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Unfortunately targeted advertising appears to be the best way to maximize returns for massive, VC-backed social media platforms. Charging for stuff simply isn't

by majani 7y ago

Unfortunately targeted advertising appears to be the best way to maximize returns for massive, VC-backed social media platforms. Charging for stuff simply isn't as profitable. The numbers have been run before multiple times.

mrgalaxy 7y ago
I was talking with Twitch's Director of Engineering about a year ago and he was saying that their ad revenue dwarfs their revenue earned directly from users (subscriptions and bits) by at least 10 to 1. I was amazed as I've seen how much people are willing to give away on that site.
- guitarbill 7y ago
  My guess would be only a fraction of people participate. I watch a bit of Twitch, but for me, the chat might as well not exist. (edit: that isn't to say how important participation and communication are for building a community, they are) Second, ads don't need payment methods. Kids and teenagers may not have debit or credit cards, but are a hugely valuable demographic that advertisers want to target. So as long as Twitch stays relevant to those audiences, ads will probably be quite valuable.
- skizm 7y ago
  Which is nuts when you think that something like ~70% of twitch users have an active ad-blocker.
  - asdff 7y ago
    Do advertisers know if their ad is getting blocked? I'd assume that they do but are being willfully ignorant about how ineffective adverts on the web really are. I mean who even clicks on an ad on the internet, Grandma?
    - skizm 7y ago
      I don't generally click the links, but if I see something I like, I'll google it or go directly to the site. As for if advertisers "see" their ad being blocked: it depends on the way the ad is being blocked / served. Most adblockers just blacklist certain web domains, so if a JS call is made to that domain it is blocked. The advertiser won't ever see it was blocked or have to pay for it being shown. The website owners are usually the ones hurt most by adblockers. Twitch gets around this now by integrating the ads directly into the video stream before it even hits your browser, so there is no way for a simple ad-blocker that blacklists domains to tell when the stream is streaming an ad vs the actual content. Most publishers put up with adblocking because most ad companies offer "set it and forget it" solutions. Just drop a piece of JS into their HTML and they start earning money. Eventually publishers will get their ads via a REST API or something (server side) and splice the ads directly into the HTML themselves, so that the ad-blocker won't know what is content and what is ads. At that point, ad blockers just have to make their best guess at which HTML elements (div/span/etc.) contain ads by checking names, dimensions, and other features and deleting that element. I think their might be laws that say you have to explicitly label ads or sponsored content as such, so that might make it easier.
notacoward 7y ago
A lot of people in tech don't seem to realize how big the advertising business is. It was gigantic even before we came along. The behemoth has turned its attention from TV and print to online, but it's still a behemoth. The amount spent on advertising just in the US is more than Facebook's entire market cap, each year. It should hardly be a surprise that an industry that big can have a significant effect on web-based companies' profit models. BTW, the finance industry is even bigger, and has a correspondingly larger effect on how the tech industry really works. I've even seen it said that Silicon Valley is basically just a (not so) well disguised extension of Wall Street, and it's not wrong.
dplgk 7y ago
Doing neither is even less profitable.
webninja 7y ago
Spotify and Pandora disagree.

by majani 7y ago

mrgalaxy 7y ago

I was talking with Twitch's Director of Engineering about a year ago and he was saying that their ad revenue dwarfs their revenue earned directly from users (subscriptions and bits) by at least 10 to 1. I was amazed as I've seen how much people are willing to give away on that site.

guitarbill 7y ago
My guess would be only a fraction of people participate. I watch a bit of Twitch, but for me, the chat might as well not exist. (edit: that isn't to say how important participation and communication are for building a community, they are) Second, ads don't need payment methods. Kids and teenagers may not have debit or credit cards, but are a hugely valuable demographic that advertisers want to target. So as long as Twitch stays relevant to those audiences, ads will probably be quite valuable.
skizm 7y ago
Which is nuts when you think that something like ~70% of twitch users have an active ad-blocker.
- asdff 7y ago
  Do advertisers know if their ad is getting blocked? I'd assume that they do but are being willfully ignorant about how ineffective adverts on the web really are. I mean who even clicks on an ad on the internet, Grandma?
  - skizm 7y ago
    I don't generally click the links, but if I see something I like, I'll google it or go directly to the site. As for if advertisers "see" their ad being blocked: it depends on the way the ad is being blocked / served. Most adblockers just blacklist certain web domains, so if a JS call is made to that domain it is blocked. The advertiser won't ever see it was blocked or have to pay for it being shown. The website owners are usually the ones hurt most by adblockers. Twitch gets around this now by integrating the ads directly into the video stream before it even hits your browser, so there is no way for a simple ad-blocker that blacklists domains to tell when the stream is streaming an ad vs the actual content. Most publishers put up with adblocking because most ad companies offer "set it and forget it" solutions. Just drop a piece of JS into their HTML and they start earning money. Eventually publishers will get their ads via a REST API or something (server side) and splice the ads directly into the HTML themselves, so that the ad-blocker won't know what is content and what is ads. At that point, ad blockers just have to make their best guess at which HTML elements (div/span/etc.) contain ads by checking names, dimensions, and other features and deleting that element. I think their might be laws that say you have to explicitly label ads or sponsored content as such, so that might make it easier.

notacoward 7y ago

A lot of people in tech don't seem to realize how big the advertising business is. It was gigantic even before we came along. The behemoth has turned its attention from TV and print to online, but it's still a behemoth. The amount spent on advertising just in the US is more than Facebook's entire market cap, each year. It should hardly be a surprise that an industry that big can have a significant effect on web-based companies' profit models. BTW, the finance industry is even bigger, and has a correspondingly larger effect on how the tech industry really works. I've even seen it said that Silicon Valley is basically just a (not so) well disguised extension of Wall Street, and it's not wrong.

dplgk 7y ago

Doing neither is even less profitable.

webninja 7y ago

Spotify and Pandora disagree.