Here's the thing that most people don't know unless they are in the "industry":<p>* 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.<p>* 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.<p>* FB <i>requires</i> 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.<p>* FB <i>still</i> is the only reliable source for advanced targeting of ads. This has massive impact on ROI for performance marketers.<p>* 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.<p>* 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.
Hopefully for their investors' sake that revenue isn't significantly driven by click fraud, a rumor that's been circulating for years <a href="http://thesocialmediamonthly.com/startup-ceo-alleges-massive-click-fraud-on-facebook/" rel="nofollow">http://thesocialmediamonthly.com/startup-ceo-alleges-massive...</a><p>* 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.
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.
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.<p>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.<p>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.
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?<p>Don't get mislead by the normalization, Facebook has still more than six times the search volume compared to the peak of Myspace.<p>[1] <a href="http://i.imgur.com/SGci58n.png" rel="nofollow">http://i.imgur.com/SGci58n.png</a>
So Facebook makes less than $3.7 per user per quarter or some $15 per user per year.<p>Don't anyone find it amazing how little money they make per user (and still have a good business)?<p>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.<p>So roughly speaking, Facebook makes $1 for every 3 hours a user spends.
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.
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.
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?<p>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.<p>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.<p>[I am talking about Facebook the app or website - the social network. Not the messenger app nor WhatsApp nor Instagram]
The big question mark for me is whether FB will be the advertising giant to finally crack the attribution nut.<p>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).<p>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.<p>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.<p>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.<p>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.<p>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.<p>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.<p>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).<p>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.
Facebook is the biggest scam for most businesses.<p>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.<p>2) Click fraud is rampant [1]<p>3) They make money on copyrighted videos + ripping off YouTube content creators [2]<p>[1] <a href="https://www.youtube.com/watch?v=oVfHeWTKjag" rel="nofollow">https://www.youtube.com/watch?v=oVfHeWTKjag</a><p>[2] <a href="https://www.youtube.com/watch?v=t7tA3NNKF0Q" rel="nofollow">https://www.youtube.com/watch?v=t7tA3NNKF0Q</a>