Facebook Reaches New Highs As Money Laundry Spins

Although Facebook's desktop platform is no longer providing the revenue stream that some platform investors came to expect, and even though the whole shebang is a very thinly veiled 21st century Pravda, reports are in that speculators in the jewel of the USG's social media crown have driven the firm's stock price to new heights on the back of "mobile" advertising revenues.

As smartphones, tablets, and the in-between "phablets"1 come to replace laptops for the majority of the world's "connected" denizens, advertisers are following suit by shifting their marketing expenditures to the non-desktop platform known as "mobile".2 This trend, combined with the emerging market-wide recognition of the ineffectiveness of search engine optimisation, as well as the increasing popularity of desktop browser ad-blocking plug-ins, have conspired to force the hollow remains of American "industry" towards the only non-television-based advertising platform remaining. Given that there's still too much money sloshing around in the fiat world – and to the extent that it needs a home, any home at all, and to the extent that the laundry has to go somewhere – how could marketers not choose Facebook, seeing as it's the most obvious and the most unassailable3 choice ?

So it is that Facebook's total revenue rose from USD $ 3.85 billion in Q4 2014 to USD $ 5.84 billion in Q4 2015 and that the portion of advertising revenue generated from the "mobile" side of their business grew from 69% to 80% of total revenue in that period, translating to a "mobile-only" revenue increase of 74% year-over-year.

Facebook inc. now claims 1.59 billion monthly active users, which, when measured against a market capitalisation of THREE HUNDRED BILLION UNITED STATES DOLLARS,4 yields an expected lifetime economic value of each user at a lofty USD $ 188.70, or approximately four orders of magnitude higher than experts suggest. Sorry for your loss.

  1. Think iPhone 6S Plus, Samsung Note, etcetera. 

  2. This is a strange label when you consider that all personal computers are in point of fact "mobile" and that the only difference between a phone and a desktop computer is relative ease and relative convenience of transportation. This is not a trivial matter, but nor is it uniformly true, and therefore nor is it absolutely true, that some internet-connected devices are "mobile" and others aren't. They all are, but perhaps that's too much nuance for the folks wearing skinny jeans, sipping "field-roasted" "bespoken" coffee, and blowing vapes in the world's various "agencies" dedicated to such market segmentation.  

  3. When you're calling the ad spending shots for a large firm, the kind that spend tens and even hundreds of million on advertising every year, unassailable "accountability" is the name of the game. 

  4. Given a share price of $105.90 per share, which happens to be the after-hours trading figure at this time.  

7 thoughts on “Facebook Reaches New Highs As Money Laundry Spins

  1. I would think "active monthly users" is a bit misleading. If you think about the average Facebook user, they likely log in at least once per day. I'd love to know the difference between active monthly users versus active daily users is. I'd wager it would make this all the more laughable.

    • – 1.04 billion daily active users on average for December 2015
      – 934 million mobile daily active users on average for December 2015

      Call it 65% of [l]users are on fb everyday.

      • I don't suppose you know how FB defines what an "active user" actually is? It's probably safe to assume it's merely the act of logging in, that'd be my guess anyway, gotta pad those stats! Amusingly 1.59m active users sounded far more believable than 1.59b.

        • Caz, excellent question. Below is the relevant section of Facebook's 10-K filing to the SEC from January 27, 2016 [emphasis added for quick-scan lulz] :


          The numbers for our key metrics, which include our daily active users (DAUs), mobile DAUs, monthly active users (MAUs), mobile MAUs, and average revenue per user (ARPU), as well as certain other metrics such as mobile-only DAUs and mobile-only MAUs, are calculated using internal company data based on the activity of user accounts. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world.

          For example, there may be individuals who maintain one or more Facebook accounts in violation of our terms of service. We estimate, for example, that "duplicate" accounts (an account that a user maintains in addition to his or her principal account) may have represented less than 5% of our worldwide MAUs in 2015. We also seek to identify "false" accounts, which we divide into two categories: (1) user-misclassified accounts, where users have created personal profiles for a business, organization, or non-human entity such as a pet (such entities are permitted on Facebook using a Page rather than a personal profile under our terms of service); and (2) undesirable accounts, which represent user profiles that we determine are intended to be used for purposes that violate our terms of service, such as spamming. In 2015, for example, we estimate user-misclassified and undesirable accounts may have represented less than 2% of our worldwide MAUs. We believe the percentage of accounts that are duplicate or false is meaningfully lower in developed markets such as the United States or United Kingdom and higher in developing markets such as India and Turkey. However, these estimates are based on an internal review of a limited sample of accounts and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that appears inauthentic to the reviewers. As such, our estimation of duplicate or false accounts may not accurately represent the actual number of such accounts. We are continually seeking to improve our ability to identify duplicate or false accounts and estimate the total number of such accounts, and such estimates may change due to improvements or changes in our methodology. Our data limitations may affect our understanding of certain details of our business. For example, while user-provided data indicates a decline in usage among younger users, this age data is unreliable because a disproportionate number of our younger users register with an inaccurate age. Accordingly, our understanding of usage by age group may not be complete.

          Some of our metrics have also been affected by applications on certain mobile devices that automatically contact our servers for regular updates with no user action involved, and this activity can cause our system to count the user associated with such a device as an active user on the day such contact occurs. The impact of this automatic activity on our metrics varies by geography because mobile usage varies in different regions of the world. In addition, our data regarding the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location. These factors may not always accurately reflect the user's actual location. For example, a mobile-only user may appear to be accessing Facebook from the location of the proxy server that the user connects to rather than from the user's actual location. The methodologies used to measure user metrics may also be susceptible to algorithm or other technical errors. Our estimates for revenue by user location and revenue by user device are also affected by these factors. We regularly review our processes for calculating these metrics, and from time to time we may discover inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical metrics. We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated. In addition, our DAU and MAU estimates will differ from estimates published by third parties due to differences in methodology. For example, some third parties are not able to accurately measure mobile users or do not count mobile users for certain user groups or at all in their analyses.

          The numbers of DAUs, mobile DAUs, MAUs, mobile MAUs, mobile-only DAUs and mobile-only MAUs discussed in this Annual Report on Form 10-K, as well as ARPU, do not include users of Instagram or WhatsApp unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook. In addition, other user engagement metrics included herein do not include Instagram or WhatsApp unless otherwise specifically stated.

  2. The last paragraph should have "1.59 billon" not "1.59 million". Or maybe my calculator is broken?

    • It's been corrected after consultation with the author. I haven't been on Facebook in years so I have no idea about the scale.

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