Diagnosing Falling Local Ads Revenue While Facebook Marketplace Sales Grow

You are a product manager at Meta working on Facebook Marketplace. Over a recent period, the number of sales completed on Marketplace has gone up, but the revenue Meta earns from Local Ads has gone down. Explain how you would work out why these two numbers are moving in opposite directions, and what you would recommend once you know the cause. ```hint Break revenue into its drivers Write Local Ads revenue as a product of a few factors on the buyer side and on the advertiser side, find which factor actually moved, and only then ask whether more Marketplace sales could plausibly push that factor down. ``` ### Clarifying Questions - How is a Marketplace "sale" measured here, given that many local deals are agreed in chat and paid in person: listings marked as sold, in-app checkouts, or total transaction value? - How are Local Ads charged (per click or per impression), and do they appear only inside Marketplace or also in Feed and other surfaces? - Over what period, and by roughly how much, did each metric move? Was the change sudden or gradual, and is it concentrated in particular countries or platforms? - Did revenue from Meta's other ad products change over the same period? ### What a Strong Answer Covers - Checking that both metrics are real before explaining them: logging, attribution, invalid-click filtering and definition changes. - A decomposition of Local Ads revenue into volume and price drivers on both the buyer side and the advertiser side, with segmentation by time, region, platform, surface and item category. - Hypotheses that explain both movements through one shared cause, as well as ones that treat them as a coincidence. - An ordered investigation plan that names the data which would confirm or rule out each hypothesis. - A recommendation tied to the root cause that weighs Marketplace health against ad revenue. ### Follow-up Questions - You find that many local businesses stopped buying ads and now post their stock as free Marketplace listings. What would you change, if anything? - The decline traces back to a feed-ranking change that raised buyer conversion. Would you roll it back? - How would you tell whether the lost Local Ads spend moved to another Meta ad product or left Meta entirely?