Facebook MAU Fraud – Where’s the scrutiny???
Bottom line – Facebook’s MAU (monthly active user) definition criteria does not require going to facebook.com…just hitting like on an article or uploading a photo via mobile and never viewing ads meets the critera!
EASY METRICS: Some metrics are pretty straightforward: 85 points in a basketball game, 100 dollars, 42 nickels, 6 feet tall without shoes. They need no additional layer of information to interpret.
FUZZY METRICS: Some are a bit more complicated: 3 inches of rain (may not be uniformly distributed), ‘up to 32 miles per gallon’, 30% gross margin, avg savings of $336 by switching to xyz insurance company. Without additional context or a distribution of the metric under varying conditions…things are less clear-cut. Here’s an example:
Drivers who switched from various insurance companies to another saved on average $336 annually. This is a very imprecise statement that marketers love writing. They strive to put you into an idealized reality. What % of applicants could save ZERO dollars by switching? Maybe 60%? If you adjust the statement for the odds of even saving money it’s more like $180 of expected value. Further, if 80% of those switching from StateFarm to Insurance ABC don’t stand to save any, $182*.2 = $36 expected value from switching. They don’t explicitly say that they are conditioning on drivers who WOULD save if they switched. We must make that leap, though?
Facebook Monthly Active Users (MAU’s)
CNBC just prior to FB’s opening quote on Friday had many investors in the company (on air) discussing ‘risks’ FB faced which might prevent them from growing into the incredibly optimistic multiple (96x earnings, 25x revenue). Given that more insiders were selling shares to the public than FB, inc (a fact not one commentator mentioned) I decieded to re-read the SEC filing with an open mind and see if there were any ‘fuzzy metrics’ which might make for an interesting post.
We all know FB’s revenue is driven by its advertising (small ads on the right, which target users based upon entered data points be they demographic or interest based). FB freely admits that they are currently unable to monetize mobile traffic. Most commentators skirted this statement by saying, ‘well duh, that’s the opportunity!’ I’d say go flip a coin. Anyway – much of the confidence was inspired by their 900 million MAU’s (monthly active users) and their vast (speculative) potential.
MAU is a highly deceptive metric – given that FB sells advertising and given that they use MAU’s as measure of network ‘value’, one might assume that a MAU is someone going to FB and reviewing photos, commenting on things, liking brands…all that good stuff that drives advertising network value. Not really though…
Monthly Active Users (MAUs). We define a monthly active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website that is integrated with Facebook, in the last 30 days as of the date of measurement. MAUs are a measure of the size of our global active user community, which has grown substantially in the past several years.
Logging into the site where the ads are ONLY represents 1/3rd the MAU requirement. They are not making money on mobile so that’s cause for concern. Now, connect that with this:
I can upload all my photos without ever viewing an advertisement. 3,200,000,000 likes per day can take place without EVER going to Facebook to view ads. Where the heck is the breakdown of all this activity by PEOPLE ON AND OFF THE WEBSITE????????????
Where’s the integrity in the world – not much to like here my ‘friends’.