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When FB went public at that "insane market cap," the IPO kerfuffle and all that followed, I had a few interesting conversations. I had been working for a while

by netcan 12y ago

When FB went public at that "insane market cap," the IPO kerfuffle and all that followed, I had a few interesting conversations. I had been working for a while in online advertising, a lot of adwords and other ad platforms so I had a fairly good understanding of the forthcoming advertising product that was supposedly going to determine FB's actual value. Anyway, my take on it was this: FB stock (at the time) is mostly a bet on two questions. (1) Can they remain the major social network where everyone has a profile and logs in regularly? (2) Can they build an ad platform that makes money off that position. Most people were curious about #2, I think because FB delayed really finding out the answer until after the IPO. For the second question, I thought 'yes' was most likely. I had (and still have) a lot of confidence in the power of scale to add value to an ad network. The bigger the userbase, the more targeting opportunities you have. If you can limit your audience to people in their 30s, with kids, within 5 miles^ and still end up with enough people to bother I think you have a valuable ad platform.^^ Anyway, the answer is yes. FB advertising is one of the world's blue ribbon cash cows. That's the difference between millions and billions. The first question though, I was (and am) less confident about. For FB to be a good investment it needs to last decades. Google has maintained its search position for a decade, but who knows if Facebook can in social. A lot of the forces at work are more cultural than economic or technological and unpredictable. Will it become uncool, unpopular. Will popular focus shift to some new shiny thing. It's a much harder question. Maybe a reason to think that it can is if you think FB-size and network effects locks a service into position in ways that Myspace-size doesn't. Maybe FB's deep pockets will let them acquire, innovate, advertise and otherwise spend their way to long term survival. I don't really have and educate way of guessing at this question. ^Add in "who are within 2 degrees of people that have visited your site" and you're really cookin. ^^tangent: if you could combine a streaming TV service with Netflix-like penetration using FB login and FB ad targeting, I'd wager you could make more in ad revenue using only a small fraction of airtime than traditional TV. IE 10 second "preroll" ads, unobtrusive banner ads (on pause, buffer, etc) with FB's targeting would earn more per viewer than traditional TV's.

davemel37 12y ago
> if you could combine a streaming TV service with Netflix-like penetration using FB login and FB ad targeting, I'd wager you could make more in ad revenue. Facebook already serves up 3 Billion video views per day and has a great video ad unit. They also have a mobile app partner network where they serve ads on third party apps. I think everyone in advertising thinks mobile video ad units will surpass every other ad unit and media due to its massive scale and proven effectiveness. If you aren't running video ads on mobile through Facebook in 2015... You are stuck in the past.
- Mahn 12y ago
  How does it compare to Applifier/Unity Ads?
mason55 12y ago
> if you could combine a streaming TV service with Netflix-like penetration using FB login and FB ad targeting, I'd wager you could make more in ad revenue using only a small fraction of airtime than traditional TV. IE 10 second "preroll" ads, unobtrusive banner ads (on pause, buffer, etc) with FB's targeting would earn more per viewer than traditional TV's. It's coming. The next wave in advertising will be ad targeting based on addressable set top boxes, which basically means targeted video ads on TV. Advertisers will be able to do things like "make sure each household sees my ad five times" to avoid cases where people who watch lots of TV see it twenty times and people who don't watch much only see it once. With addressable STB's + microtargeting there will be a whole new set of companies for which it will be profitable to advertise on TV. Right now the long tail of niche companies has no chance of profitably advertising on TV because their target only makes up a very, very, very small percentage of an individual program (think about a company advertising Bitcoin ASIC's for example). But if they get addressability + microtargeting right then they can make sure that only households which are interested in Bitcoin ASIC's see the ads. https://www.experian.com/assets/marketing-services/white-papers/audience-iq-addressable-tv-wp.pdf https://www.experian.com/assets/marketing-services/white-pap...
- netcan 12y ago
  Plugging into FB's user identification gives you way more than just location. Targeting and performance/conversion tracking. To give you an example, imagine you own a gym and you are recruiting members. I think with a really well targeted campaign to 1,000 people could yield a 5% signup rate over a month, 50 people. That's a guess, but I think it's not unreasonable. Most gyms would gladly pay $50-$100 per member for that result, so $2,500-$5,000 to target 1,000 people. That means a single SME advertiser could pay half the current price of a netflix subscription for a 1000 . Obviously, those 1,000 people will be targeted by more than one advertiser. Targeting & performance tracking are super enhancers. A significant improvement in either of these can yield 10X improvements in ad performance and similar increases in ad revenue. Scale is very important. So are supporting assets, good data sources and ways of creating links between them. FB already has the best (by far, IMO) platform for creating target groups and one of the best platforms for attribution/performance tracking/conversion tracking. You can upload a list of you gym members and get back an "audience" of their friends, who are 25-40, live in the area… Then you can subdivide it into single women, married women, married men, single men, etc. and try different ads for different people. That's the kind of improvement over TV ads that creates a 1000X increase in value per second of advertising airtime. *Reading back, it seems from my comments that I'm asserting a lot of things fairly confidently. Obviously, this is a lot of speculation and guestimates based on my understanding of the ad economy and my experience as a buyer.
derefr 12y ago
> Will it become uncool, unpopular. Will popular focus shift to some new shiny thing. It seems to me that it already has, and that this hasn't mattered. The world only needs one "boring public-face social network", and that's Facebook. Teenagers will use Tumblr or Snapchat or Instagram or whatever else to get laid. But they'll send friend requests to their actual real-life friends—the ones they don't want to expose their online self to—on Facebook. Because that's what you do. It's a niche, sort of like how business cards still exist despite the ability to email contact information around.
prostoalex 12y ago
> Google has maintained its search position for a decade, but who knows if Facebook can in social. I think the answer is no, which is why you see both companies invest in such moonshots as mobile operating systems, virtual reality, drones and autonomous vehicles. Better question would be - can they use their current market dominance to execute properly when the next wave of computing comes along?

by netcan 12y ago

davemel37 12y ago

> if you could combine a streaming TV service with Netflix-like penetration using FB login and FB ad targeting, I'd wager you could make more in ad revenue. Facebook already serves up 3 Billion video views per day and has a great video ad unit. They also have a mobile app partner network where they serve ads on third party apps. I think everyone in advertising thinks mobile video ad units will surpass every other ad unit and media due to its massive scale and proven effectiveness. If you aren't running video ads on mobile through Facebook in 2015... You are stuck in the past.

Mahn 12y ago
How does it compare to Applifier/Unity Ads?

mason55 12y ago

> if you could combine a streaming TV service with Netflix-like penetration using FB login and FB ad targeting, I'd wager you could make more in ad revenue using only a small fraction of airtime than traditional TV. IE 10 second "preroll" ads, unobtrusive banner ads (on pause, buffer, etc) with FB's targeting would earn more per viewer than traditional TV's. It's coming. The next wave in advertising will be ad targeting based on addressable set top boxes, which basically means targeted video ads on TV. Advertisers will be able to do things like "make sure each household sees my ad five times" to avoid cases where people who watch lots of TV see it twenty times and people who don't watch much only see it once. With addressable STB's + microtargeting there will be a whole new set of companies for which it will be profitable to advertise on TV. Right now the long tail of niche companies has no chance of profitably advertising on TV because their target only makes up a very, very, very small percentage of an individual program (think about a company advertising Bitcoin ASIC's for example). But if they get addressability + microtargeting right then they can make sure that only households which are interested in Bitcoin ASIC's see the ads. https://www.experian.com/assets/marketing-services/white-papers/audience-iq-addressable-tv-wp.pdf https://www.experian.com/assets/marketing-services/white-pap...

netcan 12y ago
Plugging into FB's user identification gives you way more than just location. Targeting and performance/conversion tracking. To give you an example, imagine you own a gym and you are recruiting members. I think with a really well targeted campaign to 1,000 people could yield a 5% signup rate over a month, 50 people. That's a guess, but I think it's not unreasonable. Most gyms would gladly pay $50-$100 per member for that result, so $2,500-$5,000 to target 1,000 people. That means a single SME advertiser could pay half the current price of a netflix subscription for a 1000 . Obviously, those 1,000 people will be targeted by more than one advertiser. Targeting & performance tracking are super enhancers. A significant improvement in either of these can yield 10X improvements in ad performance and similar increases in ad revenue. Scale is very important. So are supporting assets, good data sources and ways of creating links between them. FB already has the best (by far, IMO) platform for creating target groups and one of the best platforms for attribution/performance tracking/conversion tracking. You can upload a list of you gym members and get back an "audience" of their friends, who are 25-40, live in the area… Then you can subdivide it into single women, married women, married men, single men, etc. and try different ads for different people. That's the kind of improvement over TV ads that creates a 1000X increase in value per second of advertising airtime. *Reading back, it seems from my comments that I'm asserting a lot of things fairly confidently. Obviously, this is a lot of speculation and guestimates based on my understanding of the ad economy and my experience as a buyer.

derefr 12y ago

> Will it become uncool, unpopular. Will popular focus shift to some new shiny thing. It seems to me that it already has, and that this hasn't mattered. The world only needs one "boring public-face social network", and that's Facebook. Teenagers will use Tumblr or Snapchat or Instagram or whatever else to get laid. But they'll send friend requests to their actual real-life friends—the ones they don't want to expose their online self to—on Facebook. Because that's what you do. It's a niche, sort of like how business cards still exist despite the ability to email contact information around.

prostoalex 12y ago

> Google has maintained its search position for a decade, but who knows if Facebook can in social. I think the answer is no, which is why you see both companies invest in such moonshots as mobile operating systems, virtual reality, drones and autonomous vehicles. Better question would be - can they use their current market dominance to execute properly when the next wave of computing comes along?