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Phase 3: Profit
51–60 of 75 posts
Re: Phase 3: Profit
#52The difference between Facebook and Google is Technology, the value of goods is define by its availability/scarcity. There's nothing spectacular about Facebook technology, Fame alone is not enough to justify those billions if you don't think so let see when they go public.
Agreed. Facebook will lose dominance shortly because it is so easily replicable. (Although, the way Facebook grew its user base through colleges was genius and would be hard to match.)
The same argument could be made for Google as well. Hadoop is poised to render Google's search technology worthless.
Re: Phase 3: Profit
#53Earlier quoted context omitted.
I've never understood if the $15B valuation is real either (although I understand that it's quoted by everyone as being real). The original $15B number comes from an investment that Microsoft did for a share of the company plus advertising consideration. If you just valued the company on the share then it would be worth $15B but since there were other considerations you can't know at all what the valuation was. I've…
Without knowing the details on the MS deal or the follow on funding, it's hard to say. I would speculate, solely from what I've read, that MS's investment values them at $15 billion while giving them the right to run ads for which they'll have to pay a certain amount as well. So in the case, and assuming other investors also valued them at $15b, that's their actual valuation.
I recall Zuckerberg admitting at SXSW they only valued it at that so that Microsoft could invest their cash and not suck up a big percentage of the company. That would mean not even Zuckerberg pretends its worth $15 billion. It seems a bit lame to repeat this valuation as if Zuckerberg is running around yelling "My company is worth $15 billion!" because he's definitely not doing that.
Re: Phase 3: Profit
#54Earlier quoted context omitted.
Brand advertising (most of traditional media ads) isn't measured in click throughs, isn't any easier to measure on the web than elsewhere, and can't be dismissed without evidence.
It wasn't a dismissal. I would strongly disagree with isn't any easier to measure on the web than elsewhere though. If I place an ad on a site that results in 16 clicks which result in 4 transactions out of an audience of 32, I have a mathematical percentage of the effectiveness of my ad placement. This is possible on any ad placement on the web. If I run the same ad on tv or print, I have nowhere near the ability to…
That's not the point of brand advertising though. The point is to hammer the consumer with a brand over and over again until they KNOW that's the brand for them and go out and seek it on their own. Think Coke, Ford, etc. Facebook has terrible click-through rates, so if they're going to make money from advertising, it'll probably be this way.
Re: Phase 3: Profit
#55Earlier quoted context omitted.
Without knowing the details on the MS deal or the follow on funding, it's hard to say. I would speculate, solely from what I've read, that MS's investment values them at $15 billion while giving them the right to run ads for which they'll have to pay a certain amount as well. So in the case, and assuming other investors also valued them at $15b, that's their actual valuation.
I recall Zuckerberg admitting at SXSW they only valued it at that so that Microsoft could invest their cash and not suck up a big percentage of the company. That would mean not even Zuckerberg pretends its worth $15 billion. It seems a bit lame to repeat this valuation as if Zuckerberg is running around yelling "My company is worth $15 billion!" because he's definitely not doing that.
Regardless of what Zuckerberg says, it's the valuation. It doesn't matter why. It's a simple mathematical equation. He can feign humility all he wants, but legally and technically speaking, their valuation is $15 billion.
I don't know any of their investors, but I'd be willing to bet my left nut that they'd be angry if the next funding round values them at $10b.
Re: Phase 3: Profit
#56Earlier quoted context omitted.
They can convince major brands to advertise there. The problem is, unlike traditional media ads, web based advertisers can quantify how much bang for their buck they are getting (click throughs, etc). Turns out that blanket, weakly-targeted advertising just doesn't perform that well, and companies get explicit feedback from these networks on just how bad the typical ad really is in terms of ROI.
Brand advertising (most of traditional media ads) isn't measured in click throughs, isn't any easier to measure on the web than elsewhere, and can't be dismissed without evidence.
Use geotargeting to target a specific state or small country pour massive amounts of money relatively to the small target zone and monitor changes in consuming habits, brand reach and recognition etc.
I'm not sure most consumer product companies know how to do it properly.
Also some brand advertising isn't always about gaining ground, its about not losing ground to competing brands that do advertise, if Pepsi is pushing a huge TV campaign, Coke feels the pressure to play catch up.
Re: Phase 3: Profit
#57Earlier quoted context omitted.
Without knowing the details on the MS deal or the follow on funding, it's hard to say. I would speculate, solely from what I've read, that MS's investment values them at $15 billion while giving them the right to run ads for which they'll have to pay a certain amount as well. So in the case, and assuming other investors also valued them at $15b, that's their actual valuation.
I recall Zuckerberg admitting at SXSW they only valued it at that so that Microsoft could invest their cash and not suck up a big percentage of the company. That would mean not even Zuckerberg pretends its worth $15 billion. It seems a bit lame to repeat this valuation as if Zuckerberg is running around yelling "My company is worth $15 billion!" because he's definitely not doing that.
as if Zuckerberg is running around yelling "My company is worth $15 billion!" because he's definitely not doing that
well current hires are getting their stock at that valuation so the net effect is the same
Re: Phase 3: Profit
#58Earlier quoted context omitted.
It wasn't a dismissal. I would strongly disagree with isn't any easier to measure on the web than elsewhere though. If I place an ad on a site that results in 16 clicks which result in 4 transactions out of an audience of 32, I have a mathematical percentage of the effectiveness of my ad placement. This is possible on any ad placement on the web. If I run the same ad on tv or print, I have nowhere near the ability to…
That's not the point of brand advertising though. The point is to hammer the consumer with a brand over and over again until they KNOW that's the brand for them and go out and seek it on their own. Think Coke, Ford, etc. Facebook has terrible click-through rates, so if they're going to make money from advertising, it'll probably be this way.
That was not the point being argued here. He stated that web ads cannot be measured any more efficiently than any other form of advertising, and I provided evidence on how they can.
You're probably right about that being the only form of ad they can monetize, though. The question then becomes when do companies spend as much in that space as they do on tv, if ever?
Re: Phase 3: Profit
#59The biggest problem with facebook, imo. All the lovers will come and razz Matt and this comment, but none of them will be able to provide any evidence that facebook is doing anything but spending capital.
My suspicion is that Facebook will have to change how online advertising works, or die. Look at Compete data: average stay of 15 minutes * 350 million visits/month = 87.5 million hours / month in the US. That is coupled with decent demographic data and ability to target. How much would that much attention be worth in TV or newspaper advertising? A lot more than Facebook is currently getting, I suspect. If it can conv…
Our conversion rates from Facebook were low compared to other methods like AdSense. That might be hurting them as well.
Re: Phase 3: Profit
#60Earlier quoted context omitted.
That's not the point of brand advertising though. The point is to hammer the consumer with a brand over and over again until they KNOW that's the brand for them and go out and seek it on their own. Think Coke, Ford, etc. Facebook has terrible click-through rates, so if they're going to make money from advertising, it'll probably be this way.
That was not the point being argued here. He stated that web ads cannot be measured any more efficiently than any other form of advertising, and I provided evidence on how they can. You're probably right about that being the only form of ad they can monetize, though. The question then becomes when do companies spend as much in that space as they do on tv, if ever?
That doesn't measure what brand advertising wants to measure, though. If one ad gets 16 clickthroughs that result in 4 transactions, that ad is inferior to one that gets 0 clickthroughs but results in 8 sales when customers actually go to the store.
Brand advertising works because most consumers rely on a recognition heuristic when faced with the dozens of products in a store. They'll buy products they recognize, even if they have no personal experience with the product. You don't go out and buy an All-New Mercedes Benz immediately because you saw it on TV - but when it comes time to buy a car, you're far more likely to buy it because of all the associations that its name & image bring up. You can't measure this with any existing web metrics - it may be years before customers actually go out and make a purchase.