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>"Digital advertising is becoming a rather simple proposition: Facebook, Google, or don’t bother." This is true only for the worst marketers. Due to the law of

• adTechGuy 11y ago
  For performance marketers, sure. But lots of marketers are lazy or are big brand spenders just looking to do whatever gives them the most reach and the richest targeting they can sell to their boss. That spend is migrating from TV/Radio/Print to digital and once it goes digital it goes to Google/Facebook. There's always going to be new channels that open up and present short term opportunities. Those channels will get acquired or subsumed by Google/Facebook. That's what the next 4-6 years look like in terms of advertising.
• golergka 11y ago
  Most marketers are significantly bad.
• jondubois 11y ago
  Yes, that's what I wanted to say too. Perhaps LinkedIn's value of advertising is lower than that of Facebook, but it is still worth something. If the demand for ad slots drop on a particular network, the price of those slots will drop and this would attract marketers back to the ad network again. If anything, Facebook is in a worse position than LinkedIn when it comes to coping with an economic downturn. Financial crashes kill hype, not value. The article's pro-Facebook argument is centered around hype, not value.
• coldtea 11y ago
  >This is true only for the worst marketers. Worst in terms of return, but not all marketers care for return that much. Most just care for audience reach. At least you seldom see all the big lucrative accounts advertising in non mainstream channels.
• snowwrestler 11y ago
  And, it ignores the variety in the goals of marketers, and the audiences they are trying to reach. For example, on Twitter you can target ads to public conversations among influencers. You cannot do that on Facebook; there are no public conversations among influencers on Facebook. Influencers use Facebook the same way you and I do: to stalk people and avoid their parents. Or consider the quickly growing content marketing options, like branded content (the Buzzfeed and Vice model), buying native content slots on sites, and content "recommendation" systems like Outbrain and Taboola--which are way cheaper than Google or Facebook. Want to reach teenagers? They don't use Google and Facebook. You better be on Snapchat and Instagram (and, actually, Twitter). Etc.
  • spangry 11y ago
    Twitter's an interesting case. My very controversial view is that Twitter will never achieve profitability (of the level that justifies their market cap). Like Facebook, Twitter is in a two-sided market. Unlike Facebook, it's unclear what the other side of that market is, or how it could be sufficiently monetised: User --> Facebook <-- Advertiser (Stalking) --> (Profit) <-- (Eyeballs) (Socialising) --> (Profit) <-- (Targeting) User --> Twitter <-- ? (Free expression) --> (Profit?) <-- ? (Public broadcast)--> (Profit?) <-- ? There are probably a bunch of other market participants on the right side (e.g. developers) for both companies. But I think these are the primary profit engines (and main benefits listed under the participants). Here's the interesting part. Let's assume the right side participant for Twitter is also 'advertisers'. In both cases, advertising creates a 'negative cross-side network effect': it subtracts from the user's benefit. But Facebook has a number of advantages over Twitter: - Because of the structured data they hold, it's far easier for them to target advertising at finely grained demographics. This is beneficial because it reduces or eliminates the 'user value subtraction' from advertising, and increases the value of placing an ad for advertisers (so Facebook can charge more for it). Twitter have far less scope to do this, as they can only make general inferences about their user based on sentiment and relationship-network analysis. Also, because the data is public, advertisers can analyse and target (via company/brand accounts) for free. - Facebook enjoy increasing returns to scale. On the user side, if more people use facebook there are more people to stalk or socialise with. On the advertiser side, more users means more eyeballs, more targeting data and more advertising niches. For Twitter, users gain far less from increased scale (as user-base size is not related to 'free expression', and only weakly related to 'public broadcasting', given non-twitter users can read twitter walls). Even worse, because Twitter data is public, they can't charge advertisers for the (less structured) data they generate. - Although an ill-defined concept, Facebook has increasing returns to scope. That is, as they acquire new types of data on their users, they can offer even better targeting and find more granular marketing niches. For example: imagine if Facebook acquired LinkedIn. It's fairly easy for them to link Facebook and LinkedIn users, as most use their real names on both. So now, in addition to knowing someone is a single 28 year old white guy who enjoys scotch, they now also know he earns a high income. This means that where they used to target him with generic scotch ads, they can now target high-end and expensive scotch ads at him. Twitter's users, on the other hand, mostly interact behind unlinkable pseudonyms. As heretical as these sound, I think there are only three ways for Twitter to generate significant profits (and they all carry significant drawbacks): - start charging for API calls above some threshold (i.e. charge for market research) - start charging commercial entities based on number of followers (or volume of tweets) - use adsense (better user data linkability) tl;dr - Twitter creates significant value. But it's difficult for them to capture at least some of that value as profit (unlike Facebook).