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A new Facebook experience needs a new Facebook metric (Updated)

Winter 2016

Back in 2011 I proposed a new Facebook metric. Average Revenue per Minute of User Engagement or ARPMOE.

It was picked up by Chris Dixon at the time and gained a moment of popularity in VC circles as these random glimpses of insight hidden within the big data sometimes do.

You will find the original post archived here : A new Facebook experience needs a new Facebook metric.

5 years on it and is probably time to revisit the big data and examine what the averages tell us about the efficiency of Facebook's business model today.

The original research suggested the most efficient program on TV at that time was the SuperBowl with an above ARPMOE of $0.009. Meanwhile the ARPMOE for TV was $0.003. At that time Facebook was under half that. Even the much maligned Yahoo! model was 7x more efficient than Facebook at that time. Meanwhile Google had the most efficient model with an ARPMOE of $0.018. But that had slipped significantly from heights of the 2005 Google model.

So back to the question. Is Facebook's model improving or in decline?

The answer is Facebook is well on the way to being on par with Free to Air Broadcast TV - at least in its premium market in the USA. If we map Facebook against a basket of the leading broadcasters in the US Cable and Free to Air TV business we discover Facebook is among the top 3 players when it comes to monitizing content via advertising placements.

Elsewhere the answer is less convincing. Suggesting Facebook is still a significant under achiever, at least by the historical measure of online advertising business models, when it comes to monetizing all those eyeballs.

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