The news is out. Not only has Facebook reported its best earnings to date, it also managed to surprise investors with a bumper return on its quarter (resulting in a 10 per cent increase in share price) and dispel any suggestions that it might be dying any time soon.
The Q4 numbers are hard to ignore –
- Total revenues: $2.59bn (up 63 per cent on Q4 2012)
- Advertising revenues $2.34bn (up 76 per cent on Q4 2012)
- Monthly active users: 1.23 billion, up 16 per cent year on year
- Mobile monthly active users: 945 million, up 39 per cent YOY
- Mobile ad revenue was 53 per cent of total ad revenue
- Net income: $523m, up from $64m
- Revenue for the full year 2013 was $7.87bn, an increase of 55 per cent YOY
Those numbers are not to be sniffed at.
But the key line item to look at there is the 53 per cent of total ad revenue was derived from mobile advertising. To see why that’s so significant, you only need to look at this chart that demonstrates how much advertising makes up of Facebook’s total revenue –
It’s fairly safe to say that in the two years that it was first mooted that perhaps Facebook had a ‘mobile problem
’ it has turned the ship around completely and has actually, and completely on purpose, become a mobile-first company. “I think it’s inarguable that Facebook is a mobile-first company,”
– Facebook’s chief financial officer, David Ebersman.The story of how this mobile-first
attitude happened has been well documented
and really, it should come as no surprise. Keeping that in mind, the trend of announcing THE END of all things Facebook has never been stronger. Click bait is click bait, but when there’s no real/verified data to back up any of the claims that are made, week in week out, why bother? So come on everybody! All aboard the Facebook is dying train! Next stop, BS-town!Facebook Myth 1: ‘Teenagers say goodbye to Facebook’Source: The Guardian, 10 November, 2013
This entire story was based upon the recent growth of messaging apps combined with one line
from Facebook’s Q3 earnings report which, while it may not have been the wisest of statements, was certainly taken out of context and blown widely out of proportion. The line you read in the press was: "We [did] see a decrease in daily users specifically among younger teens."But the full transcript reads as follows [emphasis
mine]: “I want to say a few words about youth engagement on Facebook. As we’ve said previously, this is a hard issue for us to measure because self-reported age data is unreliable for younger users. So we’ve developed other analytical methods to help us estimate usage by age. Our best analysis on youth engagement in the US reveals that usage of Facebook among US teens overall was stable from Q2 to Q3. "But we did see a decrease in daily users specifically among younger teens. "We won’t typically call out such granular data especially when it’s of questionable statistical significance given the lack of precision of our age estimates for younger users. But we wanted to share this with you now since we get a lot of questions about teens. We’re pleased that we remain fully penetrated among teens in the US. Our monthly user numbers remain steady and overall engagement on Facebook remains strong. We’ll continue to focus our development efforts to build products that drive engagement for people of all ages.
" – Source: Facebook
.While you cannot question the numbers driving messaging apps, you can take issue with the validity of an out of context earnings statement.Incidentally, if you type the first statement into Google, we get nearly 200,000 results. Bad news travels fast. Facebook Myth 2: ‘Young users see Facebook as ‘dead and buried’Source: The Telegraph, 27 December, 2013
A ‘comprehensive’ and ‘extensive’ study revealed that Facebook is ‘dead and buried’ to teenagers. There is so much wrong with this headline I could write a whole other article on it. Fortunately the BBC already has
. Turns out it wasn’t true. It was a headline (as the research professor has confirmed
) taken out of context, and written by a journalist. Sidenote: Google ‘Facebook dead and buried’ - 3m search results. Facebook Myth 3: ‘3m fans leave Facebook in 3 years’Source: Community engagement agency, iStrategy, 15 January, 2014
Where do we start? First off, the iStrategy report does not prove that teens are deserting Facebook; it simply proves that the ad platform serves up 3m less potentials than it did three years ago. As clarified by iStrategy Labs itself – “Many have commented on the fact that “Teens” (age 13-17 in this post) as we recorded in 2011 have now grown into the 18-24 year old demographic. While that’s true, the primary point of this post was simply to draw attention to the fact that Facebook’s Social Advertising platform shows 3 million fewer addressable 13-17 year olds today compared to 2011.”
So they haven’t left, they’ve just grown up (and not been replaced). Given that Facebook, as a product, was originally set up for college students (the 18-24 demographic) this is unsurprising. Using the same data from the same study you see staggering growth across all other age ranges: 25-24 up 32 per cent, 35-54 up 41 per cent, 55+ up 80 per cent. But hey, I guess this isn’t news. Many sites ran the iStrategy piece, from Mashable to the Daily Mail. Each adding its own twist on this ‘story’. It hints at something, but cannot prove anything. Not discounting the fact that this report only covers users in the US (home to only 25 per cent of the world’s Facebook users).Facebook Myth 4: ‘Facebook is about to lose 80 per cent of its users’Source: A Princeton ‘report’, as covered by Time
When this paper
first dropped, I read it with interest: an epidemiological model on the growth of social network dynamics? Sign me up! But alas, it was a disappointing read. In fact, I checked the study with an epidemiologist friend of mine, and she said:
- This isn’t peer reviewed.
- It's OK to only validate the first stage as long as you can demonstrate some predictive power with it. Then you can use that to extrapolate further into the future.
- I'd want to see a lot more examples though, because it could be coincidental what they've found so far. This is just one dataset.
To further push the analogy, surely there is something to be said about learning/studying the mistakes of before and adjusting accordingly. If we stick with the virus analogy, then Facebook buying Instagram could be seen as an attempt to develop a vaccine. Right? Right. Anyway, that conversation took place before Facebook published its own response, which is nothing short of hilarious – ‘Debunking Princeton
’The point of all this is simple: Facebook is not dying. It is bigger than ever, in fact
. And while giants of industry come and go, Facebook isn’t going anywhere soon. As for the teen ‘problem’, when asked, the CFO chose his words more carefully this time around: "We don’t have any new data to report today."Two years ago, Facebook had a mobile problem. It knew it, and it solved it. In fact, it keeps getting better it – hello, Facebook Paper
. Today, Facebook might have a teen problem (if that matters at all), and it’s undoubtedly working on solving it as we speak. But if Facebook proved one thing with its last earnings report, it is that it is earning a shed ton of money, the majority of that from mobile (where the kids spend their time these days), and it is here to stay. Not bad for a 10-year-old…