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Can you call it a bubble if revenue is high? I have always thought of bubbles as being about valuation. If revenue is high, I'd call it a boom.

by zardo 9y ago

istorical 9y ago
If you think of ads (paid media: a portion of the marketing budget) as an investment that a business makes in hopes of boosting revenues enough to counteract the increased costs, then you can consider advertising an investment. And the risk here is that we're seeing companies post strong revenue growth, and they attribute some percentage of that success to ad spend, when in reality their revenue growth may be completely decoupled from how many impressions or conversions they're seeing from ads. That brings up an important question here - how many companies are still measuring the ROI of their advertising via "impressions". Because when you purely measure ad performance as a function of increased conversions (which is just another word for someone signing up for your newsletter, or buying one of your products, or subscribing to your service, etc) then you can get a clear picture of how that ad spend is flowing into your revenue. But when companies just spend $20 million a year hoping to get tons of impressions from pricey Super Bowl ads, they can't trace that ad spend back to revenue. So the risk here of a bubble is mainly - are companies spending more on ads than they really should be to secure more sales? And will companies realize they could be spending half as much on awareness campaigns and get the same results? If they do, then you can expect ad spend to go down and the internet (which is largely funded by its success as an advertising channel) can expect to contract.
- Aunche 9y ago
  It's not so much about boosting sales as much as maintaining it. If Nike stops paying Google, Adidas will be more than happy to have the first result of Googling "Nike" be the Adidas store.
AnimalMuppet 9y ago
Google's revenue is high. Are the advertisers' revenues high? I'm not so sure about that. Are they getting good returns on their investment in advertising? I don't know (presumably, they currently think they are). Even if they are, will they continue to do so as humans learn to better ignore the newer forms of advertising? They might be in, not exactly a bubble, but a... temporarily working technique, maybe?

Can you call it a bubble if revenue is high? I have always thought of bubbles as being about valuation. If revenue is high, I'd call it a boom.

by zardo 9y ago

Can you call it a bubble if revenue is high? I have always thought of bubbles as being about valuation. If revenue is high, I'd call it a boom.

istorical 9y ago

If you think of ads (paid media: a portion of the marketing budget) as an investment that a business makes in hopes of boosting revenues enough to counteract the increased costs, then you can consider advertising an investment. And the risk here is that we're seeing companies post strong revenue growth, and they attribute some percentage of that success to ad spend, when in reality their revenue growth may be completely decoupled from how many impressions or conversions they're seeing from ads. That brings up an important question here - how many companies are still measuring the ROI of their advertising via "impressions". Because when you purely measure ad performance as a function of increased conversions (which is just another word for someone signing up for your newsletter, or buying one of your products, or subscribing to your service, etc) then you can get a clear picture of how that ad spend is flowing into your revenue. But when companies just spend $20 million a year hoping to get tons of impressions from pricey Super Bowl ads, they can't trace that ad spend back to revenue. So the risk here of a bubble is mainly - are companies spending more on ads than they really should be to secure more sales? And will companies realize they could be spending half as much on awareness campaigns and get the same results? If they do, then you can expect ad spend to go down and the internet (which is largely funded by its success as an advertising channel) can expect to contract.

Aunche 9y ago
It's not so much about boosting sales as much as maintaining it. If Nike stops paying Google, Adidas will be more than happy to have the first result of Googling "Nike" be the Adidas store.

AnimalMuppet 9y ago

Google's revenue is high. Are the advertisers' revenues high? I'm not so sure about that. Are they getting good returns on their investment in advertising? I don't know (presumably, they currently think they are). Even if they are, will they continue to do so as humans learn to better ignore the newer forms of advertising? They might be in, not exactly a bubble, but a... temporarily working technique, maybe?