Facebook and the consumer needs gap 2016_02_08
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The Elusive Success of Facebooks Internet.orgAnd how easily the social media leader might achieve it with a simple return to its core principles, acknowledgement of consumer preferences, adherence to open access, and dedication to its vows to users, investors and regulatorsSunday February 7, 2016
Section I: Conclusions & Recommendations
Section II: Insights & Documentation1. Rhythm of the Business2. Historical Context3. Future Growth
Section III: AppendicesTable of Contents
Conclusions&Recommendations
Conclusions & Recommendations
Conclusion: A less insular view helps Facebook align initiatives to target audience needs
Facebooks actions suggest a willful and reckless abandon for factual representations of its businessNews FeedMobile vs web alignmentExplicit content (Porn)Child exploitation: zero attempt to mitigate their exposure on Facebook (i.e., Scrapbook)Recommendation: Employ strategies that balance social good and revenue and acknowledge for-profit status
Mark Zuckerbergs actions portend a willfulness to engage in self-serving, hypocritical and unethical tacticsQuotes about relevance, integrity and user preferencesMobile vs web alignmentExplicit content (Porn)Child exploitation: Zero attempt to mitigate their exposure on Facebook (i.e., Scrapbook)Recommendation: Accelerate good
Unsubstantiated ROI leaves investors and advertisers partly complicit in those outcomesViewability (auto-roll video)Undesirable placementsOut of geo/out of targetRecommendation: Adopt extant industry metrics or persuade the industry on the merit of internal metrics to compel its adoption of heretofore proprietary metrics (without attempt to benefit from their use)
Conclusions & Recommendations
Historical ContextRhythm of the BusinessFuture & Growth
Insights & Documentation
Promises to bring the Internet to every mobile phone
(Seattle Times) First company with a trillion dollar valuationLofty goals, praise and prospectingThat companyHistorical Context
And it is nothing newInfoSpace(circa 2001)
Rhythm of the Business
Rhythm of the Business
At least 80 percent of humanity lives on less than $10 a day
26%1.925 Billion kids underage 13135 million of them orphans
40 million illiterate
60% of those are girls
KIDS UNDER AGE 13
MINMAX
26%1.925 Billion135 million of them orphans
40 million illiterate
60% are girls
50%3.10 Billion earn < $2.50 per day1-in-6 (18%) live on less than $1.25 per day
1-in-6 Americans will go hungry today
MINMAX
MINMAX
21%60% of illiterates are women93 million Americans have basic or no illiteracy
KIDS UNDER AGE 13
Facebook prioritizes profits over food & water, the ability to read and personal dignity for billions of women & childrenWW POPULATION < $2.50 / DAYGLOBAL ILLITERACY RATE
Junior marketers assigned initiallyMost companies have the same personnel
Budgets ramp, same personnel running programsMobile vs web alignmentExplicit content (Porn)Child exploitation: Zero attempt to mitigate their exposure on Facebook (i.e., Scrapbook)
Return on investmentViewability (auto-roll video)Undesirable placementsOut of geo/out of target
Social Media 2.0 results in market response to social hype
106 billion people ever lived on earth7.4 billion now
1.5 billion people ever used Facebook1.5 billion now
Therefore, Facebook population will exceed:Global populationInvestors and other stakeholders must question the veracity of claims by marketers, including Facebook
NABill Gates
NAWarren Buffett
NABezosTo end poverty (not including utilities)UN Estimate
True altruism could eradicate global poverty rather than attaining a higher rank on the global wealth rankingsNAZuckerberg
Half the 4 billion people offline are under age 14; Scrapbook attempts to circumvent US law and capitalize on insufficient international laws
The Artifice of Like: Zuckerberg credits coding for Facebook success (InfoSpace failed to bring the Internet to every phone or achieve $1T valuation)
Market objectivity lists Facebook as philanthropy despite revenues, strategies and CEO personal wealth
Billionaires challenge: reallocate 0.1% of your keep 99% of your wealth and devote 0.1Total global wealth (personal) = $250 trillionTop 1% own $125 trillion1998 United Nations Estimate = $40 billionTo lift 3 billion people out of severe poverty ($2.50/day) including:EducateSanitized waterNutritionHealth care
2015 Adjustment = $58 billion
Billionaires challenge: reallocate 0.1% of your keep 99% of your wealth and devote 0.1
[Domestic growth is declining but in developing countries] weve achieved promising results made it easier for people to register for data plans and get a loan for their plan.Nigerias population will explode from 183M to 800M of the worlds poorest in the next three decades.
(Facebook Q2 10Q: Some of our metrics [are] affected by applications on mobile devices that automatically contact our servers for regular updates with no user actions involved, and this activity can cause system to count the user associated with such a device as an active user on the day such contact occurs. The impact of this automatic activity on our metrics varies by geography because mobile usage varies in different regions of the world. In addition, our data regarding the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location.
$780 Billion (2009) McKinsey & Company estimate of value of search - to $1 Trillion in 2017
David Goldberg Business Insider article from April 17, 2015 two weeks before he met his untimely demise
Facebook has no incentive to be forthcoming on quarterly calls
Facebooks Global Economic Impact (Deloitte LLP, February 2015
Facebook growth primarily in India & developing world
Africa and India are principle Facebook growth targets through 2050
India represents significant accretive revenue potential and near-zero political pushback
Longer term, Nigeria and other central-African markets embody Facebooks growth strategy
[Domestic growth is declining but in developing countries] weve achieved promising results made it easier for people to register for data plans and get a loan for their plan.
Nigerias population will explode from 183M to 800M of the worlds poorest in the next three decades.
(Facebook Q2 10Q: Some of our metrics [are] affected by applications on mobile devices that automatically contact our servers for regular updates with no user actions involved, and this activity can cause system to count the user associated with such a device as an active user on the day such contact occurs. The impact of this automatic activity on our metrics varies by geography because mobile usage varies in different regions of the world. In addition, our data regarding the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location.
Facebooks active user accounts (30 day sample randomized for seasonality, day-of-the-week, and day-parted)
Maslows Hierarchy provides the foundation for prioritizing initiatives and ensuring ethical outcomes, meeting real needs and upholding basic human truths
Self-worth and ability to project beliefs to othersConnectedness and social inclusion, commitment from others(External) personal safety, financial, health & wellnessMetabolic (air, food, water) & personal protection (clothing & shelter). Realizing ones personal potential and extending it to others through learning and mentorshipPHYSIOLOGICAL (SAFETY)SECURITYLOVE/BELONGINGSELF-ACTUALIZATIONSELF-ESTEEM
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Free basics can be very costly to a family previously surviving on $2.50/day
In the Philippines, [we] made it easier [for poor people] to register for a data plan and get a loan [to pay for] their plan.
https://www.youtube.com/watch?v=kZTvbCj5U-4&feature=youtu.beWe can do without the Facebook and the smartphones. We cannot live without relieving ourselves
Water and sanitation are Indias two greatest needs
In 2013, conditions worsened as Indias 30+ ultra-wealthy drowned 30,000 & sank Indias hydropower infrastructure
SANDPR video Flood Ravage and the Dams of Uttarakhand, narrated by Valli Biranda
Subjecting those earning $2.50/day, the price of
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First-world fixes create empathy in Silicon Valley and outrage those surviving in the developing world
SANDPR video Flood Ravage and the Dams of Uttarakhand, narrated by Valli BirandaSubjecting those earning $2.50/day, the price of
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Needs worsened by Indias 30+ ultra-wealthy, as floods drown 30,000 & destroy Indias hydropower plans
SANDPR video Flood Ravage and the Dams of Uttarakhand, narrated by Valli Biranda
In my last paper, I outlineda plan to deliver basic internet servicesto everyone... ~ Mark Zuckerberg Internet.org Whitepaper: Connecting the World from the Sky
Scrapbook is a growth toolCircumvents MZ position about two identities showing lack of integrityCreating a public persona or profile that person cannot erase or deleteWhen user grows up, they create a new profileScrapbook, innovative way to get around COPPA/CIPA especially internationally (no US laws)
Relevance is the hallmark of search results must reflect it
Advertisers brand is not covetedSearch exceptions not applied on FacebookExample: PornDeceased users profiles
Video ad pre-rollNo metrics can be tied to itDeceased users profilesClick bait = SMBs used to get tier-1 advertisers on boardRelevance is the hallmark of search results must reflect it
Facebook often beats predictions - using proprietary dataCatholic priests said they didnt molest children
Police say they can police themselves
Facebook changes terms of service after reaching critical massConsumersPublisher partners (Instant Articles)Advertisers Phase 1 advertisers = click bait the site vowed to rid the site of in 2012-2013
Historical Context
Historical Context
Facebook often beats predictions - using proprietary data2 Trillion video views: Every active user must view 3 videos every single day of the year.
Nielsen (partner in 2016) just thrown under bus by Facebook
Reach of 40 million peopleHype: not targeting effectivenessPorn pages?What are benchmarks?
Facebook no longer the global leader in audience reach
General QuestionsFacebook For Every Phone = 520 Million fans?Who would do that and why?
Search for Jeff Weiner (CEO of LinkedIn) on Facebook
Search for Porn on FacebookPretty Easy to cull a sample and estimate number of fraudulent sites etc.
The Confidence Huckster & General observationsFacebook growth strategies:Like Button DuplicityChange agent
Trojan Horse: the Like button was implanted web-wide and innocuously
Once traffic reaches critical mass, change the termsPublishing partners: Instant articles
Consumers: change privacy policy but assert ownership
Advertisers: use click bait to dupe consumers until Tier-1 advertisers come on boardThen divorce them again
Porn and other policed content are rampant on Facebook, despite the companys publicized policing of issues such as real names (note drag queen controversy does not translate to movie stars)
Examples:Thomas Mopather (Tom Cruise)
Lou Alcinder (Kareem-Abdul Jabbar)
Leslie Townes (Bob Hope)
Revenue and not authenticity are principle determinants of Facebook policy and decision makingFact: drag queens represent more accretive revenue potential than their non-celebrity counterparts
Hollywood celebrity personalities and names never questioned
Thomas Mopather (Tom Cruise)
Lou Alcinder (Kareem-Abdul Jabbar)
Leslie Townes (Bob Hope)
(Facebook Q2 10Q: Some of our metrics [are] affected by applications on mobile devices that automatically contact our servers for regular updates with no user actions involved, and this activity can causesystem to count the user associated with such a device as an active user on the day such contact occurs. The impact of this automatic activity on our metrics varies by geography because mobile usage varies in different regions of the world. In addition, our data regarding the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location.
Facebook focuses much energy on hyperbolic claims, misrepresentation of facts and gamification
rather than focusing on
Facebook spending millions to trumpet value and misrepresent facts
StudyTopic AreaSponsor (method)DateThe State of Global Connectivity https://fbnewsroomus.files.wordpress.com/2015/02/state-of-connectivity_3.pdfGlobal Internet accessFacebook (synthesized sources & metrics)Feb, 2015Offline and Falling Behindhttp://www.mckinsey.com/insights/high_tech_telecoms_internet/offline_and_falling_behind_barriers_to_internet_adoptionThe offline populationMcKinsey & Company (sponsor, Facebook)2013Connecting the World From The Sky (https://fbcdn-dragon-a.akamaihd.net/hphotos-ak-ash3/t39.2365-6/851574_611544752265540_1262758947_n.pdf)Future technologies & global Internet accessFacebook2014The Global Economic Impact of Facebook (http://bit.ly/deloitte_Facebook_economic_impact)Facebook intrinsic value to the global economyDeloitte (sponsor, Facebook)2014The Evolving Role of News on Twitter and Facebook (http://bit.ly/Pew_News_on_TWIT_FB)News & Media, Internet Pew Research Center, Journalism & Media (sponsor, Facebook)June, 2015Cisco Visual Networking Index 2015 (http://bit.ly/cisco_visual_networking_index_2015)Global Internet accessCisco SystemsMay, 2015
Having two identities for yourself is arkan example of a lack of integrity. ~ Mark Zuckerberg
(
It openly dispells misinformation: - In reality, 45% of people age ALL PEOPLE ARE online, not 33% as claimed on Internet.org- 59% of those age 14+ - and legally marketed to are onlineMark linked his fathers dental patient records and networked computers (without permission):Unethical: judged other peoples looks with an knock-off of Hot or Not app (without consent for photos used)Attempted to exclude other founders from Facebook windfallDuplicitous: testing Top Stories/Most Recent & new ad types without user consentDoes Mark Zuckerbergs prophetic statement portend disingenuous and duplicitous initiatives for selfish gains?
In the Philippines, we
register for a data plan,
for their plan.~ Mark Zuckerberg Regardless the impact to the welfare of others, which it vociferously pretends to protectand to make it easier for people to get a loan
Facebook is not relevant to people who cannot eat, have no electricity and cannot afford the phone
Two identities of Facebook: one misleads with proprietary (and unsubstantiated) metrics, the other (Internet.org) misleads with a barrage of 3-5 year old statisticshttps://fbcdn-dragon-a.akamaihd.net/hphotos-ak-ash3/t39.2365-6/851574_611544752265540_1262758947_n.pdf
Half the worlds population (3.7 billion) lives in APAC/ SE AsiaWomen are 40% more likely to be offline in developing countriesCulture prevents access: more phones/apps will not change dynamicCreating public access is the only way to ensure women can getMax Fishers heat map of global income aligns perfectly with network speeds globallyChildren: represent 26% of the global populationFastest growth among developing countries up to 45%Reportedly 20% of kids age 0-9
Consistent with Ciscos Annual Study http://www.cisco.com/c/en/us/solutions/collateral/service-provider/ip-ngn-ip-next-generation-network/white_paper_c11-481360.html
Facebooks growth depends on creating it in areas where people earn under $2.50 per dayhttps://fbcdn-dragon-a.akamaihd.net/hphotos-ak-ash3/t39.2365-6/851574_611544752265540_1262758947_n.pdfLocation, income, gender and desire are primary barriers to Internet access and children ages 0-9 (~20%)
Eight years of Facebook user requests, Stop asking our preferences then superseding them with profit-maximizing outcomes
RATIONALE: it is easier to control the algorithm for top stories. There is no context or time to alter it if the user selects Most Recent which they do do keep it relevant. For many consumers youve just rendered their news feed uselessThe 8-seconds it takes for a page to load a web page loading on a mobile device in Rwanda.. That 8 seconds was just used to wow your advertising team on the sites stickinessSub-saharan Africa constitutes the greatest growth and the greatest barriersContent scraping without context results in advertising products just bought (i.e., Nordstrom and AG Jeans (Papaya)
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CONTEXT IS KING: Without it, we MUST ask questions, not just assume the provider is objective
Publisher traffic free-fall May 1, 2015Was it accidental or was it a warning
Example: National Geographic has 900k subscribers yet 37 Million fans on Facebook
Clicking link within the article affected status on Facebook
Liking one photograph online by NatGeo or otherwise is not being a fan
Need clear rules/laws on what the like button does
Damage may already be done: Facebook has its claims
CONTEXT IS KING: What is the net ROI on advertising on profiles of deceased users?Advertising on the profiles of deceased users is akin to tagging their headstones in a cemeteryDavid Goldbergs profile page has been removedAll content too?June 4, contacted Sheryl Sandberg June 4, 2015 the day after her tribute to her late husband, who died May 1, 2015Business Insider article April 17, 2015 suggests he did not agree with Facebooks taking advantage of every Late partner could not have liked NatGeo pic
General Questions & ObservationsFacebookForEveryPhone app amassed 520 Million legitimate fans?Who would do that and why?
Search for Porn on FacebookPretty Easy to cull a sample and estimate number of fraudulent sites etc.
How do glaring infractions of Facebooks lauded single profile policy continue unaddressed? See Jeff Weiners dual Facebook profiles
General Questions & ObservationsSearch for Buy Facebook Likes on Facebook or on LinkedIn
Facebook:Unwilling to listen to people desires, needs or preferencesAmbivalent toward broader social issues, particularly those with global implicationsSteadfast in its strategic development of initiatives that exploit young, female and impoverished populationsArrogant in dealings with users and regulators
Appendix
General Questions & ObservationsSearch for Buy Facebook Likes on Facebook or on LinkedIn
Facebook:Unwilling to listen to people desires, needs or preferencesAmbivalent toward broader social issues, particularly those with global implicationsSteadfast in its strategic development of initiatives that exploit young, female and impoverished populationsArrogant in dealings with users and regulators
For considerably less than the cost of:
McKinsey & Co Report
Deloitte Facebooks Economic Impact report
Pew Family Trust News research study, sponsored by Facebook
Ciscos 2014 NetworkingMethodology to discover user-base insights: random sample, long timeframe, hand query several subsets of the data
The ultimate self-fulfilling prophecyInfoSpace (1996 2012)Facebook (2004 - ???)Market Perceptionpromise to bring the Internet to everyones mobile phone Seattle TimesFacebookonEveryPhone campaign (#1 Social Influencer with 513 Million Fans(on Fanpagelist.com)Promise/Market Conjecture[first company with a] trillion dollar value (CEO Naveen Jain)Attempting to supplant Google as the global search leader and aggregator or access point to the worlds contentPrimary strategiesBlatant lies DeceptionDuplicityTwo platforms driving different claimsGlobal leader, users/revenueAltruistic do-gooderPrimary TargetSEC/FTC/FCCAdvertisers/ Publishers/Consumers/ GovernmentOutcomeWent from Internet darling with $31B market cap (bigger than Boeing) to penny stock in less than 1 year (2002)Based on Q3 and softballs from investors, clear blue skies aheadObservationsInfoSpace, AOL/Time Warner/ MCIWorldcomm and Henry Blodgett (Business Insider) inspired a new round of leadersFacebook seems nervous - spaghetti on wall
Given other verified data, Facebook claims of global reach appear inflated and discount/dismiss known facts
Cost of phone and plan mean prepaid rule globally
Facebook & Internet.org do not ameliorate these issuesIt raises awareness to provide a self-serving solution
Other local companies are solving these issuesFacebook acknowledges it doesnt create the solutions it leverages them
Gaming the system and Internet.org live chat with a team member never seen on Facebook
Misleading claims and investors is painful reminder of 2001, for anyone who was invested in other duplicitous playersGaming the system and Internet.org live chat with a team member never seen on FacebookMotive and accessibility
eComm/m-Comm: Facebook does not provide the same solutions users need in those cultures
Older segments grow as birth rates slow
Africa and India are principle growth areas through 2050
Working age people are 1:1 with dependents in developed countries better in developing countries
In 2050, USA near equilibrium, balancing older and younger dependents
Developed countries lead in global aged populations
CONTEXT IS KING BUT IS DIFFICULT
Context, misrepresented by publishers
Facebook willfully misrepresents many facts across its storylines
What if we coordinate technology and physical manpower to help people half a world away?
Each device offers discreet value propositions (size of images, audio)
Facebook routinely accusatory of others for attempting to game the system yet who stands to gain most by gaming of its unprecedented Internet.org hosted chat feature?
Correctly anticipated Google+ surpassing of Facebook in global reach
Facebooks Q4 2015 10-K SEC Filing
Facebook and Internet.org properties use different metrics concurrently to affect different storylines
LinkedIn represents a breeding ground for known Facebook fraud schemes
Sponsored ads appearing on profile of deceased user, 5 years after his death
Notifications sent to inactive and deactivated accounts, received 3 years after requests to close
Correctly anticipated Google+ surpassing of Facebook for global reach
Each device offers discreet value propositions (size of images, audio)
Thefacebook is an online directory that connects people through social networks at colleges [Harvard only][2004]Thefacebook is an online directory that connects people through social networks at colleges [Limited to your own College or University][2004]The Facebook is an online directory that connects people through social networks at schools [Now there are two Facebooks: one for people in college and one for people in high school] [2005]Facebook is an online directory that connects people through social networks at schools [2006]Facebook is a social utility that connects you with the people around you [Facebook is made up of lots of separate networks things like schools, companies, and regions] [2006]Facebook is a social utility that connects you with the people around you. [upload photos or publish notes get the latest news from your friends post videos on your profile tag your friends use privacy settings to control who sees your info join a network to see people who live, study, or work around you] [2007]Facebook is a social utility that connects you with the people around you. [Use Facebook to keep up with friends and family, share photos and videos, control privacy online , reconnect with old classmates] [2008]Facebook helps you connect and share with the people in your life. [2008]Facebook gives people the power to share and make the world more open and connected.[2009]Facebook Timeline: Overview 2004 - 20015
Facebook Timeline: Overview 2004 - 20015200420052006200720082009201020112012201320142015- 1 MM MAU
Launch100 MM MAU
GrowthSeed acquisition interest
PR StartsCapture your audiences attention.
Text HereConjecture about value
Financial News LeakTrojan Horse
Like ButtonRequisite leaks to media, etc.
IPOCapture your audiences attention.
Text HereShows how anemic FCC is in stemming consumer privacy abuse and generally
WhatsAppInvestors continue to fall for fairy tales
Hyperbole OverdriveSource: WikipediaKey: *MAU = monthly average users