A Trillion-dollar Advertising Machine

Facebook lures 2.9bn users to the dangerous areas

Photo by Firmbee.com on Unsplash

Five years ago, Cal Newport explained the harmful effects on social media. He has a point. You can live without social media accounts. You can actually be better-off. He delivered two messages in his TED stage. Since the release of his video clip, it attracted more than 8m viewers in America.

This number is probably not enough to give a warning signal to American people. He rebuts the commom objections from SNS supporters who argue three things. SNS is the fundamental technology. It is valuable for the professional success. Finally, it is harmless for users. Dr. Newport says these objections are non-sense. I support his argument. But for the last five years, the situation might have become worse in America.

Facebook is a digital magnifying glass of human nature. It has two faces, good and bad. It can be a platform for users to help each other like neighbors. It can spread misinformation to active users on conspiracy theory. This story also has a point.

The latest financial results this year looks awfully good. The revenues of the second-quarter rose by 56% from the same period last year to $29bn, which can push a digital mega-city to a $100bn in revenue. Its profit is also up to $10.4bn, two-fold growth year-on-year, of which the advertising generates 98%. The reflection of remarkable success results in making it a $1trn firm in America.

Its 2.9 daily global users enjoy the three entertainment offerings; flagship social network (Blue), Instagram, WhatsApp and Messenger. These offerings produces $8 a quarter a user. Blue contributes $55bn whereas Instagram $20bn to the total revenue from 10m advertisers, mostly small and medium-sized firms. American adults spend an astonishing 35 minutes on average per day, according to eMarketer. It is more than necessary and should have been the same duration per week, not day. The social-networking monopolist attracts a whopping 60% of overall ad spending in America.

Mr. Zuckerburg has three paths on the future of Facebook. All of them are placed on bad effects on the welfare of users. My arguments are aligned with Dr. Newport. It is not fundamental technology. Deep work without frequent interaction in social media is required for your professional success. Mostly, it is addictive and harmful on your brain, supported by multiple well-documented evidence. Yes, he said there are multiple well-document significant harms.

The first bet is on the creator economy. Users can make money from digital works on the screen like TikTok and YouTube. Mr. Zuckerburg lures people with $1bn in the unspecified payment method. American people have already spent 21 hours a month on the video apps in TikTok. Facebook captures 18 hours a month. The new move creates more additional time consumption on the unproductive shower of entertainment platform. It is addictive and harmful.

The second hosting vehicle looks dangerous, too. Facebook promotes user-to-user chat to buy merchandize of 1.2 m online shops currently active on the platform. This is called conversational commerce where shopping takes place in the conversation among potentially unknown strangers. Misinformation could spread to extra purchase. No one is responsible for it.

The third gamble, which is probably the most dangerous one, lures young college students in America to a video-gamers’ community. Metaverse was coined by a prophet in 1997. Neal Stephenson is a science-fiction writer in 1997. Mr. Zuckerburg wants his firm to become a metaverse company. Among 8m game developers in America, 300 engineers earned $100,000 compensation for their products on Roblox. It could be far more addictive and harmful on competition. A lot of gamers become game crocks.

A trillion-dollar market capitalization is a remarkable achievement for any start-ups in Silicon Valley. But this social network monopoly with abundant pool of money from the capital market is judged by many users, advertisers, and investors on the basis of welfare. The three new bets, if incorrectly applied, could make the matter worse to the welfare. Dr. Newport on the stage clarified his convincing argument with the academic theory. The audience wants to listen to him again.

Taught marketing @ universities in Tokyo for a decade, ex-I-banker & mgmt consultant @ Kurt Salm (Accenture Technologies now), Georgia Tech educated