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Slide #3 & #5 are super interesting. US/Canada is ~10% MAU but generates ~50% of the overall revenue. I wonder why US generates so much revenue compared to it

Slide #3 & #5 are super interesting. US/Canada is ~10% MAU but generates ~50% of the overall revenue. I wonder why US generates so much revenue compared to its small user base

DisruptiveDave 9y ago
The advertisers are there.
samstave 9y ago
The richest country?
gizmodo59 9y ago
This is true not just for Facebook. Consumer spending per person in US is very high compared to many other countries in the world. https://en.wikipedia.org/wiki/List_of_largest_consumer_markets https://en.wikipedia.org/wiki/List_of_largest_consumer_marke... The businesses that wants to run ads also spend a lot. Its also true for Enterprise Software to some extent. I work for an enterprise software company and despite having had a decade of presence and having been founded in Europe, 70% of our revenue is from USA. While I don't have numbers to back it up, personally from my experience, I see Americans spending a lot (sometimes more credit than savings itself) compared to other developed nations.
- JBReefer 9y ago
  People don't understand how much wealthier the US is than most of the Western World. I realize, and please don't harp on, the fact that healthcare and college aren't free here, but the median German makes the less money than the median income in all but 9 states, and it becomes substantially more unequal when you look at PPP. https://mises.org/wire/if-sweden-and-germany-became-us-states-they-would-be-among-poorest-states https://mises.org/wire/if-sweden-and-germany-became-us-state... Now, if you want to talk about Quality of Life, instead of per capita income, I think there's probably a lot more going for the EU - much lower crime, better infrastructure, less absurd politics, more vacation. I'd definitely live in Nice over Minnesota, and I love Minnesota.
  - adventured 9y ago
    There isn't lower crime in the EU. The EU has between a higher rate or a similar rate of violent crime and crime in general vs the US (varying depending on which country you're talking about). The US rate of crime compares well to most developed nations. [1] The US has a far higher murder rate thanks to its policies on gun regulation. There is not less absurd politics in the EU. It's every bit as crazy over there right now. See: Italy, Hungary, the extreme right in the Netherlands, Greece, Poland, Denmark's recent policies on immigrant ghettos, and on and on. The EU includes a lot of mid-tier countries. Poor people in the US get free healthcare and average welfare benefits that are far higher than the median incomes of all the mid-tier nations in the EU. The OECD better life index has persistently indicated that the US poor live better than the poor in any other nations except for half a dozen or so (such as Canada, Norway, Sweden, Finland). In the US it's primarily the 20% group above the poorest 20%, that do the worst compared to other developed nations - they often make too much money to qualify for free healthcare, their income potential is weak, their education opportunities are weak, they suffer much higher rates of bankruptcy, and they often don't qualify fully for traditional assistance programs (housing or food). [1] https://www.vox.com/2015/8/27/9217163/america-guns-europe https://www.vox.com/2015/8/27/9217163/america-guns-europe [1a] http://news.gallup.com/poll/21346/crime-rate-lower-united-states-canada-than-britain.aspx http://news.gallup.com/poll/21346/crime-rate-lower-united-st...
    - lokopodium 9y ago
      >thanks to its policies on gun regulation Citation needed.
      - qedqfqef 9y ago
        This isn't wikipedia :)
      - older 9y ago
        Read that vox article he linked.
  - deleted 9y ago
    [deleted]
toephu2 9y ago
Things in general are much more expensive in the U.S. compared with other countries. Ads included.
- kazinator 9y ago
  Not in comparison with some countries north of the US, though.
- rando444 9y ago
  Are you comparing to just impoverished countries? Nearly everything is more expensive in Europe due to VAT.
- iamaelephant 9y ago
  That is absolutely not true.
  - toephu2 9y ago
    At the same time, it is not absolutely untrue. I never said every single thing and every single country.
kgwgk 9y ago
Apart from the "domestic" bias, the US has 5% of the world's population and 25% of the money (share of nominal GDP).
bertil 9y ago
If you compare to Europe, most economic factors are similar. There are significantly more ads on television, billboards, even benches, but if anything, that would mean more surface to compete with Facebook. Small and medium companies are more likely to advertise, too -- but again, that doesn’t explain how large the difference is. There is more inequality which means more disposable income overall but not an order of magnitude more. I have not looked at it when I worked for Facebook, so this is pure speculation, but I would suspect that this is due to saturation and data quality: - ads are auctioned off at the equivalent of a second price meaning, an ad buyer pays enough to compensate for the second best offer (compensating for expected conversion); if you look at the revenue as a function of ratio of ads to customers, that means that there is a discontinuity when (targeted) ads become more common than available slots: they bid against each other and not against poorly targeted ads, raising the second price; - ad targeting: there are more specific targeting options in the US; I was very taken aback to see ethic background was one (at the request of minority advocacy groups, actually); I suspect that gender orientation is; a third party was also offering income-level (an option now discontinued after the CA scandal); there are more. Better targeting allows far more valuable ads, but higher value per clic but also a higher conversion, which means a higher auction level (bid * estimated conversion).
sytelus 9y ago
It's just currency exchange rates. Europe has similarly out of proportion revenue.
shadowtree 9y ago
Certain advertising only exists in the US, specifically Pharma DTC ads. If you remove prescription drug ads from US TV, you'd get a similar picture.
- zavi 9y ago
  Source?
RestlessMind 9y ago
Because a lot of things are very expensive in the US compared to other countries (eg. healthcare, school / college education, defense, public infrastructure etc). Basically, any time you see articles complaining about runaway costs about anything in the US, see where that money goes. While some of it goes to shareholders of those companies, a significant fraction also go towards higher salaries and benefits.
corbett3000 9y ago
The reason is because advertisers are willing to spend more targeting a US user who had an average annual income of $50k where as one in India may have $5k. The user is 10x more valuable from a revenue standpoint so the cost you’re willing to bear to advertise to them is 10x etc

Slide #3 & #5 are super interesting. US/Canada is ~10% MAU but generates ~50% of the overall revenue. I wonder why US generates so much revenue compared to its small user base

DisruptiveDave 9y ago

The advertisers are there.

samstave 9y ago

The richest country?

gizmodo59 9y ago

This is true not just for Facebook. Consumer spending per person in US is very high compared to many other countries in the world. https://en.wikipedia.org/wiki/List_of_largest_consumer_markets https://en.wikipedia.org/wiki/List_of_largest_consumer_marke... The businesses that wants to run ads also spend a lot. Its also true for Enterprise Software to some extent. I work for an enterprise software company and despite having had a decade of presence and having been founded in Europe, 70% of our revenue is from USA. While I don't have numbers to back it up, personally from my experience, I see Americans spending a lot (sometimes more credit than savings itself) compared to other developed nations.

JBReefer 9y ago
People don't understand how much wealthier the US is than most of the Western World. I realize, and please don't harp on, the fact that healthcare and college aren't free here, but the median German makes the less money than the median income in all but 9 states, and it becomes substantially more unequal when you look at PPP. https://mises.org/wire/if-sweden-and-germany-became-us-states-they-would-be-among-poorest-states https://mises.org/wire/if-sweden-and-germany-became-us-state... Now, if you want to talk about Quality of Life, instead of per capita income, I think there's probably a lot more going for the EU - much lower crime, better infrastructure, less absurd politics, more vacation. I'd definitely live in Nice over Minnesota, and I love Minnesota.
- adventured 9y ago
  There isn't lower crime in the EU. The EU has between a higher rate or a similar rate of violent crime and crime in general vs the US (varying depending on which country you're talking about). The US rate of crime compares well to most developed nations. [1] The US has a far higher murder rate thanks to its policies on gun regulation. There is not less absurd politics in the EU. It's every bit as crazy over there right now. See: Italy, Hungary, the extreme right in the Netherlands, Greece, Poland, Denmark's recent policies on immigrant ghettos, and on and on. The EU includes a lot of mid-tier countries. Poor people in the US get free healthcare and average welfare benefits that are far higher than the median incomes of all the mid-tier nations in the EU. The OECD better life index has persistently indicated that the US poor live better than the poor in any other nations except for half a dozen or so (such as Canada, Norway, Sweden, Finland). In the US it's primarily the 20% group above the poorest 20%, that do the worst compared to other developed nations - they often make too much money to qualify for free healthcare, their income potential is weak, their education opportunities are weak, they suffer much higher rates of bankruptcy, and they often don't qualify fully for traditional assistance programs (housing or food). [1] https://www.vox.com/2015/8/27/9217163/america-guns-europe https://www.vox.com/2015/8/27/9217163/america-guns-europe [1a] http://news.gallup.com/poll/21346/crime-rate-lower-united-states-canada-than-britain.aspx http://news.gallup.com/poll/21346/crime-rate-lower-united-st...
  - lokopodium 9y ago
    >thanks to its policies on gun regulation Citation needed.
    - qedqfqef 9y ago
      This isn't wikipedia :)
    - older 9y ago
      Read that vox article he linked.
- deleted 9y ago
  [deleted]

toephu2 9y ago

Things in general are much more expensive in the U.S. compared with other countries. Ads included.

kazinator 9y ago
Not in comparison with some countries north of the US, though.
rando444 9y ago
Are you comparing to just impoverished countries? Nearly everything is more expensive in Europe due to VAT.
iamaelephant 9y ago
That is absolutely not true.
- toephu2 9y ago
  At the same time, it is not absolutely untrue. I never said every single thing and every single country.

kgwgk 9y ago

Apart from the "domestic" bias, the US has 5% of the world's population and 25% of the money (share of nominal GDP).

bertil 9y ago

If you compare to Europe, most economic factors are similar. There are significantly more ads on television, billboards, even benches, but if anything, that would mean more surface to compete with Facebook. Small and medium companies are more likely to advertise, too -- but again, that doesn’t explain how large the difference is. There is more inequality which means more disposable income overall but not an order of magnitude more. I have not looked at it when I worked for Facebook, so this is pure speculation, but I would suspect that this is due to saturation and data quality: - ads are auctioned off at the equivalent of a second price meaning, an ad buyer pays enough to compensate for the second best offer (compensating for expected conversion); if you look at the revenue as a function of ratio of ads to customers, that means that there is a discontinuity when (targeted) ads become more common than available slots: they bid against each other and not against poorly targeted ads, raising the second price; - ad targeting: there are more specific targeting options in the US; I was very taken aback to see ethic background was one (at the request of minority advocacy groups, actually); I suspect that gender orientation is; a third party was also offering income-level (an option now discontinued after the CA scandal); there are more. Better targeting allows far more valuable ads, but higher value per clic but also a higher conversion, which means a higher auction level (bid * estimated conversion).

sytelus 9y ago

It's just currency exchange rates. Europe has similarly out of proportion revenue.

shadowtree 9y ago

Certain advertising only exists in the US, specifically Pharma DTC ads. If you remove prescription drug ads from US TV, you'd get a similar picture.

zavi 9y ago
Source?

RestlessMind 9y ago

Because a lot of things are very expensive in the US compared to other countries (eg. healthcare, school / college education, defense, public infrastructure etc). Basically, any time you see articles complaining about runaway costs about anything in the US, see where that money goes. While some of it goes to shareholders of those companies, a significant fraction also go towards higher salaries and benefits.

corbett3000 9y ago

The reason is because advertisers are willing to spend more targeting a US user who had an average annual income of $50k where as one in India may have $5k. The user is 10x more valuable from a revenue standpoint so the cost you’re willing to bear to advertise to them is 10x etc