Author Topic: FB - Facebook  (Read 183452 times)

Liberty

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Re: FB - Facebook
« Reply #590 on: April 09, 2018, 05:59:18 PM »
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LR1400

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Re: FB - Facebook
« Reply #591 on: April 09, 2018, 06:20:24 PM »
I despise these idiot politicians who run their mouths and do largely nothing. Who are they to tell companies how they need to be run.

I’m more pro - Trump than 99% of the people on here but he is also an idiot (obviously). What I really despise is his discussion regarding Amazon and “leveling the playing field”. Did any politician discuss this when Wal Mart was crushing every Mom and Pop in America?

If Trump tries to regulate Amazon in some manner, he is nothing more than an anti-capitalist.

In my view Facebook will slide through this like all other companies that have had issues with data.

cameronfen

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Re: FB - Facebook
« Reply #592 on: April 09, 2018, 06:30:03 PM »
1) The company has put up extremly high growth numbers over the past few years. First, via increasing ad loads. Second, via increasing pricing. This is a trend that is not sustainable, and sooner rather than later will impact advertiser ROIs negatively. This is antithetical to the typical idea of a "quality business" like Amazon or Google, who typically extract cost advantages from their scale and then pass that on to the customer in the form of lower pricing. Instead, Facebook extracts growth at the expense of their customers rather than passing the benefits along.

Fair point regarding ad load. But you're misunderstanding "increasing pricing." You have to understand that FB ad prices are not set by FB, they're set by demand. And demand is set by the advertisers' ROI.

The nature of ad auction means that as more and more advertisers enter the ecosystem, the more each advertiser (in general) has to pay in order to outbid the other advertisers. In fact, as ad platforms like Adwords and FB Ads grow, advertisers over the years have had to increase their bids simply to keep their volume stable. Think about that for a moment. This means that (assuming same product and sales funnel), the advertisers must sacrifice their ROI just to buy the same number of clicks. What does this mean? It means that all the monetary benefits from the advertising accrue to the ad platform simply because advertisers keep outbidding each other.

Let me give you a simple example.

For the keyword "car insurance" in Google, imagine there's only 1 advertiser bidding on this term in US. What will he pay? Likely $0.01 since that's the lowest allowed bid on Adwords and there's no competitors. After spending some money, this advertiser realizes each visit originating from the ad with keyword "car insurance" brings in an incremental profit of $10. This is obviously amazing since he's capturing most of the incremental profit ($9.99 in this case and only has to share $0.01 with Google).


Then imagine an identical competitor with identical economics also decides to advertise on Google. He understands search advertising is extremely profitable and is happy to outbid the first advertiser by bidding $0.02. He's hence outbidding the original advertiser and captures all the traffic. His incremental profit is now $9.98 per click.

The first advertiser then realizes he's being outbid by his competitor and decides he'll increase his bid to $0.03 because he'd rather profit $9.97 rather than lose all the traffic and not profit at all. This increased bidding war goes on and on until both players successively increase their bids until such point that most of the incremental profit per click accrues to the ad platform (Google) in the form of increased click prices simply because the bidding war in online ad ecosystem is a race to the bottom for the advertisers.


This dynamic intensifies as more and more advertisers join the bidding pool and the more they optimize their funnel the wring out more revenue from each click. This underlines the fact that as ad platforms become more efficient, all the incremental benefits are passed back to ad platforms in the form of increased ad prices without meaningful benefits to any advertiser in particular. For example, if inflation or lax regulations increase profitability of insurers, their profit per customer will increase. This will increase their ability to pay more per customer acquisition/click. But since EVERYONE's profitability goes up, EVERYONE will increase their bid prices but no particular advertiser will capture any incremental benefits from inflation or lax regulations. The only entity to benefit is the ad platform.


Hence, the overall revenue per user gets a boost from these 3 things:
1. Increased competition (more advertisers entering the game)
2. Increased efficiencies/conversion rate from click to sale (this involves landing page optimization, funnel optimization which drives more sales from same number of clicks).
3. Increased prevalence of eCommerce (more users get comfortable purchasing online).

Also, read this: https://www.wired.com/2015/09/facebook-doesnt-make-much-money-couldon-purpose/


This is good.  However one point, these auctions are designed so that people bid their actual reservation wage.  For example from a one bidder case, there is a reservation wage so a single bidder can't get an ad for cheap, and if you are the winning bidder, and you outbid the reservation wage, you pay the 2nd highest bid (i.e. the reservation wage for a single bidder), so you have no incentive not to bid as high as you are willing to pay.  So theoretically no matter what anyone does or if you have more bidders, unless the new bidders have a higher maximum wage (which is probably small as there is a large population already bidding), generally you will not get more per ad. 

cameronfen

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Re: FB - Facebook
« Reply #593 on: April 09, 2018, 06:38:14 PM »
Related to Siddharth's point, I have heard complaints from business owners with Facebook pages that they are being "forced" to advertise (for products, events, etc.), even if they could promote themselves adequately based on their own organic traffic.

Does anyone have first-hand experience of this type of tactic from Facebook?

If this is occurring, does it seem like FB is too aggressively monetizing its user base, and putting people in a position where they would be more than happy to switch to another platform if one were to arise? I guess at the end of the day, all businesses go where the most users/eyeballs are, so as long as FB's policies don't begin to push out users, the businesses advertising will cry foul but still ultimately pay for the ads.

I'm just bringing this point up because Siddharth made it sound so simple and clean and easy, and that this is all about simple supply and demand. Based on some anecdotes I've heard, maybe Facebook has the ability (and perhaps willingness) to exploit its users and force small advertisers to advertise.

Disclosure: Long FB

I started a couple of organization pages and Facebook doesn't allow people to see you pages posts without changing a setting (which is off by default).  Thus basically no one sees an organization pages without paying for it.  Note you can see group posts which are different than organization pages. 

Jurgis

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Re: FB - Facebook
« Reply #594 on: April 10, 2018, 07:09:12 AM »
One way FB could be attacked is if people actually get paid by the social network for being a consumer. There are interesting things going on in Blockchain which makes this possible. See the article below

https://www.nytimes.com/2018/01/16/magazine/beyond-the-bitcoin-bubble.html

This has the added benefit that the data about consumers owned by consumer. But it is doubtful if this ever going to take off.

Vinod

WSJ just posted an article related to this:

https://www.wsj.com/articles/a-better-way-to-make-facebook-pay-1523209483

Techies have an expression for Facebook’s model. It’s “free as in beer”—in the sense of costing no money. You pay in other ways. I propose a simple fix. Let’s flip the whole thing—make it about property rights, 21st-century style. America was built on property rights. Congress can deliberate for 90 seconds and then pass the Make the Internet Great Again Act. The bill would contain five words: “Users own their private data.” Finis.

....

What would the world look like under the Make the Internet Great Again Act? If you upload to Facebook photos from your last beach vacation—though please don’t—you still own them. But if I go to your page, zoom in to see whom you’re drinking with, click on a nearby ad, message you about it, or even “Like” it, that information about me should remain private too. I should still own it. Same for whatever I search on Google or buy on Amazon. I control it.

Facebook would store this info in a virtual locker, and users would control access. The social network already has this data. It simply needs to corral it into two billion virtual lockers. It’d take an overnight hackathon to implement, really. Each user could then share or not.

But if you don’t share, Facebook can’t do its magic and provide a robust News Feed. It will be all cat videos, all the time. Similarly, Google can’t provide pertinent search results, which, like prizes on “The Newlywed Game,” are selected especially for you.

You’re going to want to share. Here’s the good news: Facebook is going to pay you to share. Then they’ll turn around and charge you a similar amount to cover the cost of servers, electricity, coders and Mark Zuckerberg’s hoodies. This way they can still show Wall Street the profits it expects. Worth it? Your call.

...

This is where it gets fun. Facebook would provide a sliding scale for sharing. The more information you deem shareable, the more you earn. In effect, it becomes a revenue-sharing arrangement with advertisers that want to reach you. If you don’t mind the barrage of ads, share away and a virtual wallet inside your virtual locker grows and grows, probably to be spent on new Facebook services like games, music or videos. Real competition in a real marketplace, rather than the charade of today.


I do not think this is easy to implement. Each of the board members would end up owning their comments on the CoBF board, as they would with all consumer reporting firms, etc. Might be easy for the big tech but not for others.

Vinod

This set of ideas have been talked about for ages in the libre tech circles (MIT, Richard Stallman, etc.). IMO beyond the pure idea, there are numerous issues of how to get there and whether it would work from technical, societal and business points of view.

I probably don't want to get into detailed discussion about the possibilities and issues, since ultimately the proof is in the pudding: either someone will figure out a working whole based on the principles described or not. But:

- When you post on the forum, even if you "own" your posting, you are still sharing it with certain audience. Attaching rights to every post and controlling how it's shared/not shared/scraped/forwarded/etc. is complicated and costly. Likely more costly than the "revenue" of your rights in the first place.

...

Gotta go. Maybe more later.  8)
"Before you can be rich, you must be poor." - Nef Anyo

nkp007

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Re: FB - Facebook
« Reply #595 on: April 10, 2018, 07:18:18 AM »
If you don't want your data shared, don't use their services.

Or maybe they should have a $9.99 per month subscription plan for "full-privacy". I bet less than 1% of people would take that option. 

longinvestor

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Re: FB - Facebook
« Reply #596 on: April 10, 2018, 07:45:02 AM »
If you don't want your data shared, don't use their services.

Or maybe they should have a $9.99 per month subscription plan for "full-privacy". I bet less than 1% of people would take that option.

I will bet that there’s way more than 1% pay for full privacy. I personally will pay more than that if what I get is assurance that advertisers don’t see how I use the internet. Also I despise how my pretty daughter’s picture is on a global billboard. We are being naive talking about advertisers and such while the users of FB etc are sitting ducks. There’s likely far uglier things to happen. To the younger, gullible section of society.

fuluvu

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Re: FB - Facebook
« Reply #597 on: April 10, 2018, 08:01:57 AM »
Comment from Oakmark fund
Facebook, Inc.
Facebook controls the world's most dominant social networking platforms, Facebook and Instagram. The company's unprecedented global reach and infamous ad-targeting capabilities have made Facebook one of the most sought after and effective advertising platforms ever created. More recently, a considerable amount of negative press has surrounded the company, as has happened occasionally in the past. Facebook's business has repeatedly withstood these historical setbacks, due in part to its superior products, powerful network effect and track record of out-innovating, replicating or acquiring its would-be competitors.
Without ascribing value to the company's non-earning assets, which include messaging platforms WhatsApp and Messenger (among others), Facebook is trading at less than 15x next year's earnings (excluding net cash), a discount to the S&P 500 Index. This is a very attractive valuation for a company that is projected to grow its revenue well in excess of 20% for the foreseeable future. We believe that Facebook's normalized operating margin is substantially higher than what it reports, as the company continues to invest heavily in a variety of growth initiatives.

LounginMKL

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Re: FB - Facebook
« Reply #598 on: April 10, 2018, 04:54:11 PM »
Orrin Hatch: Now, Mr. Zuckerberg, I remember well your first visit to Capitol Hill back in 2010 ... You said back then that Facebook would always be free. Is that still your objective?

Zuckerberg: Senator, yes. There will always be a version of Facebook that is free ... We’re committed to doing that.

Hatch: Well, if so, how do you sustain a business model in which users don’t pay for your service?

Zuck: (Blinks.) Senator, we run ads. (Smirks.)

 ;D

https://www.theatlantic.com/technology/archive/2018/04/the-strangest-moments-from-the-zuckerberg-testimony/557672/

Liberty

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Re: FB - Facebook
« Reply #599 on: April 10, 2018, 06:37:51 PM »
Orrin Hatch: Now, Mr. Zuckerberg, I remember well your first visit to Capitol Hill back in 2010 ... You said back then that Facebook would always be free. Is that still your objective?

Zuckerberg: Senator, yes. There will always be a version of Facebook that is free ... We’re committed to doing that.

Hatch: Well, if so, how do you sustain a business model in which users don’t pay for your service?

Zuck: (Blinks.) Senator, we run ads. (Smirks.)

 ;D

https://www.theatlantic.com/technology/archive/2018/04/the-strangest-moments-from-the-zuckerberg-testimony/557672/

"Sen: Mr. Zuckerberg, suppose for a second your house was ransacked by thugs, your family was tied up in the basement with socks in their mouths, you try to open the door but there's too much blood on the knob

Z: What is your question?

Sen: My question is about privacy, sir"

https://twitter.com/RobynUrback/status/983800229886644225

"Senator: 'Is it or is it not true that Facebook uses deep unsupervised necromancy to alchemize poke data into consumer cloud big digitalia?'
Zuck: 'What now?'"

https://twitter.com/primalpoly/status/983842359120084997
"Most haystacks don't even have a needle." |  I'm on Twitter  | Interesting podcast on sleep science