Facebook and Impact on Global Economy Essay

Facebook has the largest numbers of users compared to other social media platforms such as Twitter, Instagram, WeChat, and Tumblr. The social media giant history can be traced to 4th February 2004; the year it was started by Eduardo Saverin, Chris Hughes, Dustin Moskovitz, and Mark Zuckerberg at Harvard University. As of 1st December 2004, Facebook had one million active users. Since then, the number of users has been growing yearly, at a very rapid rate. As of June 2018, Facebook had 2.23 billion monthly active users across the globe as of June 2018. Because of the fact that Facebook is used by billions of people of different age groups, gender, race, and nationalities, Facebook has become a critical element of the world's economy in many ways.

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One of the ways in which Facebook has impacted the global economy is through its marketing effects. It is worth noting that by giving millions of businesses platforms to market their products, Facebook has helped companies to connect their products and services with potential clients or consumers. According to a study conducted by Deloitte, Facebook was found to have given marketers of all sizes a chance to reach billions of active users through targeted advertising and pages. Through Facebook's marketing tools, such as ads and pages, businesses have had a platform to attract customers, retain them, and build brand awareness. Also, consumers or customers have also used Facebook marketing platforms to get to know new companies and connect to business they are already aware of. It is important to note that Facebook's marketing platforms can be used by both brick-and-mortar businesses as well as the online businesses worldwide. Through increased presence of businesses in Facebook pages, the companies have reported increased sales and profits thus improving the world's economy.

Secondly, the world's economic impact of Facebook can be seen in the cost-effectiveness of its marketing platforms. Facebook offers are cheaper way of reaching potential customers because of the ability to target and reach the relevant audience. This is in contrast to the traditional marketing platforms which targeted the general audience. Additionally, because of the ability of Facebook's marketing platforms to fine-tune their campaigns to reach particular socio-demographic group and the presence of Facebook's auction-based ad tool, marketers have had the opportunity of creating campaigns at scale. These features have enabled companies to lower their cost of advertisement or marketing. Consequently, these companies have been able to have increased sales and profitability. Through increased profits, these companies advertising with Facebook have been able to improve the economies of the countries they are operating in.

Additionally, through the ability to share Facebook's ads with friends and family, businesses benefit from increased customer reach and sales leading to increased profitability of the company. Through increased earnings, governments have been able to get revenues to stimulate their economic growth. Moreover, the presence of Facebook in the mobile platform has allowed companies to reach billions of potential customers despite the device they are using and to also capitalize in the popularity of Facebook Android and IOS app to drive marketing and increase sales. Through their Facebook pages and walls, companies have also been given a chance to get customers' feedbacks. These feedbacks are used to improve the products and services thus increasing the sales and profits of the companies and improving the economy of the countries the companies are found in.

According to Deloitte, the marketing effects of Facebook was responsible for 2.3 million jobs worldwide in 2014. Additionally, Facebook's marketing effects was found to have led to $148 billion in terms of economic impact in the same year. It was further reported that the marketing effect of Facebook led to 870,000 jobs in North America, the region with the world's largest market share of Facebook. Also, North America recorded $81 billions economic impact as a result of Facebook advertising and high page engagement. Also, in Brazil, Facebook marketing added 189,000 jobs in Brazil in 2014. Additionally, the economic impact of Facebook in Brazil was estimated to be $8.4 billion. The third largest economic impact of Facebook marketing was reported in the United Kingdom in 2014. In the United Kingdom, Facebook was responsible for 89,000 jobs and $6.6 billion injection to the economy.

Facebook's positive impact into the economy has also been linked to its platform effects. Specifically, Facebook development tools enables developers to create new apps, new features, and new services. This facilitates distribution of content and stimulates innovation as well as the creation of new jobs. According to Deloitte, Facebook developer platform, which was started in 2007 to provide app developers the opportunity to add Facebook experience into their apps. This has provided app developers with significant opportunities to sell their apps and stimulate economic activity as well as create jobs. Developers can sell their apps as in-app purchases through Facebook and also via other channels such as charging for downloads and in-app advertising. According to Deloitte, up to about 90% of top-grossing apps in the United States on both Android and iOS are integrated with Facebook. This demonstrates that Facebook has an immense impact on the income of the developers.

Through the of app developers to create plug-ins in Facebook, website owners have been able to embed Facebook sharing and commenting functionality thus driving content distributors. Through increased time visitors engage with the content on the websites, Facebook plug-ins and apps have become the most important means of advertisement and ways through which products and services are marketed. Additionally, the fact that Facebook has easy functionality, such as the easy process of setting up events and inviting friends has been associated with increased spending which builds the economy. Deloitte estimates that the platform effects of Facebook has resulted in 660,000 jobs globally as well as $29 billion in economic impact.

The worlds' leading region in the economic benefits accrued from Facebook plug-ins and apps is EMEA. In this region alone, Deloitte established creation of 270,000 jobs associated with Facebook's platform effect as well as $29 billion of economic impact. These immense economic impacts have been attributed to companies such as king.com and Spotify whose headquarters are EMEA. However, when individual countries are considered, the United States leads in economic impacts associated with Facebook platform effects. In 2014 alone, the United States was reported to have generated 126,000 jobs from platform effects. Additionally, platform effects were responsible for $13 billion of economic impact. In conclusion, the economic impact of Facebook can be attributed to marketing effects which drive consumer spending and the platform effects which allow app developers to make money and create jobs.

References

CNN (2018). Facebook fast facts. Retrieved from https://edition.cnn.com/2014/02/11/world/facebook-fast-facts/index.html

Deloitte (2015). Facebook's global economic impact. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/technology-media-telecommunications/deloitte-uk-global-economic-impact-of-facebook.pdf