six times the search volume compared to the peak of Myspace. [1] http://i.imgur.com/SGci58n.png http://i.imgur.com/SGci58n.png

aembleton 11y ago
* If someone has the Facebook app then they're not going to be heading there via Google. * Instant articles means they get a cut of advertising revenue from external sites such as Daily Mail and New York Times when users click on a shared story * It is plausible that they have improved their ad targeting algorithms so that those who want to see an ad are more likely to see it.
- danbruc 11y ago
  If someone has the Facebook app then they're not going to be heading there via Google. On the other hand a lot of other searches contribute to the search volume and should track the popularity of Facebook, problems with the app, developers looking for API documentation, discussions of policy changes, people looking for jobs, news about the company and so on. So even if people are using the app the search volume should say something about the popularity. One thing I can imagine though is that a shift from the web to the app might decrease the search volume by such a large amount that it totally obscures the trend of the other kinds of searches I mentioned above.
  - aembleton 11y ago
    I expect most searches are from people typing Facebook into Chrome and hitting Enter. If those people are shifting more and more to the mobile app then they won't be doing that so much. Sure, they'll search if there are problems with the app, or they're after a job but that has got to be less than those trying to access the site.