Facebook advertising which comprised over ninety percent of revenues in 2021 consist primarily:
Display Advertising: banner ads, interstitials, video ads, and rich media ads that aim to reach large numbers of consumers within a particular audience segment. Display advertising counts small brands and large brands, such as Walmart U.S. and Diageo.
Performance-based Advertising. Performance-based advertising involves advertisers that seek specific user behaviors. Those can comprise:
clicks on a search
ad or a keyword-based content ad
a response to an email campaign
or an online purchase
The impressions economics: served vs. viewed impressions
Not all ad impressions are created equal. Increasingly, advertisers, publishers and advertising industry groups are adopting the position that it’s better to measure viewed impressions rather than served impressions.
As Facebook explains:
If an ad is served, it means that a publisher has told its system to deliver an ad. As long as the system registers delivery of the ad, it’s counted as a success. What happens next is less certain. The ad could appear someplace where lots of people see it, like the top of a website homepage. Or it might be served without anyone ever seeing it. For instance, the ad could appear far down at the bottom of a web page (below the fold). Or a person could visit a site and then leave before the ad has fully rendered.
and it continued:
Viewed impressions add an extra layer of analytical rigor, as well as common sense. They more accurately define delivery and help ensure that people have seen the ads they’re supposed to see…
…We measure an ad impression the moment an ad enters the screen of a desktop browser or mobile app. If an ad doesn’t enter the screen, we don’t count it as an ad impression.
More precisely:
An impression is counted as the number of times an instance of an ad is on screen for the first time. (Example: If an ad is on screen and someone scrolls down, and then scrolls back up to the same ad, that counts as 1 impression. If an ad is on screen for someone 2 different times in a day, that counts as 2 impressions.) Since impressions are counted the same way for ads that contain either images or video, a video is not required to start playing for the impression to be counted. Though this method of counting video impressions differs from industry standards for video ads, it ensures consistency in reporting impressions when ad campaigns contain both videos and images.
A Facebook advertising system in a nutshell
As explained by Facebook:
When advertisers create an ad campaign with Facebook, they specify the types of users they would like to reach based on information that users chose to share about their age, location, gender, relationship status, educational history, workplace, and interests.
Indeed, in terms of market segmentation, Facebook is among the most powerful tools for marketers. You can access the demographics of billion of people at a fingertip:
For example, a self-storage company ran a campaign to reach students on college campuses prior to summer break. Additionally, advertisers indicate the maximum price they are willing to pay for their ad and their maximum budget.
Advertisers choose to pay for their ads based on either cost per thousand impressions (CPM) on a fixed or bidded basis or cost per click (CPC) on a bidded basis. Our system also supports guaranteed delivery of a fixed number of ad impressions for a fixed price. Facebook’s ad serving technology dynamically determines the best available ad to show each user based on the combination of the user’s unique attributes and the real-time comparison of bids from eligible ads.
By 2022, the digitalmarketingindustry started a process of reshaping which is leading to the wrecking of the Google/Facebook duopoly.
Marketers fooled by engineers: when the attention merchant decides the rules of the game
One interesting aspect of digital advertising is its ability to introduce complex algorithms and engineered systems to be able to track the marketing activity of any business. However, those digital businesses that took over the digital world, like Google and Facebook, still live the attention merchant paradox.
Where those platforms are the ones creating the rules of the game. They are also the ones that determine what metrics matter. When Facebook engineers sell marketers impressions and likes, all they are selling is a metric whose value is dubious.
Yet as that metric is tracked and packaged within a complex algorithm, it gives marketers and businesses, in general, the impression that it is all data-driven, and so it has a clear ROI. However, with a better look, you might realize that those engineers have become better than marketers at selling.
Thus, a paradox of this generation is that, finally, marketers got fooled by engineers!
Facebook, rebranded as Meta in 2021, is primarily owned by Mark Zuckerberg, founder and CEO. Zuckerberg keeps tight control over the ownership and decision-making of the company. Other large individual shareholders comprise former COO Sheryl Sandberg and co-founder Eduardo Saverin. Large institutional investors include BlackRock, Vanguard, and Fidelity.
Facebook, the main product of Meta is an attention merchant. As such, its algorithms condense the attention of over 2.91 billion monthly active users as of June 2021. Meta generated $117.9 billion in revenues, in 2021, of which $114.9 billion from advertising (97.4% of the total revenues) and over $2.2 billion from Reality Labs (the augmented and virtual reality products arm).
ARPU, or average revenue per user, is a key metric for attention merchants like Facebook. It assesses the ability of the platform to monetize its users. For instance, by the end of 2022, Meta’s ARPU worldwide was $10.86. While in US & Canada, it was $58.77; in Europe, it was $17.29; in Asia, $4.61 and in the rest of the world, it was $3.52.
The ARPU, or average revenue per user, is a key metric to track the success of Facebook – now Meta – family of products. For instance, by the end of 2022, Meta’s ARPU worldwide was $10.86. While in US & Canada, it was $58.77; in Europe, it was $17.29; in Asia, $4.61 and in the rest of the world, it was $3.52.
As of September 2022, Facebook, rebranded as Meta, is a profitable company, generating $18.54B in net profits. Yet, if we look at its Reality Labs segment, which is in charge of building the Metaverse, it recorded a net loss of $9.44 billion in the first nine months of 2022.
Instagram makes money via visual advertising. Acquired by Facebook for a billion-dollar in 2012, today, Instagram is integrated into the overall Facebook (now rebranded as Meta) business strategy. In 2018, Instagram founders Kevin Systrom and Mike Krieger left the company as Facebook pushed toward tighter integration of the two platforms. In 2022, Instagram is the most successful product still, in Meta’s portfolio.
Founded in 2009 by Brian Acton, Jan Koum WhatsApp is a messaging app acquired by Facebook in 2014 for $19B. In 2018 WhatsApp rolled out customers’ interaction services, starting to make money on slow responses from companies. And Facebook also announced conversations on WhatsApp prompted by Facebook Ads.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
