Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

medium.com

Post reply on HN
Print view View original

61–70 of 176 posts

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

#61

Post by skywhopper »

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…

I think you misread the article, which is not about the segment of the ad market that wants to know so much about its audience.

Instead it’s about the ads that are currently on TV. The ads that are about broad brand recognition, not about microtargeting the audience. The point is that Google and Facebook already won the battle for their markets but they have no particular advantage over other media companies in competing for the rest of the ad market. In fact they are worse off because they have no existing brand of TV like content and they don’t have the cash reserves to buy their way in.

This article is a couple of years old but in the interim Facebook and Google have both had to back up and re-assess their media production strategies because so far they’ve been failing exactly as this article predicted.

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

#62

Post by themagician »

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 content that Google and Facebook produce is garbage. It’s only barely better than nothing at all. Most people would not pay for the kind of content that shows up on Facebook and YouTube by so-called “content creators”.

Facebooks ads are garbage except in certain circumstances. Everyone knows this, including the big brands, but they continue to do it because it makes the board happy when they see their brand on FB.

AdWords is the only ad platform that works, works well, and is pretty universal.

Disney has a real good chance here though because Disney has actual valuable content. As in, literally valuable. You know, because people pay for Disney content with money.

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

#63

Post by manigandham »

darawk wrote: post #47
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 ?

They generate profit with far less work than Disney, therefore their profit is much more protected and scalable with automation and tech.

Original content and physical parks are very hard to invest in and make profitable, and Disney has had plenty of missteps recently. Also Google has Youtube which is replacing TV for many young people and full of original content that required no investment.

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

#65

Post by pbalau »

petra wrote: post #36
sologoub wrote: post #17

This article completely missed the forest for the trees - the battle for TV is not just a battle for content, it’s a battle for the delivery medium itself! Think about it - how was TV delivered to you before? There are over the air broadcast, satellite, cable/settop, and what’s been called OTT. Except, more and more settop boxes are Rokus, Android TV-based and even some Apple TVs (Verizon 5G was offering those in tes…

This is true. The problem, for Google, is they lose market share in the platform market: https://i2.wp.com/www.cordcuttersnews.com/wp-content/uploads... And my guess is that Amazon will win this, because like you say, it's better. But also - Since Amazon controls all the buyer's journey, it can make more money per each ad. Which equals better content. And in any case, FireTv is a loss leader for Amazon. Hard to compe…

Here is a question to ponder about: is Google loosing market share or is the market expanding?

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

#66

Post by panarky »

disishhsha wrote: post #43
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.

This is the premise of The Innovator's Dilemma.

Incumbents ignore low-margin, cost-conscious customers.

Innovators cater to customers the incumbents don't want and build a product that is worse than incumbent's in every area except cost.

Then innovators improve the product to capture the lower tier of incumbent's customer base, then work their way up to more profitable customers.

Incumbent wakes up too late, finds their customers moved to a product the incumbent always thought was worse.

Lesson: don't ignore large, underserved populations or you'll find your lunch has been eaten.

https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma

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

#67

Post by darawk »

gibybo wrote: post #54
darawk wrote: post #49

Earlier quoted context omitted.

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

Earnings multiples reflect the amount of future earnings growth. He laid out an argument for larger future earnings growth.

None of the growth oriented items he listed are even remotely capable of justifying 2x the multiple of other media companies.

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

#68

Post by darawk »

manigandham wrote: post #63
darawk wrote: post #47

Earlier quoted context omitted.

> 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 ?

They generate profit with far less work than Disney, therefore their profit is much more protected and scalable with automation and tech. Original content and physical parks are very hard to invest in and make profitable, and Disney has had plenty of missteps recently. Also Google has Youtube which is replacing TV for many young people and full of original content that required no investment.

a) That doesn't follow at all. How do you get from less effort to higher moat?

b) So what? You're going to value a moat at a 100% premium NPV?

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

#70

Post by manigandham »

darawk wrote: post #68
manigandham wrote: post #63

Earlier quoted context omitted.

They generate profit with far less work than Disney, therefore their profit is much more protected and scalable with automation and tech. Original content and physical parks are very hard to invest in and make profitable, and Disney has had plenty of missteps recently. Also Google has Youtube which is replacing TV for many young people and full of original content that required no investment.

a) That doesn't follow at all. How do you get from less effort to higher moat? b) So what? You're going to value a moat at a 100% premium NPV?

Less work to generate more money as an industry compared to Disney, that's why they have better valuations.

The moat has nothing to do with that and is formed by their scale, which is almost impossible to break at this point. This is valued highly when it defends a multi-billion profit machine that nobody else can match.

Post reply on HN