The math’s not pretty on digital advertising’s future revenues? (2017) • Hacker News Board

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#41

Post by MarkMc » Sat, Dec 29, 2018, 11:29 PM UTC

Wow this article is so very wrong - Google and Facebook have enormous advantages over Disney because (a) they have other people producing valuable content for free; (b) they know much more about each viewer than Disney.

Google's revenue today is six times as large as it was a decade ago. And I expect its revenue in a decade to be at least 3 times as large as it is today. The reason is that many of the causes of past growth will continue for the foreseeable future:

1. The people who are connected to the internet will continue to become richer - in particular booming poor countries like India and Indonesia

2. The amount of time people spend on the internet will continue to grow

3. The amount of advertising Google can show people per hour will continue to grow. For example, Google can show many more ads on YouTube and still be less saturated than the old network TV model. Another example: The Economist app currently shows untargeted ads copied from their print magazine - but in 10 years these ads will probably come from Google.

4. Google can continue to improve its algorithm for placing of ads. Google knows so much about me yet I'm amazed how stupidly untargeted its ads sometimes are. Eg. if my photo stream doesn't include pictures of cats, don't show me ads for cat food!

5. Google can continue to collect more personal data. Right now it doesn't know when I last purchased toothpaste, but it might in 10 years from now.

6. The number of people connected to the internet will continue to grow (although of course at a slower rate than in the past)

[Disclaimer: I own shares in Google and Facebook]

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#42

Post by troygoode » Sat, Dec 29, 2018, 11:29 PM UTC

manigandham wrote: post #27

Another nonsensical article about adtech. This is not how the industry works. Apple does not have a chance at buying Google because they have the same market cap. Google and Facebook have a massive advantage in scale and precision which is why 2 of the top 10 biggest companies on the planet are ad networks. The valuations come from the sheer profit they generate, not their assets, and how much Disney spends on conten…

FWIW while I don't think it would actually happen, yes, Apple could "buy" Google. When companies merge the expectation is that the resulting combined entity will equal the two companies combined market caps.

Take theoretical company (Company A) worth $100MM and with a single shareholder (Shareholder A) who owns 100% of the 10MM shares of stock. They "buy" Company B which is also worth $100MM and has a single shareholder (Shareholder B) who owns 100% of Company B's 10MM shares. Company A executes this by issuing 10MM _new_ shares in Company A that will now be owned by Shareholder B. Company A now has 20MM shares and is worth $200MM because it has added Company B's assets, income, etc.

Of course in practice it frequently goes terribly wrong (ref: Microsoft & Nokia, Verizon & Yahoo, many others) and I don't think Google would actually have much incentive to go along with this. Just saying it COULD be done if both companies truly believed the outcome would be favorable.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#43

Post by disishhsha » Sat, Dec 29, 2018, 11:30 PM UTC

manigandham wrote: post #27

Another nonsensical article about adtech. This is not how the industry works. Apple does not have a chance at buying Google because they have the same market cap. Google and Facebook have a massive advantage in scale and precision which is why 2 of the top 10 biggest companies on the planet are ad networks. The valuations come from the sheer profit they generate, not their assets, and how much Disney spends on conten…

> Half of the world's population still isn't online so there's plenty of room for growth in the future too.

The offline half doesn’t have that much money to spend, right? Making some assumptions and approximating, would it be wrong to say that potential gains from bringing new people online ≈ global GDP growth? Currently that’s in the low single digits.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#44

Post by AznHisoka » Sat, Dec 29, 2018, 11:31 PM UTC

manigandham wrote: post #28

qha wrote: post #15

Earlier quoted context omitted.

Going back to what it was 20 years ago? I'm sold!

There was basically nothing on the internet 20 years ago.

There were just a bunch of DragonBall webmasters trying to rank #1 for DBZ in Altavista and Yahoo, but couldnt take that spot from VegettoEX.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#45

Post by bryanrasmussen » Sat, Dec 29, 2018, 11:35 PM UTC

hedora wrote: post #30

bryanrasmussen wrote: post #20

Earlier quoted context omitted.

If the web went back to what it was 20 years ago that would be economically catastrophic, I mean if it happened like nearly instantly, if it happened over a space of 10-15 years OK.

In the context of the quote, let’s ignore non-ad based stuff, like amazon’s shipping network, and online banking. In what way would resetting the ad based parts 20 years be catastrophic? Were RSS and semi-curated news portals like yahoo and google news that much worse for publishers? (I thought they were actually better, economically, than FB...)

the context of the quote was that the web went back to what it was 20 years ago, ignoring the non-ad based stuff is cherry picking after the fact.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#46

Post by tomrod » Sat, Dec 29, 2018, 11:37 PM UTC

everdev wrote: post #9

tomrod wrote: post #4

This is an open secret among techonomists and others in the arcane space of digital campaign measurement.[0][1- preprint] Digital advertising has a lot of smoke and mirrors. There is _some_ incrementality, but it seems oversold. [0] https://academic.oup.com/qje/article-abstract/130/4/1941/191... [1] https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2498290_cod...

And how much of the internet is powered by digital advertising? The web will look a lot different if that bubble bursts.

Much.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#47

Post by darawk » Sat, Dec 29, 2018, 11:38 PM UTC

manigandham wrote: post #27

Another nonsensical article about adtech. This is not how the industry works. Apple does not have a chance at buying Google because they have the same market cap. Google and Facebook have a massive advantage in scale and precision which is why 2 of the top 10 biggest companies on the planet are ad networks. The valuations come from the sheer profit they generate, not their assets, and how much Disney spends on conten…

> The valuations come from the sheer profit they generate, not their assets

Hm? He's talking about the multiples on their earnings, aka their profit. How does anything you just said justify a high multiple?

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#48

Post by joering2 » Sat, Dec 29, 2018, 11:38 PM UTC

MarkMc wrote: post #41

Wow this article is so very wrong - Google and Facebook have enormous advantages over Disney because (a) they have other people producing valuable content for free ; (b) they know much more about each viewer than Disney. Google's revenue today is six times as large as it was a decade ago. And I expect its revenue in a decade to be at least 3 times as large as it is today. The reason is that many of the causes of past…

The moment you owe the stocks thats the moment your view will be biased. Anyways Google search is most likely at its peak because next evolution of internet is voice control. And take it from horse mouth - Google CEO on shareholders call said he is most concern about voice controlled search. Because you know, its hard to show people ads when they use voice to get search result.

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#49

Post by darawk » Sat, Dec 29, 2018, 11:38 PM UTC

MarkMc wrote: post #41

Wow this article is so very wrong - Google and Facebook have enormous advantages over Disney because (a) they have other people producing valuable content for free ; (b) they know much more about each viewer than Disney. Google's revenue today is six times as large as it was a decade ago. And I expect its revenue in a decade to be at least 3 times as large as it is today. The reason is that many of the causes of past…

How does anything you just said justify a higher multiple on earnings for Google and Facebook?

Re: The math’s not pretty on digital advertising’s future revenues? (2017)

#50

Post by tomrod » Sat, Dec 29, 2018, 11:38 PM UTC

qha wrote: post #37

manigandham wrote: post #28

Earlier quoted context omitted.

There was basically nothing on the internet 20 years ago.

I vividly remember lots of things... what I wouldn't give for seeing IRC rise up again

It's still here!!!

I love IRC -- especially being able to connect with open source project maintainers. Mad respect for all of them.