With more than 1.3 billion people around the world on Facebook – so, about a seventh of the planet – it’s not exactly a secret that the Menlo Park, Calif.-based company has had a huge impact on how we communicate and how we do business.
But exactly how much is that impact worth?
That’s the question a new report from Deloitte is trying to answer. In a study released this month, the research firm looked at how Facebook generates economic activity through its marketing tools, its platform for app developers, and the fact that it’s pushed up demand among developing markets for access to the Internet.
According to the Deloitte study, in 2014, Facebook enabled $227 billion of economic impact, and has been a driving force behind 4.5 million jobs. That’s not counting Facebook’s actual operations, as it’s looking solely at the third parties that run their businesses from inside the company’s ecosystem.
To make its calculations, Deloitte looked at how much employees were spending, as well as the economic activity coming from companies that were part of Facebook’s supply chain. Researchers didn’t count costs accrued through using Facebook, but they did eliminate any economic activity or jobs that might have been created for reasons other than Facebook’s existence, or before the company existed, from the study.
Digging a little deeper, out of the $227 billion created from Facebook’s ecosystem, about $148 billion of that comes from marketing, as you might have guessed. Another $29 billion is generated from third party apps, which were built on Facebook’s developer tools. And then from there, $50 billion came from consumers buying mobile devices and data services so they could connect to Facebook.
Staggering numbers, but they do make some sense. As marketing budgets in North America continue to climb, particularly in the U.S., it’s not surprising that Facebook is getting a lot of revenue from that industry, thanks to its widespread appeal to consumers and its wealth of data collected from tracking and measuring audiences.
“The cost-effectiveness of advertising for businesses is derived from the ability to target the relevant audience. Aggregated insights collected during their advertising campaigns allow businesses to further fine-tune their campaigns,” researchers noted in the study.
“Facebook’s self-service, auction-based ad tools lets marketers of all sizes create campaigns at scale. These features lower the barriers to advertising and allow companies that would not be able to advertise in traditional channels to take advantage of promoting their products and services.”
As part of the report, the Deloitte researchers also grouped economic activity into several different regions – North America, Central and South America, and the regions of Europe, the Middle East and Africa (EMEA) and the Asia-Pacific (APAC).
And as you might expect, the region that stands to gain the most from Facebook’s economic impact is centred around the company’s country of origin. North America generated $104 billion in economic activity, and 1,060 jobs, thanks to Facebook.
However, most of that wealth was kept in the U.S., with the U.S. taking roughly $100 billion of that sum and Canada eking out just $5 billion. And out of those 1,060 jobs, only 82 were based in Canada, while the U.S. generated about 1,076.
Of course, one thing to note is that this report may not be able to account for every factor leading to calculating economic impact. For example, it’s not totally possible to look at just one particular effect – like the increased demand for connectivity in developing markets – and completely attribute its boost to Facebook. There could be other reasons for people wanting access to Internet, especially if they rely upon it for activities like banking or money transfers, as is often the case in emerging markets.
Still, the Deloitte report pointed to a number of reasons to credit Facebook with more demand for Internet connectivity. It noted the Facebook app and the Facebook Messenger app are among two of the top 10 most popular apps in both the Apple AppStore and on Google Play, and that consumers often want to upgrade their mobile devices to handle faster data plans, like the ability to post and stream more multimedia content like videos.
And in developing countries, Facebook has had a track record of partnering with local operators and ensuring its own products can be optimized for slower speeds and less data in those regions. In 2013, Favebook also announced its internet.org program, when it announced it would be bringing the Internet to people in Kenya, Zambia, and Tanzania by partnering with Internet service providers and manufacturers.
All in all, Deloitte made a pretty compelling case for us to remember why Facebook is so relevant to today’s marketing efforts, mobile app ecosystem, and to connectivity – and in turn, why it’s a big driver of business.