4 ms·

Musk's advertiser push undermined by his own opening moves

21 points by rurp 4y ago

obblekk 4y ago
Ad revenue risk really breaks out by 2 major types of spending: 1. Brand Advertisers These companies don't measure direct ROI from their ads in the short run, but believe that it's important to put their brand and message out continuously to keep consumers engaged. Coke/Pepsi are the classic example. Very few people click on a Coke ad, land on a page, and put in their credit card to purchase a bottle of Coke right away. These companies care disproportionately about long term perception and therefore who their brand is associated with. They buy big event sponsorships for the same reason. 2. Direct response advertisers These companies continuously measure the ROI of ad spend vs. revenue impact, sometimes even on a weekly or monthly cadence. These companies have some limits (e.g. no ads on porn or violence), but generally are much more willing to buy less attractive inventory that has higher ROI. Classic examples here are Wish (or most ecommerce), SaaS, etc. Sales meetings and calls with advertisers happen almost only with brand advertisers because it is their business where decisions cannot be made simply by looking at the metrics. This is a lot of spend but, importantly, it's usually inefficient spend from an ROI perspective. If these folks exit the market, the direct response folks will see lower ad auction prices and proportionately increase their spend. These feedback loops take a few weeks/months to play out, but this means the impact of decreased brand spend is usually much less than appears on day 1. Twitter is a bit unique in that they probably have one of the worst direct response conversion rates, attribution, optimization, and overall performance. That's really where Elon should invest a significant amount of resources because that problem can be improved a lot with better adtech, rather than salesmanship. Google is generally the best at this ML based adtech optimization (people searching for products also tend to want to buy that product making their problem a little easier), followed by Facebook, followed by a bunch of 3rd party display platforms, followed by Twitter (in my experience as an ad buyer, but obviously not universal). If I were Elon, I would: 1. Create a new ad unit that can only be shown to verified users or adjacent to verified tweets - this should solve most ad fraud and content rule concerns. Ad unit should be launchable within a few weeks (harder technical problem because it requires context of what's adjacent in the feed, but can be hacked with rebates for improper impressions). Spend the next week selling this to brand spenders. 2. Spend 50% of my twitter energy hiring/empowering adtech experts (this is a playbook that has been done several times over) 3. Relaunch vine with trending videos on twitter (video ads) 4. Ignore search - technically hard problem with low 1yr ROI 5. Start decreasing organic reach for non-verified users in feed + upsell boosted posts -- this is Facebook Pages playbook and is super easy to implement technically (feed value model adjustment)
- andrekandre 4y ago
  > Create a new ad unit that can only be shown to verified users or adjacent to verified tweets - this should solve most ad fraud assuming they are really verified and not just paying 8 dollars a month, right?
zackees 4y ago
All Musk has to do is create an Ad system that delivers positive ROI. That's it. If he does that then people will sign up because they enjoy scaling up their business. There is so much public backlash against the large advertisers anyway, especially Pfizer, that I think this is ultimately a good thing and establishes better Trust with Twitter and it's users.
- user_named 4y ago
  What? "They just have to solve the problem. That's it."
deleted 4y ago
[deleted]
aaron695 4y ago
machina_ex_deus 4y ago
I really hope musk can hold on and pivot away from ad only revenue. The ad business is cancer. It's a big bubble that will pop. They don't need most of the data they collect, it's all pretty graphs for egocentric managers. And they abuse their bubble and disconnection from reality by requiring censorship from Twitter with minced words like brand image. By the way, the ads bubble is quite similar to crypto bubble. They both consist of unregulated "markets" or "exchanges" for some digital good, which are actually mostly managed by those selling those goods (even worse in Google case than the crypto case!), and the market is rigged and manipulated but good luck fighting the unregulated exchange. They both abuse people's normal perception of the concept of markets to get them to buy at much higher prices because it's the "market price".

21 points by rurp 4y ago

Ad revenue risk really breaks out by 2 major types of spending: 1. Brand Advertisers These companies don't measure direct ROI from their ads in the short run, but believe that it's important to put their brand and message out continuously to keep consumers engaged. Coke/Pepsi are the classic example. Very few people click on a Coke ad, land on a page, and put in their credit card to purchase a bottle of Coke right away. These companies care disproportionately about long term perception and therefore who their brand is associated with. They buy big event sponsorships for the same reason. 2. Direct response advertisers These companies continuously measure the ROI of ad spend vs. revenue impact, sometimes even on a weekly or monthly cadence. These companies have some limits (e.g. no ads on porn or violence), but generally are much more willing to buy less attractive inventory that has higher ROI. Classic examples here are Wish (or most ecommerce), SaaS, etc. Sales meetings and calls with advertisers happen almost only with brand advertisers because it is their business where decisions cannot be made simply by looking at the metrics. This is a lot of spend but, importantly, it's usually inefficient spend from an ROI perspective. If these folks exit the market, the direct response folks will see lower ad auction prices and proportionately increase their spend. These feedback loops take a few weeks/months to play out, but this means the impact of decreased brand spend is usually much less than appears on day 1. Twitter is a bit unique in that they probably have one of the worst direct response conversion rates, attribution, optimization, and overall performance. That's really where Elon should invest a significant amount of resources because that problem can be improved a lot with better adtech, rather than salesmanship. Google is generally the best at this ML based adtech optimization (people searching for products also tend to want to buy that product making their problem a little easier), followed by Facebook, followed by a bunch of 3rd party display platforms, followed by Twitter (in my experience as an ad buyer, but obviously not universal). If I were Elon, I would: 1. Create a new ad unit that can only be shown to verified users or adjacent to verified tweets - this should solve most ad fraud and content rule concerns. Ad unit should be launchable within a few weeks (harder technical problem because it requires context of what's adjacent in the feed, but can be hacked with rebates for improper impressions). Spend the next week selling this to brand spenders. 2. Spend 50% of my twitter energy hiring/empowering adtech experts (this is a playbook that has been done several times over) 3. Relaunch vine with trending videos on twitter (video ads) 4. Ignore search - technically hard problem with low 1yr ROI 5. Start decreasing organic reach for non-verified users in feed + upsell boosted posts -- this is Facebook Pages playbook and is super easy to implement technically (feed value model adjustment)

andrekandre 4y ago
> Create a new ad unit that can only be shown to verified users or adjacent to verified tweets - this should solve most ad fraud assuming they are really verified and not just paying 8 dollars a month, right?

zackees 4y ago

All Musk has to do is create an Ad system that delivers positive ROI. That's it. If he does that then people will sign up because they enjoy scaling up their business. There is so much public backlash against the large advertisers anyway, especially Pfizer, that I think this is ultimately a good thing and establishes better Trust with Twitter and it's users.

user_named 4y ago
What? "They just have to solve the problem. That's it."

deleted 4y ago

[deleted]

aaron695 4y ago

machina_ex_deus 4y ago

I really hope musk can hold on and pivot away from ad only revenue. The ad business is cancer. It's a big bubble that will pop. They don't need most of the data they collect, it's all pretty graphs for egocentric managers. And they abuse their bubble and disconnection from reality by requiring censorship from Twitter with minced words like brand image. By the way, the ads bubble is quite similar to crypto bubble. They both consist of unregulated "markets" or "exchanges" for some digital good, which are actually mostly managed by those selling those goods (even worse in Google case than the crypto case!), and the market is rigged and manipulated but good luck fighting the unregulated exchange. They both abuse people's normal perception of the concept of markets to get them to buy at much higher prices because it's the "market price".