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Quantifying the Adpocalypse
- kcorbitt 7y agoTangentially, one positive side-effect of the pandemic lockdown I've seen is a dramatic drop in the quantity of spam in my physical mailbox. I generally get 5-20 pieces of junk mail a week, but in the 3.5 weeks that the Bay Area has been on lockdown I've gotten maybe 7-8 pieces total.
- AznHisoka 7y agoI am unsure you can even rely on analyst estimates to determine what investors are expecting from FB/Google when they report earnings soon. Will anyone be surprised if FB comes out and say they will experience a 20% decline in revenue in Q2?
- radkapital 7y agoYes, sell side analysts expectations are basically expectations of the big participants in the market unless there is disclosure / news from the company or price action on the stock that can influence the outlook.
- AznHisoka 7y agoThe estimates are just absurdly wrong though. Ask any investor and most will just laugh at those estimates. 99% of estimates for all companies haven’t dramatically been decreased yet. So I would take these estimates with a grain of salt.
- huac 7y agoyeah that's the point of the article.
- Supermancho 7y agoThis looks like data for the public network markets. In-house and larger corporations don't quantify on actual ad revenue. Rather, they find any sale by an individual that saw and ad and say that a portion of the sale is attributed to advertising. This is the "attribution" model, which is pure hand waving.
- three_seagrass 7y agoIt would be good to compare Amazon advertising spend as well. This article is also missing the fact that we're in an election year in the U.S. The ad spend from that alone could counter a lot of the losses from covid 19.
- AznHisoka 7y agoPolitical ads are very small percentage of revenue for FB https://www.google.com/amp/s/techcrunch.com/2019/10/30/zuckerberg-political-ads/amp/ https://www.google.com/amp/s/techcrunch.com/2019/10/30/zucke...
- three_seagrass 7y agoAccording to Zuckerberg, in defense against accusations that he was being greedy by allowing them on FB. I'd be more interested in an independent or consumer-based third party analysis validating his numbers, since he doesn't mention PAC spending.
- deleted 7y ago[deleted]
- redis_mlc 7y agoTrump spent very little in his first election campaign, mainly relying on saying outrageous things and tweeting (one estimate was that he added $2 billion to the value of the Twitter brand.) How little? Enough that all the Silicon Valley advertising companies missed their quarter, either unaware or wilfully ignorant that he wasn't spending money.
- kevin_thibedeau 7y agoHe wasn't trying to win.
- deleted 7y ago[deleted]
- buboard 7y agothe author is suggesting that ad spending online correlates with increased sales. is that the case? seems a big part of ad spending is simply part of burning VC money regardless of outcome.
- WalterBright 7y agoA successful marketing exec once said "We know that half our marketing budget is wasted. We just don't know which half."
- sbierwagen 7y agohttps://en.wikipedia.org/wiki/John_Wanamaker#Legacy https://en.wikipedia.org/wiki/John_Wanamaker#Legacy
- kristopolous 7y agoIt decreases the risk of failure but also corrupts the product signal. You can't get a truly clean read on the product/market fit with constant advertising since you're effectively externally subsidizing product adoption. Or, maybe you aren't subsidizing it and just tossing money in the wind...and that's the problem, you have an x +/-/*/^ y effect and can't separate the two. So the advertising becomes "locked in" because it was never extricated from the rest of the product and it becomes too much of a risk to pull it. Some people try to isolate things and figure it out but it's not really possible, externalities change, contexts change, needs change, advertising happens on the sneaker net without your knowledge... It's a real bitch
- tanilama 7y agoMy limited understanding for online advertising is that it is a white black box. It can be observed yet you don't know what is happening. Big corporations throw money at different purpose and once the budget is out they could be under a directive to just spend.
- redis_mlc 7y agoI know of a case study where one consumer sales company turned their google campaigns off for a day and got almost no calls. So that's one way to find out.
- Urgo 7y agoAdding one more piece of data to the story, I've run a large website (Social Blade) since 2008 where the primary source of revenue has always been advertising. It was only last year that we started focusing more on paid subscriptions to cover the natural drop in ad revenue that was happening anyway. I don't have the data yet from one of my two ad providers, but the one that does provide me real time data I can see a 35% drop in ad revenue this month compared to Feb while having about a 31% bump in traffic.
- pnutjam 7y agoAccording to Fark.com, there is unprecedented drops in Ad revenue. Companies have cancelled mid-quarter. https://www.fark.com/blog/DisseminationMonkey https://www.fark.com/blog/DisseminationMonkey
- avalys 7y agoThe article suggests that the stock market hasn’t priced this in yet. I don’t think that’s true. Facebook and Google are both down more than 20% from their recent highs (along with the rest of the market, of course). No one thinks that a recession is any kind of existential threat for either of them - they both have plenty of cash and fat profit margins. And if anything, both companies are positioned to emerge from the pandemic in a stronger position than they started - with fewer competitors, more users, less expensive competition for talent (* whimpers *), and acceleration of long-term societal trends that benefit them. Investors are not going to take their eye off the medium-term future of these companies because of an expected few poor quarters for very well-understood and temporary reasons.
- huac 7y agoyour margins go away if you don't have revenue (no ads) and increased variable costs (more users hitting your servers) with constant fixed costs (rent, salary, healthcare).
- avalys 7y agoSure, but having good margins in the first place gives you more room - you might call it, "margin" - before any of that results in you actually losing any money.
- grey-area 7y agoRevenue 100, Margin 20, Profit 20 Revenue 0, Margin 20, Profit 0 Margin is only helpful if you have revenue, this will hit Google and other ad based companies hard (though google probably has the cash to weather it), Amazon will be fine and may even benefit.
- danielheath 7y agoI saw a sudden drop of about 25% in ad revenue across the properties I'm privy to two weeks ago, but it seems to be pretty flat since then.
- cnxsoft 7y agoAnecdotic, but I've read several recent reports about people being kicked out of Google Adsense and Amazon affiliate program around the web.