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Facebook report says it spurs Canadian economy by $5-billion (Like?)

These are stories Report on Business is following Tuesday, Jan. 20, 2015.

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A new report commissioned by Facebook Inc. calculates that the social network stimulates almost $230-billion (U.S.) in economic activity, some $5-billion of that in Canada.

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The Deloitte report looks at how Facebook juices global economies through marketing and innovation, among other things.

Its global impact for the year ended last October, the consulting group said, was $227-billion and more than 4.5 million jobs.

The bulk of that, as you'd expect, was in the United States, at $100-billion and almost 1.1 million jobs.

At $5-billion, Canada lags not only the United States, but also Britain, at $11-billion, Brazil at $10-billion, Germany and France at $7-billion apiece, and Australia and Italy at $6-billion.

But the impact was bigger in Canada than in India or Japan, at $4-billion and $3-billion, respectively.

According to the report, that Facebook stimulation also accounted for about 82,000 jobs in Canada.

The impact from marketing in Canada was $3.3-billion, or 50,000 jobs, and that of "connectivity effects" $1.1-billion or 15,000.

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"Through targeted advertising and pages, Facebook allows firms to promote their brand, raise awareness and generate new sales," the report says, citing how pages are used to "build brand value," how targeted ads reach customers, and how referrals direct "organic traffic" from Facebook to other websites.

"Facebook connects more than 1.35-billion people with their friends and families around the world, and helps them discover new products and services from local and global businesses," Deloitte says.

"It is a catalyst for economic activity in ecosystems composed of marketers, app developers and providers of connectivity."

Chief economist Douglas Porter of BMO Nesbitt Burns said the calculations would put Facebook right between 0.2 per cent and 0.3 per cent of Canada's gross domestic product, and he's skeptical of the figure.

"Put in one perspective, Target's sales were just over 0.1 per cent," Mr. Porter said.

"In other words, that's an important company, but a small industry."

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Canada's broadcast industry in total accounts for about 0.25 per cent of GDP, just as an example, Mr. Porter added.

"There is no way Facebook contributes anything close to that industry's contribution to the Canadian economy. Not in the same universe. So, put me down as extremely skeptical."

China's growth slows
That number from Beijing, by the way, was the lowest in 24 years.

China's economy expanded by 7.4 per cent in 2014, according to the official numbers, which may well prompt the country to lower its growth forecasts.

The official target is 7.5 per cent.

In the fourth quarter alone, the economy grew by 7.3 per cent.

"In the light of the housing slowdown domestically and the sluggish demand for Chinese goods from Europe it seems likely the government will lower its growth target for 2015 to closer to 7 per cent," said CMC's Mr. Lawler.

Morgan Stanley misses estimates
The latest U.S. bank to report fourth-quarter results, Morgan Stanley, missed the mark today, though it posted a stronger overall profit.

Profit climbed to $1.05-billion (U.S.), or 47 cents a share, in the quarter, compared to $95-million or 2 cents a year earlier.

On an adjusted basis, however, its profit slipped to 39 cents from 50 cents, compared to the estimates of analyst for 48 cents.

"We finished 2014 in substantially better shape than we entered the year," said chief executive officer James Gorman.

"Entering 2015, we remain confident about our business mix, market position and the opportunities ahead of us," he added in a statement.

Manufacturing sales slip
Canadian factories suffered another setback in November, the third in four months, as sales fell 1.4 per cent.

That was largely because of lower sales of autos, chemicals, primary metals and food, Statistics Canada said today.

Sales fell in 16 of 21 industries, accounting for more than 80 per cent of the sector.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


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