The Real_Life Demigod~Facebook
This is Part Two of the series ‘Give me my money!’, Stay tuned for next parts to connect the dots backward :-)
One demigod to rule them all
One demigod to find them
One demigod to bring them all and in the darkness bind them.
(Yes, lines inscribed on ‘THE RING’)
In mythology, a demigod is a less important god, especially one who is half-god and half-human. But fundamentally, a demigod is created when a God lies down with a mortal or when 2 demigods lie down with each other. The abilities of the Demigods are inherited from their divine parents.
For example, the demigod of Ravens born from the union of Demigod of Graveyard + Demigod of birds.
To add the visuals, one could see their face and just know by the look of them that they are timeless. To add their abilities, they have a hand which extended beyond the power of humans.
Fast forward, Facebook a project at Harvard started by a bunch of guys Mark Zuckerberg and other mates including Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. Originally started as an online directory that connected people through universities. Making people develop their online profile and connect with others.
What are the key metrics to understand the revenue model?
Consider the following 3 main criteria
1. Daily active users (DAUs)
Daily active person as a registered and logged-in user of Facebook, Instagram, Messenger, and/or WhatsApp (collectively, “Family” of products) who visited at least one of these Family products through a mobile device application or using a web or mobile browser on a given day. Facebook does not require people to use a common identifier or link their accounts to use multiple products in their Family, and therefore must seek to attribute multiple user accounts within and across products to individual people.
2. Monthly active users (MAUs)
Monthly active person as a registered and logged-in user of one or more Family products who visited at least one of these Family products through a mobile device application or using a web or mobile browser in the last 30 days as of the date of measurement.
3. Average Revenue Per Person (ARPP)
ARPP= (Total revenue during a given quarter) /(average of the number of MAP* at the beginning and end of the quarter)
While ARPP includes all sources of revenue, the number of MAP* used in this calculation only includes users of their Family products as described in the definition of the MAP* above.
MAP*= Monthly Active People
Calculations of DAP(Daily Active People) & MAP* rely upon complex techniques, algorithms, and machine learning models that seek to estimate the underlying number of unique people using one or more of these products, including by matching user accounts within an individual product and across multiple products when Facebook believes they are narrowing down to a single person, and counting such group of accounts as one person.
(Calculated using internal company data based on the activity of user accounts. While these numbers are based on what Facebook believes to be reasonable estimates of our user base for the applicable period of measurement).
So how exactly does my Facebook page looks like to the advertisers/ Facebook backend team?
Each time you create your new identity, Facebook does demographic profiling. They package each information of your likes, dislikes, tailored hashtags, groups joined, and finally harvest it into a bundle.
Facebook based on this kaleidoscope of details, fits individuals into buckets labeled with the predecided category which will cherry-pick their audience and the advertisements are tailor-made. Which means that each ad you see is specifically made for you. The guarantee that FB provides to the advertisers is that that prom night dress advertisement will be seen by the potential buyer or that meat burger advertisement is not displayed to a vegan. Thereby, targeting people who could really change into customers.
Facebook acts as a facilitator and tries to sell potential customers to the advertisers that were trying to find you.
These corporations can then target ads based on your interests, type of phone, political inclination, ethnicity, and even income level. It is almost impossible to avoid being targeted by Facebook ads. However, what one can do to make Facebook algorithm also harder to speculate your psychology, is to change the limited settings or erase history options.
Facebook’s mission says it is to give people the power to build community and bring the world closer. But definite doubts about this uprising of demigod occurs. Are we really weak enough to fall prey to a contract that is non-negotiable? A contract in which the cost of my data is not decided and that can be potentially used to manipulate me. In most of the case, the individuals aren’t even aware of them being exposed to such kind of complex algorithm being built behind.
Isn’t my right to view every advertisement in an open market, being hindered?
Facebook generates substantially all of its revenue from advertising. The loss of marketers, or reduction in spending by marketers, could seriously harm their business.
One of the solution to being influenced by such targeted advertisements is to develop technologies that can block the display of the ads or block the admeasurement tools, particularly for advertising displayed on personal computers.
Another source to bring equilibrium to this contract would be incentivizing our data by offering coupons from the advertisers to whom our information is being sold to. So for an example, If Facebook decides to sell my information to a clothing company and suddenly advertisements from Zara sticks to my screen, all I (as any other normal person who avails FB’s services) want is an incentive from Zara for storing my data and most importantly, converting my data into their cash!
Even more interested?
Read Sources of Revenue:
1. Revenue Advertising:
Facebook generates substantially all of our revenue from advertising.
(2020 itself generated $17440 MN)
The advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications.
Marketers pay for ad products either directly or through their relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions, such as clicks, taken by users.
Facebook recognizes revenue from the display of impression-based ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed to a user.
2. Other revenue:
Revenue from the delivery of consumer hardware devices + Net fees we receive from developers using our Payments infrastructure + Others
3. Cost of Revenue:
Expenses related to the operation of data centers & technical infrastructure**, Costs associated with partner arrangements + Including traffic acquisition and content acquisition costs, credit card and other transaction fees related to processing customer transactions + Cost of consumer hardware devices sold.
(**such as facility and server equipment depreciation, salaries, benefits, and share-based compensation for employees on our operations teams, and energy and bandwidth costs.)
4. Research and development:
Consists of expenses primarily of salaries and benefits, facilities-related costs for employees on our engineering and technical teams
5. Marketing and sales:
Marketing and sales expenses consist of salaries and benefits, and share-based compensation for our employees engaged in sales, sales support, marketing, business development, and customer service functions.
6. General and administrative:
General and administrative expenses consist of legal-related costs; salaries and benefits, and share-based compensation for certain executives as well as legal, finance, human resources, corporate communications and policy, and other administrative employees and professional services.