Facebook has become one of the definitive icons of the modern digital age, a virtual embodiment of the human potential of the internet as a tool for interpersonal communication and information sharing. It is also something of a fairy tale in which a computer nerd with limited interpersonal skills of his own became one of the world's richest individuals before he was 30 by ruthlessly pursuing his own vision and then cashing in with what was then the biggest technology IPO of all-time. In this fairy tale, Facebook's creator and CEO Mark Zuckerberg is arguably the hero and the villain combined, certainly according to his many detractors, and for a while it was far from clear yet just how happy the ending of this story would be. Even with its vast audience, which first topped 1bn monthly active users in 2012, Facebook's ability to justify its sky-high $100bn-plus valuation seemed untested, and there were distinct wobbles in the first months following the site's IPO, not least after the company paid $1bn to buy Instagram, a service with virtually no revenues at that point in time. Yet Facebook has gradually won over most sceptics (despite the even more astronomical $22bn purchase of private messaging service WhatsApp). It managed to accumulate an extraordinary #2 position in mobile advertising (behind Google) in little more than a year, and its overall sales growth appears to justify all those original expectations. However, life turned rather more challenging during 2017 and especially in 2018 as a result of a string of negative headlines over misuse of user data, privacy infringement, and the site's infiltration by fake accounts set up to manipulate political sentiment. Zuckerberg and COO Sheryl Sandberg have spent much of their time since then fighting multiple political and ethical fires around the world. Yet that seemed to have had only minimal impact on Facebook's financial performance. For 2018, revenues jumped by another 37% to $55.8bn, while net income soared 39% to $22.1bn. There has been a marked slowdown in user growth, especially in developed markets, but advertising revenues continue to soar.
Capsule checked 21st September 2018
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Adbrands Daily Update 30th Jan 2020: Facebook's previously stellar growth slowed during 2019, despite continuing expansion of its range of services. Full year revenues hit a new high of $70.7bn, up 27%, but growth of 25% in the final quarter was the company's lowest metric since its IPO. Meanwhile, costs increased by twice that rate as a result of heavy investment in privacy and security measures, regulatory penalties and rising legal costs. That prompted a 16% decline in net income to $18.5bn, the first year-on-year decline since 2012. Daily active users of Facebook itself rose 9% to a new high of 1.66bn in December, but DAUs of the company's whole family of products - including Instagram, WhatsApp and Messenger - were up by 11% to 2.26bn.
Adbrands Daily Update 27th Sep 2019: "A Very Muppet Portal Launch". Facebook has splashed out on a lavish global campaign, developed by Anomaly, for the global launch of its Portal hardware suite. You might not be familiar with this: it's the social network's counter to AI-powered communication devices from Amazon, Google and others. As the ad demonstrates it combines Facebook's version of the various features offered by Google's Nest, Amazon's Ring and the rest, underpinned by Facebook's experience in social communications. Clearly, it's considered strategically important by Facebook HQ, so much so that they hired the Muppets - that character-based money-machine now controlled by Disney - to promote the service. Who knows, for the next ad, they might be back on the phone to Disney to try to reunite all the various Avengers...?
Adbrands Daily Update 25th Jul 2019: Facebook accepted a $5bn fine from the US Federal Trade Commission for privacy violations associated with the Camridge Analytica scandal. It also agreed to submit all new products and services to an independent auditor each quarter to be assessed for their privacy implications. "We have a responsibility to protect people's privacy," said CEO Mark Zuckerberg. "We already work hard to live up to this responsibility, but now we're going to set a completely new standard for our industry." The fine is the highest ever levied on a tech company in the US but had only a limited impact on 2Q financials, with strong earnings growth and a 28% jump in revenues.
Adbrands Daily Update 18th Jun 2019: Facebook's latest disruption project is the invention of its own money. The social giant announced the launch of a global digital cryptocurrency under the name Libra. It already has the backing of almost 30 major partners including Visa, Mastercard and Paypal, telecoms companies Vodafone and Illiad, as well as digital service providers including Booking Holdings, eBay, Uber, Lyft and Spotify. A key goal is to provide financial services to the estimated 1.7bn people around the world who don't have a bank account.
Adbrands Daily Update 15th Mar 2019: A recently announced decision by Facebook CEO Mark Zuckerberg to shift the company's focus towards private encrypted messaging rather than public news appears to causing turmoil within the organisation. Two senior managers unexectedly resigned this week in what is being interpreted as a reaction against that strategy. Chief product officer Chris Cox - who oversees the company's three main platforms of Facebook, Instagram and WhatsApp - and WhatsApp head Chris Daniels both announced their departures. Cox was generally considered to be the company's third most senior executive after Zuckerberg and COO Sheryl Sandberg. Zuckerberg's strategy shift is designed to steer the company away from the minefield of data privacy, as well as its dependence on advertising, and increase the potential for ecommerce and payment services. "While it is sad to lose such great people, this also creates opportunities for more great leaders who are energised about the path ahead to take on new and bigger roles," said Zuckerberg. There will be now three divisional heads, reporting directly to Zuckerberg: Fidji Simo as president of Facebook, Will Cathcart as president of WhatsApp and Adam Mosseri as president of Instagram.
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