Wierd - FB mobil active monthy users are 70% but Ad rev. from Mobile is only 41%
what is wrong with that picture? mobile monthly grew 9% while total monthly active grew 4%.
analyst NonGAAP EPS estimates way off from what should have been based on prior q's - I had 21 cents nongaap or ebitda and 15 cents GAAP. FB provides no guidance so this was the analysts who screwed up on estimates. So was this really a beat? Compare my numbers to their result and FB clearly missed whether you use GAAP or nonGAAP and they also provided no guidance except to say spending is going higher. If you had to look at one metric for Q2 it would have to be the doubling of advertisers to over 1 million on a yoy comp. so extrapolating forward they would need to keep doubling the number of advertisers - unlikely - which is probably one reason for Argos Research downgrade based on unlikely repeat performance of this Quarter's results going forward. Newsfeed ad impressions click thru rates all crapola. As ads increase they simply become background noise. Are there really people who have nothing to do but click on ads? Unless of course FB is paying those people to do so - but that would be fraud. Also if you listen to Sandberg you will hear weasle words for the ad spend increase - like we believe it is because of roi for our advertisers why else would they spend the money?
just some random thoughts. seriously those who are long and think this cannot go south again into the mid to lower 20s which if you do the math on GAAP earnings is where this should be keep holding the bag.
I may be picking a knit here but Sandberg's use of weasel words "We believe" imply they do not have definitive proof their FB ads even work. @ 10 min. into ConfCall she states: Each of our 4 marketing segments increased spending with us this quarter. "We believe" this is because our ad products are delivering impressive roi for each of these types of marketers. I may be picking hairs but why the wording
Shouldn't FB management know their ad platform is producing results - that is what they are selling - in order to sell you have to produce some evidence your product will in fact deliver greater sales -
Sandberg's statement should have read the more declarative form and stated "because our ad products are delivering impressive roi for each of these types of marketers" The fact she does not know indicates the weak argument for advertising on facebook IMO.
To tie this altogether you have to know how your facebook ad experience ties to real life purchases - if you listen into the CC at the 12min44sec mark you get a glimpse of what is going on - one of the keys is a company called Datalogix - they compile all the real world purchases you make when you swipe your particular Store card which ties all your purchases to your private identifying info like name phone# and email. I believe what is going on to sell advertisers a bill of goods is FB is extrapolating results from a smaller test sample to imply to larger groups of Advertisers that this is the typical return you can expect 2x 3x or even 5x roi on ad spend.
As marvinandmaydel noted in his post entitled congrats investors but.... real life ad campaigns are showing different and inadequate results as he stated "My clients are either dropping FB or cutting their budgets for it and we are moving to other social sites."
This is part of the reason I think Argus downgraded FB to hold saying in addition to valuation that they did not think Q2 results are sustainable going forward.
Datalogix has purchased data from a reported 70 million U.S. households covering a $1 trillion in consumer transactions; the data is largely drawn from loyalty cards and programs at more than 1,000 stores. For each of these users, Datalogix creates a Datalogix ID number that is then matched to Facebook users, who by default are opted into the program. By matching personal data like contact information associated with both the loyalty cards and Facebook accounts, Datalogix can track whether people bought a product in a store after seeing an ad on Facebook.
In order to assess the impact of Facebook advertisements on shopping in the physical world, Datalogix begins by providing Facebook with a (presumably enormous) dataset that includes hashed email addresses, hashed phone numbers, and Datalogix ID numbers for everyone they’re tracking. Using the information Facebook already has about its own users, Facebook then tests various email addresses and phone numbers against this dataset until it has a long list of the Datalogix ID numbers associated with different Facebook users.
Facebook then creates groups of users based on their online activity. For example, all users who saw a particular advertisement might be Group A, and all users who didn’t see that ad might be Group B. Then Facebook will give Datalogix a list of the Datalogix ID numbers associated with everyone in Groups A and B and ask Datalogix specific questions – for example, how many people in each group bought Ocean Spray cranberry juice? Datalogix then generates a report about how many people in Group A bought cranberry juice and how many people in Group B bought cranberry juice. This will provide Facebook with data about how well an ad is performing.
The obvious problem with this is it is a snapshot and does not actually predict or substantiate ad performance. If I see an ad on facebook and buy the product is it because I saw the ad or because I actually wanted or needed the product.
The percentages they gave are way off for everything. For example, I searched for Mark Zuckerburg got multiple results. I did this for various different spellings of both Mark and Zuckerberg. I Saw over a dozen. All with his picture. I know several of my FB friends are girls with real names & alias stripper names. FB proposes margin of fake accounts at 5-7%. That figure is way off and there is no way to audit it. They report financials and decide to use last years tax return this quarter, while simultaneously not with holding tax payments this year. That was +$400mill return + unpaid taxes of 18%, or roughly somewhere around $600MIll. Meanwhile, they report non-GAAP earnings of 700MIll + and get a crazy reaction. In reality the GAAP was only 550mill, minus the tax money puts them at a loss!!!!!!!!!!!!!
You hear that, They actually LOST money!!!!!! Will they be audited for this misdirection from reality? Doubt it, I don't know that what they did is not allowed. The kicker, that money will have to come into play, but when??
This was the BEST QUARTER FB WILL EVER REPORT, AND IT IS FRAUDULENT LIES!!!