3 ms·

One important detail to remember is that Facebook, Tumblr, Yahoo, Google, etc are not in the search/blogging/social media industry. That's all a smokescreen.

by gpcz 13y ago

One important detail to remember is that Facebook, Tumblr, Yahoo, Google, etc are not in the search/blogging/social media industry. That's all a smokescreen. People who follow the money and value chain see past the porn and cat GIFs and consider these companies to be in the advertising industry. The average EV/EBITDA ratio for the conventional advertising industry is 7.77 (src: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/vebitda.html http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/... ), while Warner Chilcott's is 2.94 (src: http://www.wikinvest.com/stock/Warner_Chilcott_(WCRX)/Data/EV:EBITDA http://www.wikinvest.com/stock/Warner_Chilcott_(WCRX)/Data/E... ). This implies that the market (in general) gives a higher valuation multiplier for advertising companies than this healthcare company. Then again, Facebook's EV/EBITDA ratio is 49.8 (src: http://www.wikinvest.com/stock/Facebook/Data http://www.wikinvest.com/stock/Facebook/Data ), which makes one wonder: what makes these high-tech mobile advertising companies more valuable than TV/print ads?

Tossrock 13y ago
Obvious answer, but targeting is much more effective for online companies, and success is much easier to measure. An online advertising company can give much better, more quantifiable ROI by targeting specific users more likely to convert: in Google's case, it's largely due to the desire to click inherent in search, whereas in Facebook's case it's through deep demographic information. They can also directly measure the effect an advertisement has, by measuring click throughs, etc. Compared to the much more nebulous effects of TV/print ads, this can be highly appealing.
gizzlon 13y ago
Bigger opportunities. TV/print ads are pretty much "played out" and nothing earth-shattering is going to happen in that area [0]. Online is still relatively new.. who knows what will happen :) [0] Maybe it could. And should. But I guess most people don't believe that.

by gpcz 13y ago

Tossrock 13y ago

Obvious answer, but targeting is much more effective for online companies, and success is much easier to measure. An online advertising company can give much better, more quantifiable ROI by targeting specific users more likely to convert: in Google's case, it's largely due to the desire to click inherent in search, whereas in Facebook's case it's through deep demographic information. They can also directly measure the effect an advertisement has, by measuring click throughs, etc. Compared to the much more nebulous effects of TV/print ads, this can be highly appealing.

gizzlon 13y ago

Bigger opportunities. TV/print ads are pretty much "played out" and nothing earth-shattering is going to happen in that area [0]. Online is still relatively new.. who knows what will happen :) [0] Maybe it could. And should. But I guess most people don't believe that.