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There definitely is -- and it may still be too early to say "was" -- a period of social media advertising frenzy among Fortune 500 companies in the last few yea

There definitely is -- and it may still be too early to say "was" -- a period of social media advertising frenzy among Fortune 500 companies in the last few years. Until fairly recently (with GM's $30M pullout of Facebook advertising the most visible harbinger). Now the honeymoon is just about over, and with it will go the easy money that had basically been throwing itself at Facebook's heels. Facebook in specific, and social advertising in general, will have to find a way to deliver actual results in line with people's sky-high expectations. And they'll have to do it soon. This won't be easy, given that Facebook's ad sales teams have spent the last 3+ years promising the moon to F500 marketing and advertising execs. But why were all these advertisers so willing to be wooed in the first place? Because there's a very real (and growing) hole in the advertising landscape. With the erosion of TV advertising as a reliable way to generate mass impressions at scale, advertisers are anxious to find a replacement. TV is still the largest advertising vechicle, by media spend, for most F500 companies (if not all of them?). But premiums on TV are growing each year, even while total ratings are declining, audiences are dispersing (both across networks and onto other platforms), and ads are basically avoidable. While the bloom was on the Facebook rose, it seemed like a hell of a savior to people desperately seeking one. The fallacy underpinning the leap from TV onto the Facebook bandwagon was the assumption that social media could be bought, and advertised on, in pretty much the same way as TV. In reality, the advertiser needs to be much more savvy and sophisticated about social advertising. He needs to worry about more than just reach, frequency, and CPMs. He'll need to consider the quality of his content, refresh rates for content, geo-targeting and context-targeting, the relevancy algorithms powering his anticipated reach and engagement figures, and the micro-segments to which he serves different ads at different times. Instead, right now he's spent the last few years simply throwing giant checks at Facebook and expecting TV reach, impressions, etc. I'd consider both parties at fault here: the advertisers for being naive, and Facebook for playing to the deep-pocketed suckers. Picking the low-hanging fruit, in this case, may have set back Facebook's credibility within the advertising community for quite some time. And it also set expectations that Facebook wasn't, and still isn't, prepared to meet. (In fairness, I'm sure Facebook received a great deal of pressure to take the easy ad money in order to make its books look as attractive as possible in anticipation of the IPO).

jerf 14y ago
Bear in mind a bubble doesn't imply that there's no opportunity, or even that there's no revolution. The ~2000 bubble wasn't a bubble because it was wrong, the Internet has revolutionized pretty much everything that we thought it was going to, and continues to do so. It just didn't do it at quite the promised pace, and wasn't able to sustain that much investment, that quickly, nor did it necessarily take the shape that everybody at the time was convinced it would. So when I say we seem to be in an advertising bubble, it's not a statement that there isn't a revolution in advertising coming that somebody is going to profit from, it's a statement that it isn't coming at the pace people like Facebook are promising, nor can it sustain that level of investment profitably. I did make sure to call out Google for having legitimately advanced the field. If the bubble pops they'll get hit, but I have every confidence they'll survive and thrive, because they definitely have real value, just as Amazon has survived and thrived after the last bubble. (I expect somewhere in the 5-15 years time frame there's going to be a robotics bubble too, and it won't be because robots that can coexist with us in our houses and streets won't be every bit as revolutionary as the hype claims, it just won't be revolutionary as quickly as the investment would require.)
- deleted 14y ago
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- jonnathanson 14y ago
  "a bubble doesn't imply that there's no opportunity, or even that there's no revolution" I don't disagree. "So when I say we seem to be in an advertising bubble, it's not a statement that there isn't a revolution in advertising coming that somebody is going to profit from, it's a statement that it isn't coming at the pace people like Facebook are promising, nor can it sustain that level of investment profitably." Again, I think we're in complete agreement here. "If the bubble pops they'll get hit, but I have every confidence they'll survive and thrive, because they definitely have real value, just as Amazon has survived and thrived after the last bubble." True, which may actually make Google a fantastically cheap buy if the ad bubble pops and they take a momentary hit. Their fundamentals are solid and aren't going away anytime soon -- unless, of course, Facebook gets its act together and cannibalizes Google's ad dollars. While I think that's distinctly possible -- and Google has been anxious about it for years -- it seems that the threat isn't as immiment as once expected. The threat still exists, however. And maybe, in a weird way, the recent fiasco with Facebook's IPO will actually buy Facebook some "air cover" for awhile -- allowing it to develop killer ad products under the radar, surprising everyone with their rollout. (I think this must be the thesis of anyone still holding onto Facebook stock right now).

jerf 14y ago

Bear in mind a bubble doesn't imply that there's no opportunity, or even that there's no revolution. The ~2000 bubble wasn't a bubble because it was wrong, the Internet has revolutionized pretty much everything that we thought it was going to, and continues to do so. It just didn't do it at quite the promised pace, and wasn't able to sustain that much investment, that quickly, nor did it necessarily take the shape that everybody at the time was convinced it would. So when I say we seem to be in an advertising bubble, it's not a statement that there isn't a revolution in advertising coming that somebody is going to profit from, it's a statement that it isn't coming at the pace people like Facebook are promising, nor can it sustain that level of investment profitably. I did make sure to call out Google for having legitimately advanced the field. If the bubble pops they'll get hit, but I have every confidence they'll survive and thrive, because they definitely have real value, just as Amazon has survived and thrived after the last bubble. (I expect somewhere in the 5-15 years time frame there's going to be a robotics bubble too, and it won't be because robots that can coexist with us in our houses and streets won't be every bit as revolutionary as the hype claims, it just won't be revolutionary as quickly as the investment would require.)

deleted 14y ago
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jonnathanson 14y ago
"a bubble doesn't imply that there's no opportunity, or even that there's no revolution" I don't disagree. "So when I say we seem to be in an advertising bubble, it's not a statement that there isn't a revolution in advertising coming that somebody is going to profit from, it's a statement that it isn't coming at the pace people like Facebook are promising, nor can it sustain that level of investment profitably." Again, I think we're in complete agreement here. "If the bubble pops they'll get hit, but I have every confidence they'll survive and thrive, because they definitely have real value, just as Amazon has survived and thrived after the last bubble." True, which may actually make Google a fantastically cheap buy if the ad bubble pops and they take a momentary hit. Their fundamentals are solid and aren't going away anytime soon -- unless, of course, Facebook gets its act together and cannibalizes Google's ad dollars. While I think that's distinctly possible -- and Google has been anxious about it for years -- it seems that the threat isn't as immiment as once expected. The threat still exists, however. And maybe, in a weird way, the recent fiasco with Facebook's IPO will actually buy Facebook some "air cover" for awhile -- allowing it to develop killer ad products under the radar, surprising everyone with their rollout. (I think this must be the thesis of anyone still holding onto Facebook stock right now).