Facebook's fake account problem
aarongreenspan.com
aarongreenspan.com
Actually, advertisers already know there are lots of fake (Facebook/Twitter/Snapchat) accounts. Likewise, advertisers also know that newspaper & magazine circulation numbers are inflated (even though the circulation #s are "audited"). Ad buyers also know that tv audience sizes are inflated as well.
What matters in the end is if there's a positive ROI on the ad spending. The advertisers can measure the uptick on sales and if the ads worked, they renew their ad spend on Facebook. The majority of Facebook revenues come from repeat business of advertisers who already know about fake users. In contrast, if the majority of Facebook revenue were to come from 1st time ad buyers that were easily fooled by fake accounts, that's when the false user count would drastically affect revenue.
I'm the last person to defend Facebook but just wanted to highlight how advertisers think. For the Facebook ponzi scheme to fall apart, the ads have to stop working. This has happened before. In the 1990s, advertisers were buying Yahoo banner ads. But after the initial novelty of naive web surfers clicking on them, advertisers quickly realized banner ads were worthless. As a result, Yahoo revenues plunged.
Often even when the advertising account is directly held by the advertiser there is an intermediary managing the ad spend.
And the intermediary is incentizived to spin the numbers as best they can.
This would make logical sense. BUT! it turns to not be the case. Larger accounts: Pepsi, Johnson&Johnson, Tmobile, etc tend to just take a massive budget and blow it on ads. They don't necessarily care about the ROI or click tracking. They just want to shove banners in front of people's faces before the quarter ends. What is nuts -- is that these large accounts (we used to call it dumb money) are almost all of the ad revenue. Accounts that care about click ROI tend to be low budget -- that is why facebook/google will push these people into self service ad portals.
Agencies would hire me late in the process, when most of the campaign was specced out (as some silly app on a page). I saw many times that the campaign wouldn’t really be that viral etc. But the design had already been nailed down and it was my job to make it happen.
So what they would do is just buy 50,000 likes and maybe get some organic action. They showed the results, the guys at the brand showed the results to the giys upstairs, everyone seemed happy.
It was one of the things that made me realize current social media platforms were about fake or shallow online engagement, and gave me the impetus to start Qbix
Many have "totemic" advertising where they think slapping their name everywhere will be what gives them success when they are already well known and widespread enough that people wouldn't forget about them if they stopped advertising tomorrow. Brand awareness is a thing but it seems overhyped - especially when it forgets the downsides of obnoxious advertising.
If as the old joke the moon was painted a cocacola logo that would give brand awareness in perpetuity but it would piss off a lot of people rightfully.
Well, sure. They are going for brand awareness. There's an entire field of study around it.
Large accounts are not enough to keep FB and the like afloat. The small accounts do care about conversion rate, etc.
Small businesses care about ROI in the abstract, but are generally so time strapped just running their business that they barely have time to even set up attribution or measure ROI beyond "I spent this much and it kind of seemed like I got more business".
Pepsi cares about making you read the word "Pepsi" over and over until you buy one, but you don't buy them from pepsi.com, you buy them at every restaurant/store you go to.
Major multinationals are sophisticated enough to correlate their ad campaigns with product sales. And they have the resources to run numerous ad campaigns simultaneously in multiple regions and iterate on the campaigns that work. Smaller players are less able to do that, and are forced to rely more on metadata like click through rates because they can't see the bigger picture.
From what I've seen, the big brands don't really know the ROI of their ad spending. They allocate X% to digital, Y% to outdoor, Z% to TV, etc. Then they sub-allocate across channels within each category. It's not really about ROI.
And smaller advertisers don't have much in-house capability to measure ROI. Instead they rely on Facebook's own analytics.
Only a handful of companies I've seen actually build their own analytics, measure customer acquisition cost, and match acquisition cost to lifetime value for specific customer cohorts.
The smaller firms that do their own analytics invariably discover that 95% of the traffic from "paid social" Facebook ads is low quality, high churn, with deeply negative ROI. And it's impossible to isolate the 5% high quality, low churn, positive ROI traffic and just pay for that.
It's true that "seriously investing" in Facebook ads is much more involved than the equivalent investment in search ads, but it's absolutely false that the traffic from Facebook ads is definitionally low quality.
In general, last-click methods will substantially under-value FB and over-value Google. This occurs because you see an ad on FB, don't click, but search to get back to the website, and click on a Google ad.
I've found, that for a lot of b2c businesses, FB provides extremely good ROI. Google is much better for b2b though.
If by "perform better" you mean "generate traffic" then I agree with you. Facebook ads really do result in a lot of clicks.
And if you're running a political or awareness campaign, maybe that's what you want. But it's hard to measure ROI for this kind of campaign except by comparison with other traffic sources.
On the other hand, if you're selling a product or service, and you track narrow cohorts from prospect through conversion, repeat buy, defection and churn, you can compare total acquisition cost of the cohort with LTV of the cohort.
Regardless of the product or service, I usually see CAC >> LTV at the cohort level.
Within a cohort, usually < 10% of customers have CAC <= LTV, but it's nearly impossible to target this subset in advance, so negative ROI dominates the cohort.
The old "I know half of what I spend on advertising is wasted but the problem is I don't know which half" still applies, despite all the promises of digital advertising.
I am taking the Ponzi scheme here refers to numbers of users? Because for Facebook's Client, it is obvious that Ads is working and bringing a positive ROI. And these ROI are not paid out directly by Facebook ( which could easily distort the number ) but results measured through other channels. Which means from Facebook's clients perspective it is not a Ponzi scheme at all, as there is nothing to lose from its Client.
As far as the account fraud is concerned, I've wondered about this throughout the tech industry for pretty much my whole career. Most companies I've worked for have done all kinds of things to pad usage and retention stats in order to appease investors, ranging from ethically innocuous to "holy shit I need to start looking for a new gig". Online advertising in particular has been the worst at this in my professional experience.
What's being communicated to the advertiser isn't the whole truth: it's a selectively, surgically crafted subset of the truth. The first time I saw "The Big Short", I couldn't help but think about how similar the ad company I worked for behaved like the credit rating agencies. We knew that if our reporting showed that we were ineffective, we'd lose customers, so we did all kinds of things to make the reporting look good.
The accusation that one of the largest companies in the world is doing pretty much the same thing doesn't surprise me at all.
Maybe advertisers know what they’re getting. Or maybe they think they know but are actually willfully ignorant of something important because it goes against “common knowledge”.
Without some kind of third party auditing it’s impossible to tell, and I haven’t seen anything like that from Facebook.
We do know the companies that have cut advertising too much have lost market share. However when you have a lot of ads it is hard to figure out which ad made the difference.
Several companies have tried to fill that role online, but not to much success.
It's worse than that: Facebook has little short-term financial incentive to reject third parties who proliferate fake FB profiles.
Do people really not evaluate return on ad spend against revenue?
In this case the client saw a direct link between marketing and revenue and I'm not sure why they would care if some of the views were from fake accounts. Views on the bus stop ad might be from someone homeless or other unlikely purchasers.
"Facebook reported advertising revenue at $16.6 billion for the final quarter of last year, up 30 percent year-over-year."
I guess all these companies are idiots for advertising on Instagram and facebook (I find this totally hard to believe)
My violin for investors getting screwed is much smaller than that for consumers getting screwed. (Oh wait, I have Amazon stock. Crap!)
If this person wants to short facebook because they don't think it will maintain earnings 26 years or whatever P/E multiple it is currently trading at, that's fine.
The simple fact is that companies can grow and evolve. When Cisco got started, they sold switches. Eventually people stopped buying that switch, so they made a different one. Then they saw that people needed routers. And wifi. And teleconference.
FB is far from a static company with an unchanging platform - definitely not a ponzi scheme, unless you consider every company that funds current expenses with expected growth a ponzi scheme. I'm going to take a stance on the author; he is a nut job.
https://newsroom.fb.com/news/2009/05/facebook-and-think-comp...
>Starting in August 2003, Think released a web based student portal called houseSYSTEM through a Harvard student group. This software was designed to make life easier for students, faculty, and alumni. By September 2003, houseSYSTEM featured a section (devised and implemented by Greenspan) called “The Universal Face Book” (sometimes called “The Face Book”).
Which is an odd claim because I was under the impression that "face books" weren't an original concept.
Even if you could prove that Facebook is filling the gaps between new users and churned users by creating fake accounts, you also have to draw a line between those fake accounts and the company's bottom line.
Fake accounts don't buy products, so if advertisers are making decisions off of CAC, numbers potentially inflated by fake accounts (reach, clicks, engagement, etc.) are secondary.
Facebook's ad power comes from their egregious data collection and lack of privacy concerns. The more they know about you, the more relevant your ads will be and the more likely someone seeing your ad will be to buy. And if advertisers can draw a line that says "if I spend $50 on Facebook ads, I'll increase my bottom-line line $100", they'll spend money until it's no longer profitable to do so.
That said, it's not like all Facebook advertisers are acting rationally in that manner. I don't know what % of Facebook revenue to coming from unsophisticated advertisers, so it's possible that they could be making a lot of money from people focusing on fuzzy metrics like reach.
Billions of dollars don't get spent for years on end without an ROI.
How much ACTUAL evidence is there for this?
Take Amazon for instance... they know everything I have bought from them ever and employ some mega-smart people but the number of times I buy something and they then recommend either absolute shite or the same damn thing is not an insignificant number.
Another thing is if I am an advertiser and FB says "your ad was seen by 20 million people", how can I dispute this? It's a closed system.
I am sorry... but from my comfy armchair position I'm calling shenanigans on mass-data collection in advertising being able to move the profitability needle in a measurable way.
Edit: Added a bit more stuff
How many people see ads on tv, and buy the thing they saw right away? You guessed it, it is probably less than a percent.
There are so many impressions in the world, from billons of users. You cannot expect each of them to do meaningful conversions. On a super off the cuff calculation, assume each user see 100 ads a day, 2b users makes it 200b impressions. If each user generously converts once a day, that is 1%. If they convert every other day, it is 0.5% per impression.
I particularly left clicks out went straight to conversions. Usual flow goes like this: query, matched query, impression, click, conversion... The funnel is super large and drop offs are huge.
They're always going to say it works.
The purpose of all the data collection/targeted advertising/remarketing, is to increase the efficiency of these ads, and to increase the threshold when it goes from 'works' to 'doesn't work'.
To put it another way - I can't think of many businesses where showing ads for 1 cent / 1000 impressions would not be worth it. I can't think of many businesses where showing ads for $1000 / 1000 impressions would be worth it. Depending on the business, there's some inflection point between those two numbers. More targeted advertising makes the implicit promise that the inflection point for <your particular business> is higher, then in an untargeted advertising platform.
Even if it weren't, I still don't see the incentive. If you don't think that it matters what your secret sauce actually is, why use mass data collection rather than something more popular?
Still though, if Facebook has solved the "50% of my ad spend works, I just don't know which 50%" issue for companies like Mercedes Benz and Coca Cola then that would be mighty impressive.
Or are you really arguing that >$500B businesses like Google and FB are complete fraud?
Advertising isn't fraud. Neither is data collection. It's just unfortunate. I wouldn't even be surprised if many Google and Facebook employees agree it's unfortunate. They're probably thinking: what else exactly can we do to sustain all these non-paying users?
It's really not even the data collection that bothers me so much as the fact that it's being used for such a... dumb purpose, I guess. The best minds of our generation are dedicating their life's work and all of their brainpower to thinking about how to get people to see or click more advertisements. What a waste.
What I have issues with is using masses of data to persuade someone to buy something having any more significant ability to make them part with their cash than doing it contextually.
I realise I said "measureable effect" and I kind of meant that in my original statement but I also mean measurable enough that my privacy is traded for an extra fraction of a percent.
By way of example, lets say a contextual banner ad at the top of an article for the new Hyundai i30 Fastback N (I just bought one of those :) with a discount code to buy one might persuade 10% of people to click and 10% of them to buy. (Illustrative figures, don't throw your back out over their accuracy)
If adtech companies hoover up data across the web about my buying habits, browsing habits, sexual habits etc. can they legitimately say they can make a measurably larger percentage of people buy that car (or handbag, shoes whatever)?
And if so, what kind of numbers? Is it 10.1%? 30%?
And is that trade-off worth me allowing them to do that?
That's my issue with ad tech.
Alcohol companies don't want to waste their advertising money on people who belong to a region that doesn't consume alcohol. Car companies don't want to advertise to the poor with bad credit - by contrast scammy used car dealers want to advertise to those with bad credit and not reach the rich.
Of course there is a real downside to this: you will miss someone who should be a target because they look like the type of person is not. The person who just left his restrictive religion. The poor person who is starting what will turn out to be a successful business. Thus big companies often to have a component of ad budget that reach everybody without concern for who buys - just to make sure they don't completely miss someone worth targeting.
The people who use ads effectively are buying pay per click and measuring the real conversions to measure effectiveness. Bots don't buy the products after they click through, but the real clicks often do. (For some categories you can get as high as 10% conversion rate to a real sale from real clicks that you buy because ad targeting on platforms like Facebook and Amazon is really, really good. If your ad is good and your product is good then the ad targeting will get your ad in front of the right people a lot of the time.)
If you are smart you don't pay for impressions, you pay for clicks and conversions, and you measure how many of those clicks convert into sales to make sure you are coming out net positive. Sure there are always going to be some fake clicks but there are still enough real clicks that convert to make it worth it. A bit of click fraud is just the cost of doing business.
Lets say I'm selling a product that has a 20% profit margin. I might be willing to pay up to 10% of my profit margin on ads if the increased number of real conversions that result will more than double my sales, allowing me to make more money overall than I would have otherwise.
There are definitely a lot of people out there who are foolishly wasting money on buying impressions, but there are also tons of people making ludicrous amounts of money from well targeted ads that convert into increased sales of their product
So yea, people look at things like reach, and view through conversions, and it would be very hard not too or they might not have the means to do something more sophisticated. Fake accounts undeniably puff of numbers for these people, and they should be taken to court for not giving a shit about that fact.
In general, it will be extremely difficult to run accurate tests on FB (or indeed Google) ads without using some of their infrastructure, as these platforms can balance users appropriately in terms of likely response to your ads (for instance, ensuring that both ads are shown to people with approximately the same click probability).
Without this, you run the risk of making bad decisions because one ad got served to users who were far more likely to convert.
Of course you should definitely run your own tests, but I wouldn't completely discount the platform's tools as they do have advantages which are impossible for you to replicate (i.e. balancing users in terms of response rates in each condition).
I believe that there were rumours of using bayesian analysis in the future, but I believe it's a two-sided p-value based on the differences in your chosen outcome.
Reasonably simple, and mostly effective.
If FB isn't one of the lowest channels (platforms) for CAC that is greatly exceeded by LTV (or even <3 mo breakeven), then it isn't a channel you use for that product!
Facebook and Google are both advertising companies. That is how they make money so naturally that is also where a lot of their R&D spend goes.
Imagine you're Coca-Cola. You have an on-line ad budget for this quarter. Where should you spend it? Probably the places that have the most reach: Google and Facebook. Do you know how many cans of Coke or other drink brands you will sell based on these ads this quarter? No. Is there any way for you to figure it out? No. All you know are the numbers Facebook tells you. And those numbers look pretty good. This is how "sophisticated" ad buyers work.
It's actually far easier for a tiny business to measure the conversation rate between clicks and actual purchases. Big ad buyers throw stuff at the wall to see what sticks, and they rarely bother truly measuring because that's often impossible.
The entire ad industry is based on fuzzy metrics. Within that fuzz is an awful lot of room for fraud.
To answer directly : of course you can measure how effective your FB ads are. Pick two markets with similar demographics and a timeframe. Run FB ads in one market as an experiment and traditional media ads in another market as a control. If sales increase in the experiment market vs the control that is strong evidence that FB ads are more effective than traditional marketing. For higher confidence repeat the test with multiple markets and multiple controls.
That experiment took me 30 seconds to think of. A sophisticated marketer can probably come up with one that gives even more solid evidence.
This sounds like an incredibly naive and expensive experiment, filled to the brim with noise.
It's not perfect, but if you do it frequently you can estimate (some of) the impact.
- Finding a time where there isn't some global event (e.g. oscars, olympics, etc)
- Weather effects (it was hot/cold so they went out/didn't go out)
- Local effects (Warriors just won the championship)
- SUPER local effects (it was prom at this high school)
- Brand history (Coke does better in ATL than Pepsi)
- etc.
And then, even if you did, ACTUALLY being able to measure impact on anything but ultra-transactional things (e.g. buying a movie ticket) is super hard/expensive too. You're going to run a survey after each experiment? And THEN, even if you DID run a survey, maybe it worked for one brand and one brand only! Maybe it doesn't even cross over to other brands in a category, let alone other categories.
Look - scientifically speaking, sure, you should be able to do what you describe. Almost none of the time does that work in the real world.
Ad campaigns are super expensive. If I were an exec at a company managing a campaign I’d want to see solid metrics and impact on sales, otherwise what’s all this money for?
In other words, if you can’t tell the difference between spending the money and not, don’t spend it.
That's why Google are working with mastercard to get hash credit card transactions.
Additionally, Amazon are probably in a really good place to do marketing for CPG brands, as people actually purchase those on Amazon and thus they can track conversions (whereas FB and Google aren't great for these kinds of advertisers).
> The entire ad industry is based on fuzzy metrics. Within that fuzz is an awful lot of room for fraud.
Citation needed.
Do you have any hard data besides anecdotes and contrived examples?
From reading his writings on this, and other topics, it's clear that he is extremely bitter about virtually all things related to Facebook.
See this from over a decade ago: https://venturebeat.com/2007/09/02/who-founded-facebook-aaro...
He also undertook a multi-year quixotic series of lawsuits against California and other entities over what he felt were unfair regulations on money services businesses.
https://www.upcounsel.com/blog/aaron-greenspan-versus-silico...
No one is doubting that Facebook is making genuine revenue, although they may be misleading people to earn that revenue.
But seriously, that's actually what happens in the real world in % of "successful" startups. I think context is important in pointing to something as a ponzi scheme
That would just be Fraud. And on a long enough timeline, publicly traded companies may eventually come to that point.
That said, for another business, FB is absolutely killing it for us.
The difference is in target market size and niche.
Are the target market size and niche smaller or bigger for the one that works?
Eric Schmidt made pretty much the same point about Google fake clicks.
https://searchenginewatch.com/sew/news/2058286/eric-schmidt-...
Granted this is trickier if you don't have an easy way to determine if your advert has converted to a result e.g. somebody who is just looking to raise brand awareness.
> While they reveal a problem escalating at an alarming rate and are constantly being revised upward .. in Q2 2017
In Q4 2017 the method for measuring the prevalence of fake accounts was changed to something more accurate. The number of fake accounts wasn't "escalating at an alarming rate", it was comparable to the number in the previous quarter.
Source: I worked on that change.
https://www.nytimes.com/2007/09/01/technology/01facebook.htm...
> https://www.nytimes.com/2007/09/01/technology/01facebook.htm....
I wasn't aware of this. Thank you!
Oooh, there's a blast from the past. Why do so many Harvard undergrads talk like this? (I was as guilty as anyone.)
Second, the implicit comparison between the great stupendous thing that "I" did with the minimal barely-worth-mentioning thing that "you" did. As if "thinking" and "deciding" were somehow so much more important than "suggesting". We can be certain that if the conversation roles were reversed then the implied relative importance of the different actions would also have been reversed. This was just a particular flavor of a more general rhetorical activity we called "flexing", back then. Lots of intimidated kids, attempting to intimidate in turn.
Replace "actually did think" with "thought." "Actually" says "no you're wrong."
Remove "before you even suggested it." Saying you did it first attempts to position yourself as smarter. Adding "even" diminishes it.
Making those changes, you end up with a less insecure, less posturing version, "I thought about integrating it into houseSYSTEM, but I decided that it’s probably best to keep them separated at least for now."
https://hn.algolia.com/?query=facebook%20ponzi&sort=byPopula...
Note that I do believe that FB has changed since 2012 (and I may have helped launch FB Videos which are definitely driving influence and probably make useful ad time) and many people do effectively reach new users with FB ads.
In terms of FB's growth slowing, that is likely given that it has the majority of the world's population online already, and Instagram is growing fast still (and entirely owned by FB).
> fake account problem … Google Trends shows worldwide "Facebook" queries down 80% from their November 2012 peak.
Except that much of this downturn in people googling "Facebook" is explainable by the shift to mobile. Surely no one needs to Google "Facebook" to open the Facebook app on their phone’s home screen. (For that matter, one doesn't even need the app icon when one is receiving push notifications from FB. No legit notifs? No problem, FB will synthesize fake ones.)
Additionally, targeted ads on Facebook or Google are pretty much table stakes in the ad business now. Many (or most) firms probably think it would be silly not to use them.
You bid to hit a certain CAC (customer acquisition cost) and to the extent any numbers are inflated, it would just quickly result in a lower bid price per inflated number
I can see why platforms would be reluctant to offer this feature. If you're running ads on multiple platforms and only one offers this feature, it will make itself look uniquely bad. However, the other platforms probably also provide little extra value compared to running ads on a single platform.
It would be like a development team measuring success by lines of code written - it bears no relationship with the underlying success of the business.
The identification of success/failure should be attributable to revenue or profit. They can have an internal conversion factor from clicks->$$, but it should be there.
In addition, time is always an issue and is the ultimate variable. What worked two months ago didn't work last month, what do you do? Every company runs into this and there are factors that make it crazy complicated: payback period, LTV, AOV, Days to Close.
Ad platforms like Google Ads and Facebook Ads talk more about "reaching your target customer" with fluffy metrics since that's what they can easily measure and, IMO, it obscures the real end-to-end results you mention. When success is obscured, it allows them to absolve themselves of educating their customers.
The ad platforms build case studies of success and then simplify it down to impressions and reach so that companies feel like they have to do it. It's a profit machine.
Somewhat similarly, on the matter of choosing between alternative advertising platforms, the uncertainties surrounding the quality of their products makes it difficult to choose between them, so people can be inclined to simply go with heuristic measures like a known brand (i.e. Facebook).
https://www.adweek.com/digital/facebook-announces-settlement...
- Clickfarms in China that have shady people using some automation and thousands of smartphones to perform fake clicks for the Chinese ad market
- Pied Piper style farms with people in poor countries sitting all day creating accounts (it was exaggerated in the series)
- The ad giants constant "battle" with click-fraud
- Shady tactics used by smaller app/websites to get people to accidentally click on ads
I wouldn't personally denounce all online advertising though. It has its place the same way print media advertising does. It's market-value is questionable though (which is derived from questionable "effectiveness" sales pitches we're told about online advertising)
The author seems to be talking up his portfolio. Although there may be truth to this article, it seems the author is attempting to move the stock price with negitive press.
In the meantime, the OP and comments here remind me of the reaction of a media executive, Mel Karmazin, upon realizing, back in 2003, that Google could measure the effectiveness of advertising:
> Karmazin and the networks continued to charge steep rates because, Karmazin says, "advertisers don't know what works and what doesn't. That's a great model." But it's a model, the Google executives told him, that is horribly inefficient. Karmazin, before departing, trained his eyes on his Google hosts and blurted, only half in jest, "You're fucking with the magic!"[a]
Perhaps new media companies like Facebook have come to the realization that they too should not be "fucking with the magic," to use Karmazin's colorful language.
--
[a] https://www.npr.org/templates/story/story.php?storyId=120389...
"Are advertisers getting enough performance out of Facebook ads to justify the expense?"
The answer could be Yes. It's also possible that many of the companies aren't managing their expenses well, and that they don't know (but still have enough cash, whether from stock market "play money" or VC (SV play money)).
There's no effective answer to the implied question, "How can we stop Facebook from being evil?" Even if the poisonous head of the snake is cut off, there is enough financial interest for remaining executives (and board) to continue along the same general path.
My answer is this: smart startups identify the key value features of Facebook and implement them independently. This is a long play, but it could work.
One example is how Facebook is used for communication and coordination of groups that share common interests. In this example, it's really just a little bit of communication features missing from meetup.com to replace this (and be better than what Facebook offers).
I try to run my hobby groups and there's resistance to using new services when FB can handle it all. Even if it's not as good.
It's like, always buying from Amazon cause it's easy, even if there's a cheaper/better product elsewhere. The effort factor.
Even with digital minimalist individuals, they'd rather manage a single app than multiple. Regardless of the high cost of FB in attention terms.
tl;dr- wat do w/ friends who don't want to use alternative
Many people who advertise get a certain gratification in hearing their name (or business name) on the radio. More than one salesperson for newspaper advertising I have talked to tells me that their best line for retaining customers is that "if your newspaper ads disappear people will assume you went out of business." Political campaigns will spend hundreds of millions in election years, enough to drive up the cost of TV advertising for car dealerships, causing a drop in car sales.
Often the audiences for ads are not consumers, but shareholders, politicians, employees, business partners, etc. Why else did IBM and GE run so many "lights on and nobody home" ads before shareholders finally made them stop? Why else do I see so many ads for cable providers that don't do business anywhere near my area? Does this play a role in why mall stores are dying (e.g. they believed their own illusions and didn't realize they were out of touch with consumers?)
When Warren Buffet dies those GEICO ads will be the first thing to go, but they help keep the news media sweet and uncritical of a once superstar investment firm that now burns shareholder dollars while contributing to everything wrong with our economy.
Again, it's important to disassociate that and the claims that it is a Ponzi scheme and unsustainable business. Both of these things can (and I think probably are) true: Facebook can have a much bigger privacy/fake account problem than it lets on AND also have very real, sustainable revenue from advertising. These things aren't mutually exclusive.
>In other words, Facebook is growing the fastest in the locations worldwide where one finds the most fraud. In other other words, Facebook isn’t growing anymore at all—it’s shrinking.
Look I hate Facebook as much as the next guy but this is clearly specious logic. The existence of fraudulent accounts does not preclude growth in new accounts.
I am not saying they are lying, it would be truly surprising to believe such an elaborate house of cards could stand for so long. But I am asking for evidence.
What reason do they have to obfuscate the data unless the data shows something they don't want you to see?
I mean, it seems like an internal corporate metric. I would expect to be refused that simply on the basis of it not being my business?
I've also asked people who did it for companies after they shut down. The only thing that's obvious is nobody wants to share the data. I suspect it's because the data is not as positive as we're supposed to believe.
My question to you is: why would you ever trust a claim without evidence (especially when the people making that claim stand to personally profit from it)?
The shut-down case: well, maybe you feel they don't have a reason not to tell you internal info for a dead company, but the general hesitation would still be there, and I don't see what they would gain from it either. Hardly seems like evidence for hiding information.
> My question to you is: why would you ever trust a claim without evidence (especially when the people making that claim stand to personally profit from it)?
"Ever"? I mean, it's a case-by-case thing. I might do it if the evidence isn't available to me, and the opposite might imply believing there's a large-scale conspiracy to lie. Or I might not. The lack of someone telling an outsider internal information is not really strong evidence either way.
There is a massive difference between "letting people create accounts for their pets, spammers put up fake accounts" and "fake financial accounts out of whole cloth to create false profits".
Fortunately there is a Twitter icon, so you can rest safe knowing this outraged person is still giving free publicity to a social media company.
Second: it's not like investors are somehow unaware that FB cannot grow forever. In 2013 the PE ratio was more than 120, and it is now 30. That is investors adjusting their expectations about future growth.
The problem is the same for facebook. Major advertiser track clicks up to purchases over months , sometimes years. So they are perfectly aware of which users are bogus, which impression are actually never seen, etc. Ultimately the only thing that counts is whether the investment is worth it.
I wouldn’t say fb is totally pure, but hyping number is i think the general rule with companies whether they are public or private. That’s why we have analysts, notation agencies, and why stock exchange requires publishing hard facts, which analysts can cross and match with high scrutiny.
Click your picture or add an account, and Add account and in big type: Create a new account. It's free and always will be (un etc fields, birthdate) The whole front page is set up to encourage multiple accounts and presumably easy to automate the creation of thousands of fake accounts, which as we know is very prevalent. Great hard hitting article Aaron.
אריכות ימים חברתית דרך האמת וחדשנות
"Social longevity through truth and innovation"
Facebook actually under-reports the ROI for us (we acquire 2x more customers through Facebook ads than Facebook says we do), because ad blockers block the Facebook tracking pixel.
A lot of people stopped reading the article right there.
Writers like this only reach a certain audience.
Sheryl Sandberg hasn't been thrown overboard because if she is thrown overboard she might talk.
Mark Zuckerberg won't allow the appointment of an independent Chairman of the Board because one thing about people who run Ponzi scams is that they try to keep as small a circle of people as possible in control so that news won't leak out.
False. Facebook made $50M in profit the year before it took its Series A. It has always been a profitable company[0].
[0] https://www.macrotrends.net/stocks/charts/FB/facebook/profit...
No, Facebook was founded in 2004 and it took 5 years to make its first profits in 2009: https://www.theatlantic.com/business/archive/2009/09/faceboo...
Your cited chart only begins at 2009 instead of 2004.
Also, if we count Accel Partners $12.7 million in 2005 as the "Series A" investment, Facebook was not yet profitable at that point. (https://fortune.com/2011/01/11/timeline-where-facebook-got-i...)
Seems like we're both wrong. FB was profitable before '09, but it did have a couple years of loss.
[0] https://techcrunch.com/2012/02/01/facebook-ipo-facebook-ipo-...
Those figures are not anywhere in the actual S-1: https://www.sec.gov/Archives/edgar/data/1326801/000119312512...
In fact, page 40 of the S-1 clearly shows a 2007 loss of -$138 million which contradicts what the Techcrunch author wrote.
> a company that was out of users in 2012 managed to find a wellspring of nearly infinite and sustained growth that has lasted it, so far, half of the way through 2019. So what is that magical ingredient, that secret sauce, that “genius” trade secret, that turned an over-funded money-losing startup into one of America’s greatest business success stories?
Facebook has been wildly profitable since approximately the end of 2008. Five years after its founding, in 2009 - long before Greenspan's setup premise - they turned a $229m profit on $777m in sales. For fiscal 2011 that was a billion in profit. Any start-up in world history would be envious of that extreme profitability so early into existence.
In terms of millions of daily active users or users in general, Facebook wasn't suffering in terms of growth in 2012 or 2013. Greenspan is flat-out lying here. They went from 483 million daily active users at the end of 2011, to 665 million at the end of 1Q13. They added 135m daily actives in 2012, 28% DAU growth after eight or nine years. A strong number given their immense size at that point.