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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 f

by MarkMc 8y ago

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]

joering2 8y ago
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.
- deleted 8y ago
  [deleted]
- burntwater 8y ago
  And we move nearly full circle back to radio-style ads.
  - ss2003 8y ago
    drink your ovaltine.
darawk 8y ago
How does anything you just said justify a higher multiple on earnings for Google and Facebook?
- gibybo 8y ago
  Earnings multiples reflect the amount of future earnings growth. He laid out an argument for larger future earnings growth.
  - darawk 8y ago
    None of the growth oriented items he listed are even remotely capable of justifying 2x the multiple of other media companies.
    - throwawaymath 8y ago
      Why do you say that?
      - darawk 8y ago
        Where's it going to come from? Here's the options I see: 1. More users. This is pretty tapped out for Google. Yes, more people will come online in developing countries, but those people will also gain access to say Disney content. So, world GDP growth is already largely priced into the multiple's of other companies too. 2. Higher ad density. I don't see a lot of opportunity for Google to substantially increase it's ad density. Reasonable people might differ here, but I think they're already fairly dense. 3. Higher ad quality / spend efficiency. This cuts both ways for them. Right now advertisers spend a lot of money on AdWords inefficiently. If Google can optimize their spend, they'll pay less in aggregate, but they may be willing to pay more per ad. Which, in turn, will allow the ad density to be more globally efficient, if Google can replace the lost volume with other advertisers who will also pay more. There is probably room here, but it's speculative, and I don't think the growth potential is enormous. 4. Reducing costs. Google's gross margins are already tremendous (63%), you could cut their costs to zero and you wouldn't even double their profit.
tyingq 8y ago
I read it more that growth percentage won't be as high in the future. Not that there won't be growth. That makes sense to me for Google. They have played out most of their bag of tricks to get more ad impressions. Everything above the fold is an ad, or a link to a Google owned property for any query you can monetize now. And any video on YouTube with revenue potential has a forced ad view. That wasn't true in the past, so they could turn the dial to turn up revenue. That dial is all the way to the right now. So, revenue growth will now match eyeball growth instead of exceeding it.
- deleted 8y ago
  [deleted]
pravda 8y ago
>Google and Facebook have enormous advantages over Disney The big advantage is that Google and Facebook have monopolies.
skywhopper 8y ago
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.
- aasasd 8y ago
  Personally I didn't even know Google and Facebook tried to produce something. What was that? I've only heard about YouTube's programs for creators, with workshops, free studio time and such.
  - ethbro 8y ago
    This article was from a little over a year ago, and detailed what Google and Facebook were producing. I think your ignorance of their offerings (and I couldn't name anything either!) says what we need to know about their success.
    - aasasd 8y ago
      I'm sorry, but by "this article" you mean ... ?
      - ethbro 8y ago
        The submitted link. "Oct 16, 2017"
    - MarkMc 8y ago
      So Google have complety failed in producing popular content themselves, yet still managed to grow revenue at 22% per year. What does that say about Google's need to produce in-house content?
themagician 8y ago
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.
- shawn 8y ago
  Most people would not pay for the kind of content that shows up on Facebook and YouTube by so-called “content creators”. This isn’t really true. I’ve been trying to demonstrate this by curating some interesting and educational YouTube videos in one place: https://www.laarc.io/l/videos https://www.laarc.io/l/videos You’re right that there’s a lot of noise to sift through. But there are real gems. People may not pay for it directly, but they pay for it with their time and attention. In most cases that can be translated to dollars for popular items. You can get a sense of estimated value by looking at socialblade. Here’s a content creator that recently rose to fame: https://socialblade.com/youtube/channel/UC5_do3JQAPHA1rIlM-2iS6g https://socialblade.com/youtube/channel/UC5_do3JQAPHA1rIlM-2... (If anyone knows how this guy got ~300k subscribers almost overnight, I’d love to hear from you. It’s a mystery, but it doesn’t seem like foul play. Just lucky social exposure with some good timing.)
- throwawaymath 8y ago
  > Most people would not pay for the kind of content that shows up on Facebook and YouTube by so-called “content creators”. Are you sure? Why are you sure? And as a corollary: even if most people won't pay for it, are you sure it won't still obtain a majority in its market? For any given successful product, most people don't buy it.
  - themagician 8y ago
    Yeah I’m sure. Most of the content that gets views is click-baity garabage. Not all, just most. People watch it because they are conditioned to, not because they want to or even find it entertaining. Some people can make it in a paid model—most can’t. Most of those who can graduate out being a “content creator” for a living.
scarface74 8y ago
The difference is that Google’s profit can easily be cut off by an ad blocker. Facebook’s ads are “organic” and are viewed mostly on mobile within an app - meaning harder to block.
- adventured 8y ago
  Google controls search, Android, the Play store and Chrome. The most popular search engine, the most popular mobile OS, the most popular app store and the most popular browser. No, its profit can't be easily cut off. They control the environment in all regards and have the leverage to dictate terms to nearly everyone. That's why they'll do ~$130 billion in sales this year, despite the popularity of ad blockers. A tiny percentage of users will evade Google's moves to ensure its advertising survival? Sure, and it won't matter in the least.
  - scarface74 8y ago
    1. Search - doesn’t make any money if people aren’t viewing ads. 2. Chrome - doesn’t make any money except for having Google as the home page - see #1 3. Android is the “most popular” but Android users are far less affluent and valuable to advertisers than iOS. On top of that, the largest market in the world is China and Google has no presence. And according to information that came out during the Oracle lawsuit (that Google didn’t dispute), Android has only made Google $31 billion since its inception. https://www.reuters.com/article/us-oracle-google-lawsuit-idUSKCN0UZ2W9 https://www.reuters.com/article/us-oracle-google-lawsuit-idU... 4. Play Store - even though the Play Store is on more phones. Again, Android users are not as affluent on average and spend much less than iOS users https://techcrunch.com/2018/07/16/apples-app-store-revenue-nearly-double-that-of-google-play-in-first-half-of-2018/ https://techcrunch.com/2018/07/16/apples-app-store-revenue-n... 5. As far as ad blockers - again since the most affluent users in development countries are using iOS devices where there is a native ad blocking framework, ad blocking is being used by the most coveted demographics. https://martechtoday.com/state-mobile-ad-blocking-200622 https://martechtoday.com/state-mobile-ad-blocking-200622
fiachamp 8y ago
I own shares of Facebook and even I see that 'amount of advertising you CAN show' is not the amount of advertising people will be okay with, we're getting close to saturation before people realize they're being exposed to constant bullshit. At this point, I am so frustrated with ads that I'm willing to pay $10/mo for ad-free social media.

by MarkMc 8y ago

joering2 8y ago

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.

deleted 8y ago
[deleted]
burntwater 8y ago
And we move nearly full circle back to radio-style ads.
- ss2003 8y ago
  drink your ovaltine.

darawk 8y ago

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

gibybo 8y ago
Earnings multiples reflect the amount of future earnings growth. He laid out an argument for larger future earnings growth.
- darawk 8y ago
  None of the growth oriented items he listed are even remotely capable of justifying 2x the multiple of other media companies.
  - throwawaymath 8y ago
    Why do you say that?
    - darawk 8y ago
      Where's it going to come from? Here's the options I see: 1. More users. This is pretty tapped out for Google. Yes, more people will come online in developing countries, but those people will also gain access to say Disney content. So, world GDP growth is already largely priced into the multiple's of other companies too. 2. Higher ad density. I don't see a lot of opportunity for Google to substantially increase it's ad density. Reasonable people might differ here, but I think they're already fairly dense. 3. Higher ad quality / spend efficiency. This cuts both ways for them. Right now advertisers spend a lot of money on AdWords inefficiently. If Google can optimize their spend, they'll pay less in aggregate, but they may be willing to pay more per ad. Which, in turn, will allow the ad density to be more globally efficient, if Google can replace the lost volume with other advertisers who will also pay more. There is probably room here, but it's speculative, and I don't think the growth potential is enormous. 4. Reducing costs. Google's gross margins are already tremendous (63%), you could cut their costs to zero and you wouldn't even double their profit.

tyingq 8y ago

I read it more that growth percentage won't be as high in the future. Not that there won't be growth. That makes sense to me for Google. They have played out most of their bag of tricks to get more ad impressions. Everything above the fold is an ad, or a link to a Google owned property for any query you can monetize now. And any video on YouTube with revenue potential has a forced ad view. That wasn't true in the past, so they could turn the dial to turn up revenue. That dial is all the way to the right now. So, revenue growth will now match eyeball growth instead of exceeding it.

deleted 8y ago
[deleted]

pravda 8y ago

>Google and Facebook have enormous advantages over Disney The big advantage is that Google and Facebook have monopolies.

skywhopper 8y ago

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.

aasasd 8y ago
Personally I didn't even know Google and Facebook tried to produce something. What was that? I've only heard about YouTube's programs for creators, with workshops, free studio time and such.
- ethbro 8y ago
  This article was from a little over a year ago, and detailed what Google and Facebook were producing. I think your ignorance of their offerings (and I couldn't name anything either!) says what we need to know about their success.
  - aasasd 8y ago
    I'm sorry, but by "this article" you mean ... ?
    - ethbro 8y ago
      The submitted link. "Oct 16, 2017"
  - MarkMc 8y ago
    So Google have complety failed in producing popular content themselves, yet still managed to grow revenue at 22% per year. What does that say about Google's need to produce in-house content?

themagician 8y ago

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.

shawn 8y ago
Most people would not pay for the kind of content that shows up on Facebook and YouTube by so-called “content creators”. This isn’t really true. I’ve been trying to demonstrate this by curating some interesting and educational YouTube videos in one place: https://www.laarc.io/l/videos https://www.laarc.io/l/videos You’re right that there’s a lot of noise to sift through. But there are real gems. People may not pay for it directly, but they pay for it with their time and attention. In most cases that can be translated to dollars for popular items. You can get a sense of estimated value by looking at socialblade. Here’s a content creator that recently rose to fame: https://socialblade.com/youtube/channel/UC5_do3JQAPHA1rIlM-2iS6g https://socialblade.com/youtube/channel/UC5_do3JQAPHA1rIlM-2... (If anyone knows how this guy got ~300k subscribers almost overnight, I’d love to hear from you. It’s a mystery, but it doesn’t seem like foul play. Just lucky social exposure with some good timing.)
throwawaymath 8y ago
> Most people would not pay for the kind of content that shows up on Facebook and YouTube by so-called “content creators”. Are you sure? Why are you sure? And as a corollary: even if most people won't pay for it, are you sure it won't still obtain a majority in its market? For any given successful product, most people don't buy it.
- themagician 8y ago
  Yeah I’m sure. Most of the content that gets views is click-baity garabage. Not all, just most. People watch it because they are conditioned to, not because they want to or even find it entertaining. Some people can make it in a paid model—most can’t. Most of those who can graduate out being a “content creator” for a living.

scarface74 8y ago

The difference is that Google’s profit can easily be cut off by an ad blocker. Facebook’s ads are “organic” and are viewed mostly on mobile within an app - meaning harder to block.

adventured 8y ago
Google controls search, Android, the Play store and Chrome. The most popular search engine, the most popular mobile OS, the most popular app store and the most popular browser. No, its profit can't be easily cut off. They control the environment in all regards and have the leverage to dictate terms to nearly everyone. That's why they'll do ~$130 billion in sales this year, despite the popularity of ad blockers. A tiny percentage of users will evade Google's moves to ensure its advertising survival? Sure, and it won't matter in the least.
- scarface74 8y ago
  1. Search - doesn’t make any money if people aren’t viewing ads. 2. Chrome - doesn’t make any money except for having Google as the home page - see #1 3. Android is the “most popular” but Android users are far less affluent and valuable to advertisers than iOS. On top of that, the largest market in the world is China and Google has no presence. And according to information that came out during the Oracle lawsuit (that Google didn’t dispute), Android has only made Google $31 billion since its inception. https://www.reuters.com/article/us-oracle-google-lawsuit-idUSKCN0UZ2W9 https://www.reuters.com/article/us-oracle-google-lawsuit-idU... 4. Play Store - even though the Play Store is on more phones. Again, Android users are not as affluent on average and spend much less than iOS users https://techcrunch.com/2018/07/16/apples-app-store-revenue-nearly-double-that-of-google-play-in-first-half-of-2018/ https://techcrunch.com/2018/07/16/apples-app-store-revenue-n... 5. As far as ad blockers - again since the most affluent users in development countries are using iOS devices where there is a native ad blocking framework, ad blocking is being used by the most coveted demographics. https://martechtoday.com/state-mobile-ad-blocking-200622 https://martechtoday.com/state-mobile-ad-blocking-200622

fiachamp 8y ago

I own shares of Facebook and even I see that 'amount of advertising you CAN show' is not the amount of advertising people will be okay with, we're getting close to saturation before people realize they're being exposed to constant bullshit. At this point, I am so frustrated with ads that I'm willing to pay $10/mo for ad-free social media.