They've actually pulled a bait and switch on small business.<p>First the pages were free and great, then they started to reduce the number of people who'd see your posts (fair enough, not everyone can see every little thing)<p>Then they reduced the % of people seeing posts to 3% and less, and really focussed on getting those page owners to buy ads to maintain their previous view numbers.<p>Maybe page owners are paying for now, potentially reliant on traffic, but I don't think they're going to be happy paying forever when free alternatives will crop up again. The traffic quality is reported as being low (many mis-clicks on mobile). If the profit isn't there then business won't be able to afford to pay in the long run.<p>Maybe I don't want to see posts for 'Jim's oil change' every three seconds, but good content is getting cut away also making FB far more boring.
Facebook Ads are a real shakedown scam, & getting worse.<p>After reading up on other's experience, I ran an experiment last week:<p>I started a stupid comic blog (<a href="http://omgcmon.com" rel="nofollow">http://omgcmon.com</a>). I made a facebook "page" for it too.<p>I posted an link from my stupid comic blog to the facebook "page". I posted the same link to my personal status.<p>The posting didn't even show up in my OWN news feed, unless I changed it from "top stories" to "most recent". (All other posts from me, show up in my "top stories" at least.) My friends & family didn't see it either.<p>But, when I took the same image in the blog post, & put it in facebook as a "Photo", then people saw it, commented, liked, etc.<p>So, it sure does look like Facebook knows that the link was on a "page", & then used it's secret algorithm to suppress it, as it knows that will, over a large population, cause more ad dollars to be spent to boost "pages".<p>So, the money/profit will flow well, but not forever.<p>Run your own experiments if you doubt it. It's not hard to get this data yourself.
I have reasons to believe that Facebook earnings correspond to unstable practice: namely, both brands and games have bad metrics (i.e. uninformative) of their activity, and both are re-considering how their price fan- and user-acquisition. There is a stunning lack of understanding of social network dynamics among Facebook client companies. I have been through a lot of interviews lately, and no one to whom I talked seemed to know basic things like the Friend paradox, avalanche thresholds, or that the first fans are naturally more engaged -- Facebook ad purchase interface doesn’t really help either.<p>Nothing about game session duration, rhythm? Nothing about the thousands of odd Pakistani accounts liking the page of random family restaurants in the North of Ireland?<p>Some people at Facebook know those very well, but as far as I can tell, no one has connected that issue with a Wil-E-Coyote moment: strong sales out of momentum, filling an inflated inventory but widespread skepticism. There is indeed far more ads in the Facebook mobile thread, but almost exclusively for miss-targeted offers (I recently moved to a different country, twice, and I keep seeing things for local apps in a city 2,400 miles away) and for mobile games with Zynga-like gameplay: pay or… well, you can pay too.<p>I’m not sure Facebook is aware of that; I am sure however that Zynga wasn’t, or at least that the people in charge of the financial stability of the company dealt with that issue in an unethical manner. Seeing both a trend and someone to chosen to reinforce it scares me.
Certainly not related to the numbers. They killed it this quarter!<p>They had a NON-GAAP EPS of 34C while estimates were at 24C.<p>That's pretty incredible considering that mobile advertising contributing about 59% of their advertising revenue. That's been the one area that analysts were worried about.
I fully imagine the descent will even more rapid than the rise.<p>When people congregate; advertisers follow seeking the <i>staggering</i> ROI of the early marketers on the platform.<p>The platform, under shareholder pressure, will accept as many ads as it can until the platform is so saturated the customers leave and the ad ROI plummets. Advertisers are normally last to arrive at the party and also late to leave...<p>I recently saw a photo that demonstrated Facebook has an 8/1 content ratio. For every 1 meaningful piece of content a user is subjected to 8 ads including sidebar + newsfeed. If you include the horizontal scrolling for mobile adverts it rises to 13/1.<p>I think this party just hit it's peak. I deleted my FB a month ago, have not really missed it and a few of my friends have followed. Anecdotal evidence admittedly but no one did it in the usual "I am out!". The deletions were more of a <i>shrug</i>. Personally I find that the most emphatic indictment; when people have just grown bored of your platform.
i sent a link over their newly acquired IM service... and now all my ads are for the company owning that link.<p>for one side I'm impressed at their speed in incorporating that new window into my privacy. ...or maybe the selling price was so high because that was already a feature? anyway, on the other hand, I'm unimpressed by either their inventory of ads or ability to classify the content they know i know.<p>if they showed me things relevant to that link it would be interesting. they just flooded me with ads for something i might even own already. its like the cheap ad networks on desktop. see one item at amazon, now all sites in the world will show you that item. they just spent billions to race the mobile ads to the bottom from the get go.
I am short, but congrats on a great quarter! Enjoy it while it lasts. I still doubt the company will exist by 2025, but I've been wrong before so who knows.
What I don't understand. How do these figures justify a $70 share price ? Companies tend to be valued at 15 * revenue, on large aggregate.<p>With these earnings their PE ratio will go from 72 to 57, assuming the stock price doesn't increase. If this stock deleverages at the same speed as google stock did, over 2 years, the share price will be $35-$30 by the end of the year ...<p>If the pe ratio gets in line with S&P 500 "normal" pe ratio of 15 (actually more like 10-15, but recently it's been nearer 15 than 10), facebook is only worth $17 per share.<p>Now the default argument is "but growth", so I fit a third degree curve to their earnings. So I fit a second-degree curve to their eps (this assumes it's on an exponential growth trajectory, quite generous I would say), and at what point would their valuation become justified at standard S&P 500 ratios ? Q1 2017. This is assuming FB's exponential growth holds up. That's not as bad as I feared it would be, but still it's pretty bad.<p>EPS curve for facebook:
0.005 x^2 - 0.0015 x + 0.12 (x is measured in number of quarters since Q2 2012. Data from streetinsider.com)
<i>The world’s largest social network has been on an acquisition tear this year, effectively moving to transform itself into a tech portfolio company.</i><p>>Interesting take on things ...
The headline should read, "Facebook earnings gain as they insert 82% more ads".<p>There's got to be a point where it just gets too saturated for users, just like Myspace did. Maybe not this time?