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Facebook's impact: 4.5M jobs, $227B added to economy

The social network measures impact based on marketing, sales of mobile devices and app developers

Financial trends and news by Steven Loeb
January 20, 2015
Short URL: http://vator.tv/n/3b83

With over 1.35 billion users and billions in revenue, Facebook is obviously the most successful social network. But the company wants to be known for more than that. It wants you to know that it is really having an effect on the world.

Hence the release of a new report on Tuesday that measures Facebook's global economic impact. It showed the company creating over 4.5 million jobs, and having a global impact of $227 billion around the world.

All such activity, it said, is done by third parties in Facebook's ecosystem, and doesn't include "the operations of the company itself."

Facebook has the biggest effect in North America, where it has an impact of $104 billion, and created 1.2 million jobs. That was followed by the European-Middle East-Africa region, with $64 billio and 1.4 million jobs created. In the EU alone, Facebook has driven $51 billion and created 783,000 jobs.

The company measures its impact in three separate ways:

  • Marketing effects, which is describes as, "the economic impact of  Facebook for businesses that use it as marketing platform to connect with consumers and build brand value."

The three sources that have the biggest effect in this area are pages, targeted  advertising and referrals, according to the report. The increase in ad activity has led to an increase in sales, and, in the case of  the Ice Bucket Challenge, an increase in charitable giving.

In all, marketing effects had a $148 billion global impact, and created 2.3 million jobs. It had the biggest impact in North America, generating $81 billion and creating 870,000 jobs, followed by the European-Middle East-Africa region, with $15 billion and 380,000 jobs created. The U.S. alone  saw a $77.6 billion impact, and 816,000 jobs, nearly half of the entire global impact. 

In the EU, marketing effects drove $27.7 billion and created 388,000 jobs.

  • Connectivitiy effects, which it describes as, "the impact created through the sale of mobile devices and internet connectivity"

Nearly 1 in ever 5 minutes spent on a mobile device is spent on Facebook, the report says, driving more mobile-specific content, such as video and links to stream music. This, in turn, causes people to "buy faster connections and more generous data allowances."

In all, marketing effects had a $50 billion global impact, and created 1.6 million jobs. It had the biggest impact in North America, generating $14 billion and creating 150,000 jobs, followed by the European-Middle East-Africa region, with $18 billion and 580,000 jobs created. The U.S. alone  saw a $13.8 billion impact, and 135,000 jobs created. 

In the EU, connectivity effects drove $12.9  billion and created 197,000 jobs.

  • Platform effects, which it describes as, "the impact in the developer app economy."

It allows developers to expand their reach, and to create new genres of apps with a social twist. Website owners can also use social plugins to  embed Facebook, increasing the amount of time people spend on their apps, and to increase sales. 

In all, marketing effects had a $29 billion global impact, and created 660,000 jobs. It had the biggest impact in the European-Middle East-Africa region, with $13 billion and 270,000 jobs created,  followed by North America, generating $9 billion and creating 140,000 jobs.

In the EU, platform effects drove $10.5  billion and created 198,000 jobs.

Those are some impressive numbers, and they sure make Facebook look like an important driver of the world economy. Not everyone is convinced that Facebook really does have such a big impact, though. A number of economists, speaking to the Wall Street Journal, put serious doubt on how much any of this really means.

“The results are meaningless,”  said Stanford economist Roger Noll. “Facebook is an effect, not a cause, of the growth of Internet access and use.”

“The value of smartphones is that they help you read Facebook — in addition to other benefits — not vice versa,” Tyler Cowen, a professor of economics at George Mason University, said. While Facebook does serve as a driver of the economy, he doubts it has as big of an impact as the company says it does.

VatorNews reached out to Facebook, but the company declined to comment on these statements.  We have also contacted Deloitte the consulting firm that prepared the report, and  we will update if  we learn more. 

(Image source: inewsgr.com)