Twitter Files For IPO(allthingsd.com)
allthingsd.com
Twitter Files For IPO
http://allthingsd.com/20130912/twitter-files-for-ipo/?mod=atdtweet
230 comments
My personal impression is that the rise of advertising has emerged from the collapse of disposable income. In a world where everyone has wealth to spend, it is better to just make more goods people want to buy as efficiently as possible. In a world where everyone is poor, and losing money to capital siphoning through the rich (who do not evenly reinvest this capital into the economy, and expect reliable returns meaning more long term concentration of money), advertising becomes more relevant because you compete over scarce dollars and more so need to motivate purchases through psychological breaking down of a targets resistance to splurge buy something of yours.
When actually making more goods doesn't make you more money (at least commodity goods, there is a growing market for the absurd luxury goods targeting those that own dividend stocks and have multiple houses and personal chefs) your alternative is to use psychological manipulation to drive the limited dollars towards your goods, even if it means the per-unit cost is higher. You make the gambit - persuade someone to buy, or don't sell at all because your product isn't really that competitve anymore when you are spending upwards of 30% of your budget on ads.
Look no further than the evolution of the video game industry - since it is so new, it also shows this effect strongly, where the biggest titles like the CoD games can see 80% of their budget spent on advertising (cursory google search to get these numbers on the latest title, Black Ops 2, turned up nothing citeable). If you spend $28 million making a game, and $120 - 200 million on ads, your economic model must be fucked.
So because you compete for scarce dollars, customers aren't coming to you, you need to manipulate customers into spending money they don't have. Hence why advertising is so huge, even with 1% click-through rates. All that concentrated wealth getting reinvested has limited alternative options of where to go, so you just try to pry more money out of people through bombardment.
When actually making more goods doesn't make you more money (at least commodity goods, there is a growing market for the absurd luxury goods targeting those that own dividend stocks and have multiple houses and personal chefs) your alternative is to use psychological manipulation to drive the limited dollars towards your goods, even if it means the per-unit cost is higher. You make the gambit - persuade someone to buy, or don't sell at all because your product isn't really that competitve anymore when you are spending upwards of 30% of your budget on ads.
Look no further than the evolution of the video game industry - since it is so new, it also shows this effect strongly, where the biggest titles like the CoD games can see 80% of their budget spent on advertising (cursory google search to get these numbers on the latest title, Black Ops 2, turned up nothing citeable). If you spend $28 million making a game, and $120 - 200 million on ads, your economic model must be fucked.
So because you compete for scarce dollars, customers aren't coming to you, you need to manipulate customers into spending money they don't have. Hence why advertising is so huge, even with 1% click-through rates. All that concentrated wealth getting reinvested has limited alternative options of where to go, so you just try to pry more money out of people through bombardment.
>the rise of advertising has emerged from the collapse of disposable income.
No way. The rise of advertising to pay for internet stuff stems from a) the inherent network effects present in the most successful internet software, and b) the historically difficult problem of ubiquitous, safe, secure online payments.
Network effects: if you offer a paid and a free version of a product, more people will take free.
Online payments: if payments were really easy then people would pay for more things. Currently, solving this problem requires captive audiences (App Store, iTunes, in-app purchases, Facebook). But YouTube, for example, only hurts itself the more closed it becomes.
No way. The rise of advertising to pay for internet stuff stems from a) the inherent network effects present in the most successful internet software, and b) the historically difficult problem of ubiquitous, safe, secure online payments.
Network effects: if you offer a paid and a free version of a product, more people will take free.
Online payments: if payments were really easy then people would pay for more things. Currently, solving this problem requires captive audiences (App Store, iTunes, in-app purchases, Facebook). But YouTube, for example, only hurts itself the more closed it becomes.
> My personal impression is that the rise of advertising has emerged from the collapse of disposable income.
The rise of the advertising industry actually happened in the 1950s and 60s, when the American middle class was at its peak.
Advertising today is just moving to the Internet, and by dollar amount that means it is falling. Advertising on the Internet is way cheaper than on TV or even in print.
The rise of the advertising industry actually happened in the 1950s and 60s, when the American middle class was at its peak.
Advertising today is just moving to the Internet, and by dollar amount that means it is falling. Advertising on the Internet is way cheaper than on TV or even in print.
> Advertising today is just moving to the Internet, and by dollar amount that means it is falling.
Do you have a reference for that? I would be extremely surprised if aggregate advertising budgets were falling down. It might be cheaper on the Internet but my gut guess is that more companies are advertising or are advertising in more places.
Do you have a reference for that? I would be extremely surprised if aggregate advertising budgets were falling down. It might be cheaper on the Internet but my gut guess is that more companies are advertising or are advertising in more places.
[deleted]
> Look no further than the evolution of the video game industry - since it is so new, it also shows this effect strongly, where the biggest titles like the CoD games can see 80% of their budget spent on advertising (cursory google search to get these numbers on the latest title, Black Ops 2, turned up nothing citeable). If you spend $28 million making a game, and $120 - 200 million on ads, your economic model must be fucked.
I highly doubt your 80% figure is anywhere near the mark. Even movies don't spend that much in promotion in %. You shouldn't bring out numbers if you cannot back them up, because that just makes the rest of your post less credible as well.
I highly doubt your 80% figure is anywhere near the mark. Even movies don't spend that much in promotion in %. You shouldn't bring out numbers if you cannot back them up, because that just makes the rest of your post less credible as well.
http://www.neogaf.com/forum/showthread.php?t=586441
> The Witcher 3 to be most expensive Polish game; $15M dev. budget + $25M ad. budget
So over 60% of the budget is marketing.
> The Witcher 3 to be most expensive Polish game; $15M dev. budget + $25M ad. budget
So over 60% of the budget is marketing.
I make mobile games, and don't have money to.advertise the level we calculated we need. Our competitors we discovered talking with drunk employees saying too much that the advertising budget is usually from 1.5 to 2.5 of the game development cost. New franchises from new companies then this go to 5x the dev cost.
who do not evenly reinvest this capital into the economy
Huh? Do most rich people have their money under their mattresses?
Rich people try to maximize their returns as much as anyone else, which typically means a mix of stocks (that's capital for businesses to grow) and bonds (capital for cities, states and nations as well as businesses).
Huh? Do most rich people have their money under their mattresses?
Rich people try to maximize their returns as much as anyone else, which typically means a mix of stocks (that's capital for businesses to grow) and bonds (capital for cities, states and nations as well as businesses).
I'm not saying a wealthy person is hoarding money, I'm saying that 1. they reintroduce that money for the purpose of further profit generation (meaing that over time the goal is to accumulate more ownership of productive goods or businesses) rather than exchange that money for goods and services directly.
This means you favor 1. non risky ventures and 2. likely growth centers. If in an entire economy you only have this one way wealth ciphon effect, that means that money can be caught in an independent economic loop (especially after legislative manipulation makes some markets no-risk, like mortgages in the early 2000s, or military contracts, or telecom monopolies) of the majority of the population.
The wealthy aren't buying your small town trinkets from the general store, or even hiring anyone living in most rural areas. They interact with a small subset of society directly, and in most cases the money they exchange won't end up at your mom and pop shop, it is much more likely to end up back at walmart peppering the rich guys pocket again.
It is more about recogition of the game of economics we are all enveloped in. Most wealthy people actively engage and play the game to make a profit. Most people are ignorant to their participation and don't understand that every purchase they make is a power transfer from themselves to someone else. On topic, advertising helps manipulate that exchange in the marketers favor because most ads attempt to illicit an emotional response drive to purchase.
This means you favor 1. non risky ventures and 2. likely growth centers. If in an entire economy you only have this one way wealth ciphon effect, that means that money can be caught in an independent economic loop (especially after legislative manipulation makes some markets no-risk, like mortgages in the early 2000s, or military contracts, or telecom monopolies) of the majority of the population.
The wealthy aren't buying your small town trinkets from the general store, or even hiring anyone living in most rural areas. They interact with a small subset of society directly, and in most cases the money they exchange won't end up at your mom and pop shop, it is much more likely to end up back at walmart peppering the rich guys pocket again.
It is more about recogition of the game of economics we are all enveloped in. Most wealthy people actively engage and play the game to make a profit. Most people are ignorant to their participation and don't understand that every purchase they make is a power transfer from themselves to someone else. On topic, advertising helps manipulate that exchange in the marketers favor because most ads attempt to illicit an emotional response drive to purchase.
Do most rich people have their money under their mattresses?
Apple has a hundred billion dollars sitting around not doing very much.
Landlords in The Bay Area are capturing extra money available to FaceLinkGoogTwitIPO Heads and pocketing it themselves.
Most rich people aren't investing in startups. Most rich people are probably corrupt doing borderline, if not flat out, illegal things, and are only interested in hoarding more wealth for themselves.
Apple has a hundred billion dollars sitting around not doing very much.
Landlords in The Bay Area are capturing extra money available to FaceLinkGoogTwitIPO Heads and pocketing it themselves.
Most rich people aren't investing in startups. Most rich people are probably corrupt doing borderline, if not flat out, illegal things, and are only interested in hoarding more wealth for themselves.
"Apple has a hundred billion dollars sitting around not doing very much."
Couldn't be further from the truth. Apple runs one of the world's largest hedge funds: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
Not even going to bother with your other statements.
Couldn't be further from the truth. Apple runs one of the world's largest hedge funds: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
Not even going to bother with your other statements.
Hedge funds have very little impact on the economy. The same dollars would have a much bigger impact if spent or left to consumers.
Or they tie it up by purchasing the 6th largest island of Hawaii, massive yachts, and mansions that benefit few people other than themselves.
Yachts and mansions don't build themselves. Jobs are created by their construction. Then that money is spent somewhere else, etc. Multiplier effect. Better that things are bought than the money sitting in a money market account.
In regards to the island purchase in Hawaii, it sounds like he is putting funds into improving the infrastructure on the island. (I don't want to get into an argument on whether that is a good or bad thing. Just pointing out that money is being put into the economy by him doing so.)
In regards to the island purchase in Hawaii, it sounds like he is putting funds into improving the infrastructure on the island. (I don't want to get into an argument on whether that is a good or bad thing. Just pointing out that money is being put into the economy by him doing so.)
Sure the money is spent paying people to build those yachts, etc., but then the benefits of that labor, once spent, continue to accrue only to the owner. In other words, the yacht builders are paid once; the owner benefits continually from ownership of the finished product.
The same could be said of anything including the keyboard I'm typing this comment on.
Your keyboard is probably used to produce new value for yourself and others, and represents a very small fraction of the economy. A yacht (to continue the example) is a much larger chunk of economic output frozen in the control of a single owner.
I'm not saying nobody should have yachts, just that the argument that the yacht builders were paid only addresses part of the economic effect of concentrated wealth.
I'm not saying nobody should have yachts, just that the argument that the yacht builders were paid only addresses part of the economic effect of concentrated wealth.
Yachts don't operate, maintain, or moor themselves.
We had this 'Trickle Down Effect' with Maggie Thatcher in the UK - it does not work!
Looking for a convenient link, the Wikipedia page is rather nifty. Seems people have fallen for 'Trickle Down Effect' many times, although it was called the 'horse and sparrow theory':
http://en.wikipedia.org/wiki/Trickle-down_economics
Looking for a convenient link, the Wikipedia page is rather nifty. Seems people have fallen for 'Trickle Down Effect' many times, although it was called the 'horse and sparrow theory':
http://en.wikipedia.org/wiki/Trickle-down_economics
Even money under the mattress would be fine, since money != wealth.
[deleted]
There is a clear race to the bottom in so many technology industries, but advertising has been a major cost for most industries for some time, especially premium brands. I recall how surprised I was to learn that 1/3 of the cost of making a box of Tide detergent was the advertising getting you to buy it. Then again, you could just not click the ads. I think I've clicked one in the last 12 years.
We're all aware that this doesn't matter, right? Unless you believe that years of TV and radio had no impact, then clearly an impression has value.
The difficulty is that valuing that impression accurately and linking it to outcomes is hard, while linking clicks to outcomes is much easier. So people (especially in tech) tend to believe that impressions are meaningless, which is clearly not the case.
The difficulty is that valuing that impression accurately and linking it to outcomes is hard, while linking clicks to outcomes is much easier. So people (especially in tech) tend to believe that impressions are meaningless, which is clearly not the case.
Especially when you understand that the impression cookies you, and those cookies are then read when you buy that product on amazon, etc.
Yeah, but cookies are a really bad way of tracking people over multiple sites. They're cheap and ubiquitous, but not actually very good. Logins on the other hand...
> "the rise of advertising has emerged from the collapse of disposable income"
I respectfully disagree and argue for the opposite. It is the increase in disposable income that creates a bigger market opportunity, which in turn drives more competition from sellers that want a piece of the market. Because consumers already have too many choices and little attention span, they need advertising to get in the door in the first place.
While word of mouth is the holy grail of advertising, many underestimate how long it takes to generate this type of growth engine in a sustainable way, even for the best products.
As for the video game industry, a product's typically life cycle is 1 to 2 years, and the entire market changes every 5 to 10 years (e.g. think about how fast the transition went from arcades to home consoles to online/social to mobile phones). The majority of profits come from the first few months' of a game's release; so aggressive advertising is almost essential to success.
I respectfully disagree and argue for the opposite. It is the increase in disposable income that creates a bigger market opportunity, which in turn drives more competition from sellers that want a piece of the market. Because consumers already have too many choices and little attention span, they need advertising to get in the door in the first place.
While word of mouth is the holy grail of advertising, many underestimate how long it takes to generate this type of growth engine in a sustainable way, even for the best products.
As for the video game industry, a product's typically life cycle is 1 to 2 years, and the entire market changes every 5 to 10 years (e.g. think about how fast the transition went from arcades to home consoles to online/social to mobile phones). The majority of profits come from the first few months' of a game's release; so aggressive advertising is almost essential to success.
I wanted to reply with an off handed comment but i checked myself because this is a good and thoughtful comment which doesn't take the discussion off topic.
Unfortunately your comment is not applicable to this scenario, as someone who has worked in marketing at Procter&Gamble i can tell that it is about the shift in attention from tv and radio to the internet. Search was the first big disruption and it's measurability was par to none. This caused a shakeup in brand management and companies now had to focus on the zero moment of truth, a step up from the first moment of truth and the internet owns the zero moment of truth for products. Startups/Entrpreneurs and VC's enticed by the windfall profits of google and yahoo started pushing for ideas that could attract more eyeballs and as a result the younger generation have grown into the facebook era and have not been trained in other forms of business.
So what we have is a vicious cycle where entrepreneurs create attention grabbing startups, where the measure of success is x amount of users and then sell this advertising demand to google,yahoo, etc since they have the ad inventory to make use of that demand. This is why yahoo bought tumblr. This is also why most(not all) VC's don't really care about actual businesses that generate revenue by selling goods or services, it's too hard and it is too hard to get aquired. Basically you reduce their probability of a win, since two of their three exits are taking off the table, being exit to bigger ad comapny or aqui-hire leaving creating a profitable business on the table.
The bottom line is this, you are the spaghetti that the VC throws to the ceiling to see what sticks, thier appearance at tech conferences and startup competitions are to align you with their vision of what they want you to build. You have the illusion of choice, they say wearables or food tech and startups lineup to be the spaghetti.
This is a winners take all game, where VC's are chasing black swans like facebook, instagram, tumblr and the more of you that lineup to be spaghetti, the better their chances unless the "price" of spaghetti goes up. Pls read this book or the comments at least to understand the effects of this, http://www.amazon.com/The-Winner-Take-All-Society-Much-More/... .
At this point we are all trampling over each other to be the one that takes all and this has tipped the balance in the VC's favor until we have a shakeout, the hype dies down and entrepreneurs move on to other industries like banking. I would argue that this is the time to get into finance mabe use all the data science tools and start a Hedge Fund because those guys that left the HF industry before 2008 for tech probably had it easier. Bottom line, ask yourselve how many photo startups have been started vs sold for a $billion dollars, instagram will be the only one "winner takes all".
If not then pls watch this guy from startup school 2008, it is the highest probability for you to succeed in this overcrowded goldrush. https://www.youtube.com/watch?v=Y2UXPfz_Kgk
Unfortunately your comment is not applicable to this scenario, as someone who has worked in marketing at Procter&Gamble i can tell that it is about the shift in attention from tv and radio to the internet. Search was the first big disruption and it's measurability was par to none. This caused a shakeup in brand management and companies now had to focus on the zero moment of truth, a step up from the first moment of truth and the internet owns the zero moment of truth for products. Startups/Entrpreneurs and VC's enticed by the windfall profits of google and yahoo started pushing for ideas that could attract more eyeballs and as a result the younger generation have grown into the facebook era and have not been trained in other forms of business.
So what we have is a vicious cycle where entrepreneurs create attention grabbing startups, where the measure of success is x amount of users and then sell this advertising demand to google,yahoo, etc since they have the ad inventory to make use of that demand. This is why yahoo bought tumblr. This is also why most(not all) VC's don't really care about actual businesses that generate revenue by selling goods or services, it's too hard and it is too hard to get aquired. Basically you reduce their probability of a win, since two of their three exits are taking off the table, being exit to bigger ad comapny or aqui-hire leaving creating a profitable business on the table.
The bottom line is this, you are the spaghetti that the VC throws to the ceiling to see what sticks, thier appearance at tech conferences and startup competitions are to align you with their vision of what they want you to build. You have the illusion of choice, they say wearables or food tech and startups lineup to be the spaghetti.
This is a winners take all game, where VC's are chasing black swans like facebook, instagram, tumblr and the more of you that lineup to be spaghetti, the better their chances unless the "price" of spaghetti goes up. Pls read this book or the comments at least to understand the effects of this, http://www.amazon.com/The-Winner-Take-All-Society-Much-More/... .
At this point we are all trampling over each other to be the one that takes all and this has tipped the balance in the VC's favor until we have a shakeout, the hype dies down and entrepreneurs move on to other industries like banking. I would argue that this is the time to get into finance mabe use all the data science tools and start a Hedge Fund because those guys that left the HF industry before 2008 for tech probably had it easier. Bottom line, ask yourselve how many photo startups have been started vs sold for a $billion dollars, instagram will be the only one "winner takes all".
If not then pls watch this guy from startup school 2008, it is the highest probability for you to succeed in this overcrowded goldrush. https://www.youtube.com/watch?v=Y2UXPfz_Kgk
> since two of their three exits are taking off the table, being exit to bigger ad comapny or aqui-hire leaving creating a profitable business on the table.
VC's don't generally see an aqui-hire as an 'exit', rather as a soft landing to ward off impending failure or as an early abort where it might still have worked.
Aqui-hire's are sometimes good for founders, rarely good for VC's unless the business was about to go bust and they recoup their original investment. That's definitely not a win.
VC's don't generally see an aqui-hire as an 'exit', rather as a soft landing to ward off impending failure or as an early abort where it might still have worked.
Aqui-hire's are sometimes good for founders, rarely good for VC's unless the business was about to go bust and they recoup their original investment. That's definitely not a win.
VC's do try and recoup from a soft landing unless it was really a disaster. If you buying call options to capture a black swan, which is what vc's do, then the options that break even make a huge difference to your return distribution over time.
Of course they do. A soft landing is better than a total-loss. But it's not generally termed an 'exit' with a degree of success unless there is a multiple on the investment.
[deleted]
> "this is the time to get into finance mabe use all the data science tools and start a Hedge Fund"
It might be a BIT easier without all the noise, but starting a successful hedge fund at a young age is no walk in the park either. Think about how many John Arnolds, Chase Goldmans, Ken Griffins etc. are there comparing to all the traders out on the street try to make it big. The markets are equally as out of your control as the market where your product wants to serve.
It might be a BIT easier without all the noise, but starting a successful hedge fund at a young age is no walk in the park either. Think about how many John Arnolds, Chase Goldmans, Ken Griffins etc. are there comparing to all the traders out on the street try to make it big. The markets are equally as out of your control as the market where your product wants to serve.
Thanks for the link to the YouTube video - a must watch!
Wow. This is a really great insight. I've worked in advertising and never thought of it this way.
"Three of the largest, most influential and defining technology companies of our lifetime (Google, Facebook, Twitter) make money pretty much solely through advertising."
lol, a couple weeks ago i got into real deep thought about this and realized the same thing. The question i asked was what spurred this, companies relevant from the eighties and nineties like apple, amazon, microsoft all sell something. Then i realized that it may have been the huge success of google and adwords that spurred this. Since every entrepreneur would use this excuse about how google just focused on product and thought about revenue later, yet implicitly these entrepreneurs already know that they will focus on ad revenue. All the companies making headlines today are or will be ad focused, snapchat, tumblr, vine, frontback, instagram etc.
This has also created a situation where users expect a product for free and if you charge someone will make a clone with a slight twist and offer it for free, so developers rather offer it for free and not attempt charging. I find this phenomena mainly with social products but this is what VC's and guys like Mike Arrington find exciting. They find enterprise boring because you have to be methodical, know the business and sell! The one thing modern tech can take from wall street is the excitement in sales. I believe snapchat is worth around 800mill if this is the case then we should take TV series model for creating companies because we are in the business of making entertainment shows to last a few seasons.
I am very excited when i hear about companies like nest, jawbone, pebble, nike fit, etc!
lol, a couple weeks ago i got into real deep thought about this and realized the same thing. The question i asked was what spurred this, companies relevant from the eighties and nineties like apple, amazon, microsoft all sell something. Then i realized that it may have been the huge success of google and adwords that spurred this. Since every entrepreneur would use this excuse about how google just focused on product and thought about revenue later, yet implicitly these entrepreneurs already know that they will focus on ad revenue. All the companies making headlines today are or will be ad focused, snapchat, tumblr, vine, frontback, instagram etc.
This has also created a situation where users expect a product for free and if you charge someone will make a clone with a slight twist and offer it for free, so developers rather offer it for free and not attempt charging. I find this phenomena mainly with social products but this is what VC's and guys like Mike Arrington find exciting. They find enterprise boring because you have to be methodical, know the business and sell! The one thing modern tech can take from wall street is the excitement in sales. I believe snapchat is worth around 800mill if this is the case then we should take TV series model for creating companies because we are in the business of making entertainment shows to last a few seasons.
I am very excited when i hear about companies like nest, jawbone, pebble, nike fit, etc!
> Three of the largest, most influential and defining technology companies of our lifetime (Google, Facebook, Twitter)
That's so funny it hurts. If Google, Facebook and Twitter would all disappear tomorrow the world would continue to revolve and productivity in general would likely be up.
Techology companies that defined our lifetime exist (Intel, Microsoft, Apple, Sony, Samsung, etc) but are of a completely different kind. Google has the potential to become such a company, facebook and twitter not so much.
That's so funny it hurts. If Google, Facebook and Twitter would all disappear tomorrow the world would continue to revolve and productivity in general would likely be up.
Techology companies that defined our lifetime exist (Intel, Microsoft, Apple, Sony, Samsung, etc) but are of a completely different kind. Google has the potential to become such a company, facebook and twitter not so much.
If Google, Facebook and Twitter would all disappear tomorrow the world would continue to revolve and productivity in general would likely be up.
Google is really a useful tool and productivity would probably drop if it disappeared. How many technical answers did I get from Google? A lot!
I agree about Facebook and Twitter however, it wouldn't surprise me that both company get myspaced in the next 10 years.
Google is really a useful tool and productivity would probably drop if it disappeared. How many technical answers did I get from Google? A lot!
I agree about Facebook and Twitter however, it wouldn't surprise me that both company get myspaced in the next 10 years.
Google is the best search engine, that I am aware of, but it's not the only one.
I suspect if google disappeared I could make do with others (Bing, yahoo, DuckDuckGo, ...).
The biggest deal for me would be my @gmail.com account. So much of my online identity and profiles are connected to it.
I suspect if google disappeared I could make do with others (Bing, yahoo, DuckDuckGo, ...).
The biggest deal for me would be my @gmail.com account. So much of my online identity and profiles are connected to it.
The harsh reality is that at the moment advertisers will pay more for your attention than you will pay to use things.
I remember when popcapgames did a kickstarter to make all of their games ad-free. It was basically, "Look, we're making a great profit, but if you pay enough to cover our costs we'll take the ads off." It wasn't anywhere close to covering the costs, let alone to what the advertisers would pay.
There probably are some exceptions to this; people who have a passion or a love for some product, but for most consumer-facing products it's easier to tolerate a few ads than to shell out for everything you use.
I remember when popcapgames did a kickstarter to make all of their games ad-free. It was basically, "Look, we're making a great profit, but if you pay enough to cover our costs we'll take the ads off." It wasn't anywhere close to covering the costs, let alone to what the advertisers would pay.
There probably are some exceptions to this; people who have a passion or a love for some product, but for most consumer-facing products it's easier to tolerate a few ads than to shell out for everything you use.
>pay more for your attention than you will pay to use things.
I don't think we're given the choice very often. If there was a Facebook Premium that was no ads, no status filtering, and opted you out of the backend data-selling, would you consider it? I would.
>I remember when popcapgames did a kickstarter to make all of their games ad-free
I don't! That's awesome! But I didn't hear about it at all. See, that's an example of being given a choice, but not even knowing about it. (Pop Cap was probably not very serious about it - if they were, they would have pushed an ad)
I don't think we're given the choice very often. If there was a Facebook Premium that was no ads, no status filtering, and opted you out of the backend data-selling, would you consider it? I would.
>I remember when popcapgames did a kickstarter to make all of their games ad-free
I don't! That's awesome! But I didn't hear about it at all. See, that's an example of being given a choice, but not even knowing about it. (Pop Cap was probably not very serious about it - if they were, they would have pushed an ad)
The problem is, people who have enough money to opt out of ads are exactly the ones that are worth advertising to.
Two things come to mind.
First, 99% of advertising, at least in terms of impressions we see on web pages, fail to convert. Which tells me that this waste has to be squeezed out over time. Which tells me that a lot of people overpay for ads and perhaps ad sellers are in for a surprise, not unlike that experienced by print media.
The other thing that comes to mind is that Twitter has the attention of celebrities and influentials, and they value what Twitter offers in terms of reach. Seems to me these are the people that will sustain it. It’s a specialized form of advertising, I suppose, but perhaps less buckshot.
First, 99% of advertising, at least in terms of impressions we see on web pages, fail to convert. Which tells me that this waste has to be squeezed out over time. Which tells me that a lot of people overpay for ads and perhaps ad sellers are in for a surprise, not unlike that experienced by print media.
The other thing that comes to mind is that Twitter has the attention of celebrities and influentials, and they value what Twitter offers in terms of reach. Seems to me these are the people that will sustain it. It’s a specialized form of advertising, I suppose, but perhaps less buckshot.
Not all advertising is direct response (ie: looking at dollars in vs dollars out in specific advertising channels). There will always be a Coca-Cola or a P&G that care more about eyeballs than direct sales.
yep - i think this is where the real dollars in advertising is to be made; namely, branding campaigns.
I second that. Working for a publisher, I know, that it is most valuable for us, if any big brand covers our front page with a big eye-ball-grabbing-wallpaper.
That is, where the money is.
That is, where the money is.
It probably makes the most sense to just look at advertising as a share of GDP or some sort of sales metric (this page indicates it has been pretty stable for the last 50+ years: http://www.niemanlab.org/2009/08/can-newspaper-publishers-su...).
There isn't any obvious reason it would drop over time, I think the bigger question is how will advertising evolve over time.
There isn't any obvious reason it would drop over time, I think the bigger question is how will advertising evolve over time.
Something like a Yelp or Tripadvisor seemingly has made it seem possible for restaurants (or hotels) to not advertise anymore. If you provide good food and good service, your restaurant/coffee-shop should bubble up to the top and be seen consistently by a lot of people. This is a simplistic take on the restaurant business of which I know nothing about, but at least that seems like a plausible scenario.
As someone who ran a restaurant I can say that being well-known, in a prime location, and easy to google does not completely remove the need in ads, much like it doesn't remove the need to have a signboard.
For a known brand ads serve as a means to say "we are here, we are alive, we do well". That's why Coca-Cola or McDonald's keep running ads, despite the fact that everyone in the world is aware of them. This is not unlike wearing an expensive necktie on public, or having a gold watch 100 years ago; it's the same sort of signaling a peacock uses his tail for.
If you stop putting your ads before public's eyes, sales start to slump. Maybe this is not so for a brand with a small cult following, but such brands are few.
So advertising is not going to go away, as much as luxury items market is not going to go away. It may shrink a bit when times are hard, it may migrate to different media (from paper to TV to computer screen), but not disappear.
For a known brand ads serve as a means to say "we are here, we are alive, we do well". That's why Coca-Cola or McDonald's keep running ads, despite the fact that everyone in the world is aware of them. This is not unlike wearing an expensive necktie on public, or having a gold watch 100 years ago; it's the same sort of signaling a peacock uses his tail for.
If you stop putting your ads before public's eyes, sales start to slump. Maybe this is not so for a brand with a small cult following, but such brands are few.
So advertising is not going to go away, as much as luxury items market is not going to go away. It may shrink a bit when times are hard, it may migrate to different media (from paper to TV to computer screen), but not disappear.
A YC13S company (Datarank) is using twitter data (among others) to try to quantify the general public's attitude towards certain products. So that's a possible revenue stream. Rather than a company paying to advertise, they pay to find out what people think about their products.
https://www.datarank.com/
https://www.datarank.com/
I've thought a good bit about alternative revenue models for Twitter—Pro accounts that show statistics and keep your entire history, have developers pay for access to their API—I'm assuming they have gone through these ideas and realized they could make the most money from ads.
I think that just means DataRank is a market research tool. It won't mean companies that use it will spend less on advertising, but it will help them target specific demographics, perceptions, etc more efficiently. Not less spending, just different.
No, don't forget Data.
Twitter sells its tweet data exclusively via Gnip, DataSift, and perhaps one or two other authorized data providers (i.e. they alone have access to 100% of Twitter's data pipeline, both historical and real-time).
Using Twitter's public search API you can get a max of 1% access to their data pipeline.
It's a racket, one that is making the authorized providers (and Twitter) heaps of cash.
So, yes, advertising, but also data; those are the revenue streams that social media are creating IPO-able companies out of.
Twitter sells its tweet data exclusively via Gnip, DataSift, and perhaps one or two other authorized data providers (i.e. they alone have access to 100% of Twitter's data pipeline, both historical and real-time).
Using Twitter's public search API you can get a max of 1% access to their data pipeline.
It's a racket, one that is making the authorized providers (and Twitter) heaps of cash.
So, yes, advertising, but also data; those are the revenue streams that social media are creating IPO-able companies out of.
my understanding is that twitter doesn't make boatloads of cash off of licensing access to the likes of gnip/datasift/etc.
more of a push towards where it wants its ecosystem to move.
but yes, it is another rev stream.
more of a push towards where it wants its ecosystem to move.
but yes, it is another rev stream.
Huh? Tweet data is not free for public use (well, less than 1% is), although the public provides the very data that they are monetizing.
We have a client who's willing to pay $10K/month for real-time tweet data pertaining to 20 search terms in the pharmaceutical industry, which is a small-time job for Gnip and Datasift. Check their pricing and tell me if you think Twitter is giving this data away for free. More likely they're taking a decent piece of the pie in exchange for access to the data.
Social media data is crucial for companies to stay on top of current (and past) trends -- Twitter knows this, and are profiting, presumably hugely as they have the market cornered with deep pocket clients willing to pay, repeatedly, month after month.
We have a client who's willing to pay $10K/month for real-time tweet data pertaining to 20 search terms in the pharmaceutical industry, which is a small-time job for Gnip and Datasift. Check their pricing and tell me if you think Twitter is giving this data away for free. More likely they're taking a decent piece of the pie in exchange for access to the data.
Social media data is crucial for companies to stay on top of current (and past) trends -- Twitter knows this, and are profiting, presumably hugely as they have the market cornered with deep pocket clients willing to pay, repeatedly, month after month.
I would argue that these are not the most influential technology companies of our lifetime at all. Google, yes, but what about Microsoft who put a PC on every desktop, or Apple maybe for taking the smartphone that Blackberry had invented and brought it to masses, or IBM for Watson, or Oracle for the Relational Database, or even Wordpress. Google revolutionized the internet, they did to data what MSFT did to computing, but FB and Twitter are essentially the same, one's a photo sharing site, the other wordpress for the twitch generation. What about GPS, hasn't that touched more lives in more meaningful ways that Twitter?
> What is the future of advertising?
the same as the future of capitalism. advertising will exist as long as people sell shit.
the same as the future of capitalism. advertising will exist as long as people sell shit.
I have thought about this long and hard. Advertising seems like a necessary evil. Free services help to democratize the internet to some extent. Imagine if you had to pay for Google searches! Today, a kid in India can use the same search engine as a kid in the US. However, to address your question, advertising will not be able to support all the businesses of the future.
The reason for the reliance on advertising for revenues is because of the shift of ad dollars to the internet from old media such as radio, print etc. Advertising seems like this massive source of revenue waiting to be tapped. It is really a temporary illusion of growth. Overall ad spending is not increasing dramatically, it's only being reallocated. Once the shift to digital is complete, digital advertising will track GDP growth (similar to offline advertising today). But complete allocation will take several decades more.
A second reason for this reliance is lack of competition. Only a few companies have the scale needed to be attractive to advertisers. Hence, all ad dollars go to these companies. The success of these companies creates a lot of me-toos. Once there are a few more companies with the scale of Google/FB fighting for the same dollars, advertising will cease to be as attractive.
The reason for the reliance on advertising for revenues is because of the shift of ad dollars to the internet from old media such as radio, print etc. Advertising seems like this massive source of revenue waiting to be tapped. It is really a temporary illusion of growth. Overall ad spending is not increasing dramatically, it's only being reallocated. Once the shift to digital is complete, digital advertising will track GDP growth (similar to offline advertising today). But complete allocation will take several decades more.
A second reason for this reliance is lack of competition. Only a few companies have the scale needed to be attractive to advertisers. Hence, all ad dollars go to these companies. The success of these companies creates a lot of me-toos. Once there are a few more companies with the scale of Google/FB fighting for the same dollars, advertising will cease to be as attractive.
It's similar to television. All of these companies have relatively fixed costs. When adding a new customer is super cheap, and your product has the potential to be super popular, then the optimal business plan is to maximize the number of customers even if revenue per person is tiny.
Ads are a proxy for micropayments. For various reasons, Google cannot charge you directly for their services. Instead, they show you an ad, which is effectively you paying them in attention, and they then sell this user attention to the advertisers.
Don't fight it. Advertising is an absolutely legitimate business and in fact vital to a dynamic economy.
You are always going to see advertising where marginal costs to operate approach zero. It is by far the best way to take advantage of such situations.
You are always going to see advertising where marginal costs to operate approach zero. It is by far the best way to take advantage of such situations.
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Advertising will continue to exist but it will change forms. Once upon a time TV and Print media was the main source then it was desktop web. Today it is mobile and in future it will be something else like Google Glasses.
During the iron age the most successful companies were those that exploited iron, during the silicon age its companies that most successfully exploit information. That seems somewhat logical to me.
As a species we're driving the costs out of creating things so everything becomes a commodity, and the value isn't in the making, it is in finding the one which meets your requirement in a sea of things that are all very similar, hence the value is in the finding, aka advertising (and to a lesser extent information distribution).
As a species we're driving the costs out of creating things so everything becomes a commodity, and the value isn't in the making, it is in finding the one which meets your requirement in a sea of things that are all very similar, hence the value is in the finding, aka advertising (and to a lesser extent information distribution).
We need a good feedback mechanism. Of the major forms of advertising (TV, radio, web, mobile), which allow you to respond to the ads? None so far. But I don't think it'll be that way for long.
Facebook? Much as we all love to hate them, they do in fact offer the ability to remove ads from both the right hand side and the feed. I have no idea if this matters, but it is an attempt to allow feedback (at a relatively imprecise level).
So much pessimism in the comments about the viability of Twitter as a business model. I've heard multiple sources (Chris Sacca, Ron Conway) not only say that Twitter has perhaps the best monetization opportunity of any web 2.0 company but dump as much money as they can into the stock. I've advertised on Twitter for quite a while, and the returns destroy Facebook and Adsense.
Advertising makes a lot of money if the audience is big enough. Twitter's audience is huge, connected, well sorted, and interested.
Advertising makes a lot of money if the audience is big enough. Twitter's audience is huge, connected, well sorted, and interested.
I'm bullish on TWTR(?), and will definitely buy into the company at some point (likely after their first lockup expiration), but I am, for one, not the least bit surprised that two people who have a ton of money on the line say they think Twitter has a solid business model, and that of course you should buy their stock.
I'm really, really hoping its TWIT...
Is # an acceptable character?
[deleted]
Sort of, but only as a suffix, and only for specific types of securities: http://www.nasdaqtrader.com/trader.aspx?id=CQSsymbolconventi...
TWTTR would be interesting since that was the original name of the service.
I think Leo Laporte might have a problem with that.
because he's going to have an IPO soon? and his trademark in anyway can be conflated with twitter's?
I think you're guilty of chicken and egg there though. They put a ton of money on the line based on what they were seeing?
> I've advertised on Twitter for quite a while, and the returns destroy Facebook and Adsense.
Well, go on already... This is far more interesting than the original subject :)
Well, go on already... This is far more interesting than the original subject :)
> dump as much money as they can into the stock
They would say that wouldn't they!
They would say that wouldn't they!
Sure, you can look at it as Ron Conway pulling a long con by investing in a stock and lying about its monetization potential. Or you can look at it as Ron Conway putting his money where his mouth is.
Nobody wants to know if the stock is worth something, they want to know if it is worth the IPO price.
I read an article a few years back about how Twitter could potentially be of great value as a peer-to-peer PSP. It's more of a long shot (and they probably should've started a long time ago) but I did find it an interesting model. I just don't see advertising work at the scale that they'd need to justify a ginormous valuation (just as FB isn't very convincing with their ad network).
http://www.businessinsider.com/2008/6/how-twitter-will-be-wo...
Also, just realized that Square is set to go into this direction.
http://www.businessinsider.com/2008/6/how-twitter-will-be-wo...
Also, just realized that Square is set to go into this direction.
Can you elaborate about AdWords vs Twitter Ads?
We've advertised on Linked In and Facebook but haven't thought of trying Twitter. Would you mind sharing a bit about what you've advertised on Twitter and the type of results you've experienced?
Thanks!
Thanks!
Advertising makes money when the audience has intent.
People search google for "Best washing machine". Google shows them adverts for washing machines, customer buys washing machine.
Where is the intent on twitter? To gossip? I just don't see it.
If someone is about to buy something, they're likely to go to google and search. They're not likely to go to twitter. Google gets them at the crucial point before they buy something.
People search google for "Best washing machine". Google shows them adverts for washing machines, customer buys washing machine.
Where is the intent on twitter? To gossip? I just don't see it.
If someone is about to buy something, they're likely to go to google and search. They're not likely to go to twitter. Google gets them at the crucial point before they buy something.
Advertising makes more money when the audience has intent. That's why a google click for someone who is searching for "mesothelioma" costs $130, and why Google makes money faster than it can spend it.
But what if no one is looking for you? What if you are trying to gain new audiences? There's still plenty of money to be made there. Maybe not Google money, but enough to build a company that's worth tens or perhaps eventually hundreds of billions of dollars. Reputable sources (http://www.forbes.com/sites/roberthof/2013/03/27/report-twit...) have Twitter's estimated revenue to be at $1 Billion next year. And the monetization is just getting started.
But what if no one is looking for you? What if you are trying to gain new audiences? There's still plenty of money to be made there. Maybe not Google money, but enough to build a company that's worth tens or perhaps eventually hundreds of billions of dollars. Reputable sources (http://www.forbes.com/sites/roberthof/2013/03/27/report-twit...) have Twitter's estimated revenue to be at $1 Billion next year. And the monetization is just getting started.
> Advertising makes money when the audience has intent.
That's why nobody advertises on television.
When I watch TV, my intent is to see what antics the Simpsons are up to this week, not to go to Best Buy and trade my cellphone in for a newer version or buy a Coke or go to a movie theater an watch a Seth Rogen movie.
That's why nobody advertises on television.
When I watch TV, my intent is to see what antics the Simpsons are up to this week, not to go to Best Buy and trade my cellphone in for a newer version or buy a Coke or go to a movie theater an watch a Seth Rogen movie.
> That's why nobody advertises on television.
Companies spent $140 billion in advertising on US TV in 2012, up 3% from 2011. TV is about brand and awareness, not direct response.
Companies spent $140 billion in advertising on US TV in 2012, up 3% from 2011. TV is about brand and awareness, not direct response.
He was obviously being sarcastic.
I know. I was supporting his point. Massive industry. Hoping to see more brand dollars shift toward online.
I think the idea that twitter will follow more of a TV strategy than a google strategy is good one. Twitter is obviously a platform ideal for kicking entertaining content at users to keep your brand relevant and with positive affect in their mind.
Secondary to intent, but still pretty valuable, is interest. With Twitter, interest is VERY clear. If you want to target web developers, or fashion lovers, or car enthusiasts, you just have to look at who they follow to figure it out.
Google (or all search engines, i guess, but who are we kidding) is pretty much the only example of the situation you describe. All other advertising that exists, or has existed, doesn't work like that, yet is supposedly successful.
What's the intent of people watching television or reading newspapers? Ads were a distraction, but people never minded too much. And advertisers were happy, because they got enough people with intent to make it worth their while.
Twitter may not have direct understanding of intent, but they are pretty good at knowing interest, which is sufficiently correlated with intent to make advertisers happy.
Twitter may not have direct understanding of intent, but they are pretty good at knowing interest, which is sufficiently correlated with intent to make advertisers happy.
"I just bought a #WashingMachine from @SomeWebshop for #cheap, #omg!!111#one~!", where @SomeWebshop paid Twitter to have positive-sounding tweets for SomeWebshop appear more prominently on the #washingmachine hashtag and elsewhere.
(disclaimer: I don't know twitter and never got into it.)
(disclaimer: I don't know twitter and never got into it.)
I think this also shows a somewhat limited understanding of Twitter and solely puts it in the "passive" mode. I'll actively search on Twitter for topics of interest to me to see what people are saying on topics.
One of these companies(FB, twitter, YELP, Goog, etc) is going to rethink and reinvent advertising. All these companies use old models on the web(playing an ad before a video like tv, banner ads are like magazine or classifieds ads).
That's kind of the name of the game. "How can we show people ads in a new way that integrates seamlessly with their experience?"
What if Twitter found a way to do it? Facebook seems to be getting the hang of it with their newsfeed ads.
That's kind of the name of the game. "How can we show people ads in a new way that integrates seamlessly with their experience?"
What if Twitter found a way to do it? Facebook seems to be getting the hang of it with their newsfeed ads.
> "How can we show people ads in a new way that integrates seamlessly with their experience?"
Imho Google does this pretty well with Adwords (those that you see in the search results).
Imho Google does this pretty well with Adwords (those that you see in the search results).
Is this where I can complain about Twitters Ad API still not being available to the general public?
You can build some amazing tools with the APIs Google and Facebook give you, but Twitter is off-limits unless you're an invited partner, of which there are only a handful (I think.)
They seem a little too content to keep it restricted.
And to at least make my missive vaguely related to your post - surely they'd get a lot of interesting ideas on how to revolutionize advertising if they allowed open experimentation.
You can build some amazing tools with the APIs Google and Facebook give you, but Twitter is off-limits unless you're an invited partner, of which there are only a handful (I think.)
They seem a little too content to keep it restricted.
And to at least make my missive vaguely related to your post - surely they'd get a lot of interesting ideas on how to revolutionize advertising if they allowed open experimentation.
Who you follow on twitter shows intent far more than liking a page on Facebook.
My guess is that profits will be low. And they should be. Declared profits are basically a way of saying, "We can't figure anything more useful to do with this money than put it in the bank or give it back to our investors."
That's fine for a large company in a stable market. But Twitter is a young company battling to establish market share with products they hope will last for decades or centuries. [1] If the management really can't think of anything useful to do with cash, they should step down and help hire somebody who can.
[1] Yes, centuries. The New York Times started publishing in 1851. It's reasonable to think that the World Wide Web will have a historical place similar to print periodicals. And network-effect businesses are notoriously hard to dislodge once widely adopted.
That's fine for a large company in a stable market. But Twitter is a young company battling to establish market share with products they hope will last for decades or centuries. [1] If the management really can't think of anything useful to do with cash, they should step down and help hire somebody who can.
[1] Yes, centuries. The New York Times started publishing in 1851. It's reasonable to think that the World Wide Web will have a historical place similar to print periodicals. And network-effect businesses are notoriously hard to dislodge once widely adopted.
The web is _very_ churny; waves of people move from service to service over 5-10 year adoption cycles. Eventually people will declare twitter "uncool" (perhaps as a result of abuse problems?) and move onto the next thing.
The modern web has been very churny, but I think we have been witnessing the equivalent of the Cambrian Explosion [1]. Eventually both tech and behavior will settle down. Some evidence for that was the rapid churn cycles in social tools from 2002-2008 or so. But Facebook, Twitter, and LinkedIn could well be where the musical-chairs game stops.
[1] http://en.wikipedia.org/wiki/Cambrian_explosion
[1] http://en.wikipedia.org/wiki/Cambrian_explosion
Their revenue is also likely low, given that they could do a confidential S-1 (there's a revenue, not a profit, limit for that type of filing)
Ironically, I think this is both the sign to buy twitter and stop using it at the same time.
I no longer trust American companies to do right by the user the moment that their stock becomes public. When wall street is banging on the door for a quarterly result, most CEOs end up listening.
I'm not deleting my account just yet, but I'm wary from everything I've seen in the last decade.
I no longer trust American companies to do right by the user the moment that their stock becomes public. When wall street is banging on the door for a quarterly result, most CEOs end up listening.
I'm not deleting my account just yet, but I'm wary from everything I've seen in the last decade.
Maybe this will get buried, but as a huge fan of Twitter and the team I can't help but think they can try making more cool stuff? This huge benevolent profitable business with amazing developers has a shot at making more than a web application, I suppose. Others may say it's unfair for the big guy to cannibalize business ideas though.
I dont believe a profit seeking entity can (ever) be "benevolent", in the sense that it would forgo profit in an altrustic manner to help "the world".
If the profit generating actions of such company also align with the interests of society, then good. When they aren't aligned, they will chose profit over the welbeing of people, unless laws come in to "re-align" them.
Perhaps when a company is private and small, they can be benevolent, but when it grows big (which is usually when they IPO), the share holder's expectation of a return (as well as various other market pressures to make profit or die) forces companies to behave in a sociopathic manner. Despite all good intentions of the CEO, employees, etc.
If the profit generating actions of such company also align with the interests of society, then good. When they aren't aligned, they will chose profit over the welbeing of people, unless laws come in to "re-align" them.
Perhaps when a company is private and small, they can be benevolent, but when it grows big (which is usually when they IPO), the share holder's expectation of a return (as well as various other market pressures to make profit or die) forces companies to behave in a sociopathic manner. Despite all good intentions of the CEO, employees, etc.
I gotta disagree with you on "benevolent". Twitter's been mistreating their developers for quite some time now.
http://developingzack.blogspot.com/2012/09/wait-what-twitter...
http://www.androidpolice.com/2013/02/26/falcon-pro-developer...
http://developingzack.blogspot.com/2012/09/wait-what-twitter...
http://www.androidpolice.com/2013/02/26/falcon-pro-developer...
Yes, I've heard about the API issue. I don't really care anymore. It's wasting Twitter's money to give free access to every dev, and yet they do anyway. If they want to set limits that's their issue. The only real downside I see is that if someone wants to use a FOSS Twitter client it might be harder.
Yes, I know Twitter grew because of these developers. But think about all the good Twitter does, sponsoring the Apache Foundation, not giving into the NSA, etc. They have much higher standards than most mainstream tech corps, imo.
Yes, I know Twitter grew because of these developers. But think about all the good Twitter does, sponsoring the Apache Foundation, not giving into the NSA, etc. They have much higher standards than most mainstream tech corps, imo.
Well, I suspect that most tech companies don't really want to give in to the NSA. Twitter have been better though, I do agree.
However, on the sponsorship of the Apache foundation, you may wish to peruse http://www.apache.org/foundation/thanks.html for the list of sponsors. You'll note that Twitter are Bronze, while Goog and FB are Platinum (along with Microsoft, oddly enough).
However, on the sponsorship of the Apache foundation, you may wish to peruse http://www.apache.org/foundation/thanks.html for the list of sponsors. You'll note that Twitter are Bronze, while Goog and FB are Platinum (along with Microsoft, oddly enough).
I have heard they basically no longer want to be a web company but rather a service company. This means they could have lots of interesting ideas in the works.
They have a lot of really sharp talent over there. I'm confident they can make a killer ad platform. Sign me up.
Not to be mean, but in the dev circles in the valley, I tend to hear the exact opposite. Just what I've gathered from the rumor mill.
I'm a software engineer. I work down the street from Twitter. I hear nothing but great things about their devs.
What exactly are those devs doing? I mean, aside from scaling to million and millions of users...which happened a while ago...it's pretty much the same thing as it's always been.
If you look at their Github, they are always coming out with great stuff. They also have their name on the biggest frontend framework out there :)
of course because you don't want to piss off your neighbors...
I always keep an eye on: http://github.com/twitter lots of awesome stuff ranging from frontend stuff to distributed services. Having 100 open source projects and judging by the rate they are putting things out they do have a good engineering team.
Well, twitter has "devs" then they have "Devs." They're known for their Kevin Weil-type employees and not their mumble mc. staresatfeet (because for "culture fit" they hire attractive outgoing people, not mumbles mc. staresatfeet).
I think it's already very well-done: https://ads.twitter.com.
"Confidentially" meaning they submitted all the paperwork via Snapchat, of course.
This is awesome. I use Twitter everyday in a way that can't be replicated by any other service out there - there's zero competition. Once they really figure out monetization, as Facebook eventually did, it will be a home run for investors.
would you mind describing in what way(s) you use twitter?
Great, did they find a way to monetize their service yet?
Mainly through advertising, like "promoted tweets"
Is there much evidence to suggest that actually brings in value and profit though?
People search google for washing machines, then click on an advert, and buy a washing machine. I can see how that works, and makes google lots of money.
But a "promoted tweet", to people who are tweeting gossip, wasting time, etc? There's no intent there. They're not looking for a washing machine, they're wasting time.
People search google for washing machines, then click on an advert, and buy a washing machine. I can see how that works, and makes google lots of money.
But a "promoted tweet", to people who are tweeting gossip, wasting time, etc? There's no intent there. They're not looking for a washing machine, they're wasting time.
What you are describing is direct response advertising.
There is another type of advertising called branding. Budweiser doesn’t spend $25 million per year advertising during the Super Bowl because they expect you to see the advertisement and immediately order a beer at the bar. Instead, Budweiser is trying to tell you a story about their brand to evoke an emotional response that will be stored deep in your amygdala such that every time you go to buy beer in the future you will reflexively choose Budweiser.
Google is better for direct response advertising; Twitter is better for branding.
PS: There is more money in brand advertising.
There is another type of advertising called branding. Budweiser doesn’t spend $25 million per year advertising during the Super Bowl because they expect you to see the advertisement and immediately order a beer at the bar. Instead, Budweiser is trying to tell you a story about their brand to evoke an emotional response that will be stored deep in your amygdala such that every time you go to buy beer in the future you will reflexively choose Budweiser.
Google is better for direct response advertising; Twitter is better for branding.
PS: There is more money in brand advertising.
I don't buy that. On the web, there is far more money in direct response advertising.
Branding is far more prominent in old media.
Yes, that's the point. As people spend more of their time and attention on social media relative to other media, where will those branding budgets go? Not to Google (well, actually, that's why they bought YouTube...but not to Google Search).
Twitter is one of the few outlets where brands can effectively communicate their message online. That's the theory, anyway. You can argue that Twitter is a bad medium for branding but arguing that it's a bad medium for direct response advertising is missing the point.
Twitter is one of the few outlets where brands can effectively communicate their message online. That's the theory, anyway. You can argue that Twitter is a bad medium for branding but arguing that it's a bad medium for direct response advertising is missing the point.
Watch out guys Twitter is doing something different.
On the web there is far more money in direct response right now because that's the easiest to measure and we have the platforms well ingrained in all our systems.
To say that brand based advertising isn't required or has no place is contrary to everything we know about advertising. You don't see the coke logo 50 times a day for nothing.
On the web there is far more money in direct response right now because that's the easiest to measure and we have the platforms well ingrained in all our systems.
To say that brand based advertising isn't required or has no place is contrary to everything we know about advertising. You don't see the coke logo 50 times a day for nothing.
That's a very biased argument.
Just as people searching for a washer on Google are more likely to click on a washer ad, people looking at the #Astronomer stream are more likely to buy a telescope.
That's not the perfect comparison, but Twitter definitely classifies it's users into ad related categories.
Just as people searching for a washer on Google are more likely to click on a washer ad, people looking at the #Astronomer stream are more likely to buy a telescope.
That's not the perfect comparison, but Twitter definitely classifies it's users into ad related categories.
You're missing the point.
You can classify all you want, but my central point was:
If I'm about to buy a washing machine, I would go search on google. I would not go on twitter and tweet "OMGLOLPOP! Gonna buy a washing machine what does every1 (including advertisers) recommend #confused"
So Google get me at the crucial time I'm about to buy something. Twitter don't.
You can classify all you want, but my central point was:
If I'm about to buy a washing machine, I would go search on google. I would not go on twitter and tweet "OMGLOLPOP! Gonna buy a washing machine what does every1 (including advertisers) recommend #confused"
So Google get me at the crucial time I'm about to buy something. Twitter don't.
Your model is too coarse.
My brother bought a new dishwasher not long ago. He knew for months that he really needed one, and there was circa 2 years that he wanted one.
For considered purchases, there's generally a long period before a clear intention to purchase where people have some awareness of the need. During that period, they're very open to information on products. If they're at a friend's house, they might say, "Hey, how do you like that dishwasher?" And if they see an ad for a dishwasher, they're more likely to pay attention.
Google does very well once people have decided to search. Twitter will be better for getting them before the conscious decision to take action. And it will also be good for the (often long) period between first Google search and actual purchase.
My brother bought a new dishwasher not long ago. He knew for months that he really needed one, and there was circa 2 years that he wanted one.
For considered purchases, there's generally a long period before a clear intention to purchase where people have some awareness of the need. During that period, they're very open to information on products. If they're at a friend's house, they might say, "Hey, how do you like that dishwasher?" And if they see an ad for a dishwasher, they're more likely to pay attention.
Google does very well once people have decided to search. Twitter will be better for getting them before the conscious decision to take action. And it will also be good for the (often long) period between first Google search and actual purchase.
You're not buying anything during the super bowl either and it costs millions to run a 30s ad -- branding.
> If I'm about to buy a washing machine, I would go search on google
Actually we've just bought a washing machine in the past week and Google's ads didn't really have anything to do with it.
Selecting a machine took about three months, a combination of searching for user reviews and information about warranty. None of the Google 'ZOMG BUY NOW' ads were in the slightest bit useful for that.
Once we decided to buy, we noticed that all the ads were for big-name stores that don't have outlets where we live; because Google is basing the results on the address of my ISP, 500 miles away...
Actually we've just bought a washing machine in the past week and Google's ads didn't really have anything to do with it.
Selecting a machine took about three months, a combination of searching for user reviews and information about warranty. None of the Google 'ZOMG BUY NOW' ads were in the slightest bit useful for that.
Once we decided to buy, we noticed that all the ads were for big-name stores that don't have outlets where we live; because Google is basing the results on the address of my ISP, 500 miles away...
Not sure about the value, or how much money it brings in. According to Twitter "Promoted Tweets are ordinary Tweets purchased by advertisers who want to reach a wider group of users or to spark engagement from their existing followers." Advertisers pay Twitter to tweet, Twitter finds a specific group of people to show this tweet to.
To the "intentionality" question. They may be wasting time, but they may also be checking news, looking for weather updates, gossip, gadget news, &c, not to mention keeping up with what their IRL friends are doing. All of which falls under the broad category of intentional.
Their estimated 2013 revenue is $600m (and was $350m in 2012) so they are making a little revenue at least.
They're at 50% the revenue of Bosch and Lomb. More than a little money.
I'm curious if Hacker News would have brought such pessimism to the AAPL and MSFT IPOs as they have with Facebook and Twitter.
Around 500 million users, around 750 million tweets per day. That data might not be worth everything, but it's definitely worth something.
Around 500 million users, around 750 million tweets per day. That data might not be worth everything, but it's definitely worth something.
A major difference is the valuation these companies are getting. Compare Facebook's $80 billion to $100 billion to Apple's $4.8 billion IPO in today's inflation-adjusted dollars. I think that is a large part of where the cynicism is coming from.
Calculated using: http://www.quora.com/What-was-Apples-valuation-at-IPO and http://www.usinflationcalculator.com/
Calculated using: http://www.quora.com/What-was-Apples-valuation-at-IPO and http://www.usinflationcalculator.com/
AAPL IPO'd in 1980, when there were 1M personal computers in the world. Total.[1] The tech sector was just tiny compared to what it is today, and nobody predicted the WWW or the ubiquity of web-capable devices.
By contrast, when FB IPO'd it had 845M users[2], or 8.3% of the world's population. The two simply aren't comparable. AAPL made niche luxury products, and FB had something close to half the potential market engaged on a daily basis.
[1] http://www.corbinball.com/articles_technology/index.cfm?fuse...
[2] http://en.wikipedia.org/wiki/Initial_public_offering_of_Face...
By contrast, when FB IPO'd it had 845M users[2], or 8.3% of the world's population. The two simply aren't comparable. AAPL made niche luxury products, and FB had something close to half the potential market engaged on a daily basis.
[1] http://www.corbinball.com/articles_technology/index.cfm?fuse...
[2] http://en.wikipedia.org/wiki/Initial_public_offering_of_Face...
Every time one of Apple's products sold it resulted in cash transferring over to Apple. They had a viable, proven business model selling computers to business, consumers, and educational institutions, were leaders of a new industry that everyone agreed had a huge amount of growth ahead of it. Nobody thought that PCs would continue to be a niche product throughout the 1980s.
Facebook owned, and owns, only a tiny slice of the advertising market, despite being so far along in developing their product. Remember, facebook's users and attention is their product. Their customer-base - companies who want to advertise is still underdeveloped.
Facebook owned, and owns, only a tiny slice of the advertising market, despite being so far along in developing their product. Remember, facebook's users and attention is their product. Their customer-base - companies who want to advertise is still underdeveloped.
This is an excellent point. Sure, Facebook has the biggest audience, but somehow I only ever see a few companies in my ad rotation.
But your argument can easily be used against Facebook. When you're IPOing at that late of a stage, all the gains have already gone to the private market investors. Facebook will have to come with drastic new revenue models to justify its valuation, and very few companies have reached a $100 billion valuation, let alone grown from there. And again, even if it does continue to grow financially, most of the gains have already been made. There are VCs who have made this point to lower Sarbox requirements so companies can go public earlier. I believe Ben Horowitz made a blog post on the topic, but I could not quickly find the link.
The main difference in my eyes is that its relatively easy to evaluate a business that bases revenue off sales of tangible goods. Twitter and Facebook are a much harder valuation because there isn't a clear standard way of evaluating them.
Evaluating them is not the same as evaluating google, even though they are both in the online advertising biz...
Evaluating them is not the same as evaluating google, even though they are both in the online advertising biz...
Users and tweets aren't nearly as impressive as hardware or software sales numbers. But since it's Hacker News commentary, I guess yes plenty of pessimism.
Congrats, Twitter. Another product that was mocked as a "toy" becomes revolutionary and finally going to raise money on public market. I use twitter everyday and it is my primary information network. I'm sure they will be successful!
What do you use it for?
Discovering new content. I follow influential people in the areas that I'm interested in. And they are always sharing interesting links/insights/opinions. And I also share some!
Sharing links with friends, discovering new content, getting news I'm interested in. (I use Twitter, but not Facebook.)
I love that Twitter announced it via a tweet. Good work dogfooding their own product :)
As one of the people who decides where and how brand marketing budgets are spent - I would say Twitter's advertising product and approach is far more viable and attractive than Facebook's is (or ever has been).
On top of that, the work Twitter is doing with TV networks, producers, and sporting organisations is unique and has a high chance of success because it provides value to those organisations.
While some have tried, nobody else has come as close as Twitter to accessing and disrupting the $180B (annual) TV advertising market.
I wish them luck. I think they're going to nail it.
On top of that, the work Twitter is doing with TV networks, producers, and sporting organisations is unique and has a high chance of success because it provides value to those organisations.
While some have tried, nobody else has come as close as Twitter to accessing and disrupting the $180B (annual) TV advertising market.
I wish them luck. I think they're going to nail it.
I'm bullish on Twitter for a few reasons.
I think Twitter has a unique opportunity in advertising. I'd be interested in seeing how many businesses are on Twitter and what percentage of Twitter users follow a business. I'm assuming both of those numbers are fairly high. If so, that means that a large number of users expect to see information about businesses they follow in their feed (and thus are ok with receiving marketing/business information/etc.) That in turn means ads are not viewed by a large percentage of the user base as intrusive. I think psychologically that is very important for an advertising company.
In terms of the rumored market cap, all I have to say is there is no way Twitter is worth only 1/10 of Facebook. I'm not sure what Facebook is worth, but I'm sure the gap between those two companies is much closer than that.
I really like the Twitter platform, and while I know they messed up by restricting their API, I think their leadership generally make good decisions.
I think Twitter has a unique opportunity in advertising. I'd be interested in seeing how many businesses are on Twitter and what percentage of Twitter users follow a business. I'm assuming both of those numbers are fairly high. If so, that means that a large number of users expect to see information about businesses they follow in their feed (and thus are ok with receiving marketing/business information/etc.) That in turn means ads are not viewed by a large percentage of the user base as intrusive. I think psychologically that is very important for an advertising company.
In terms of the rumored market cap, all I have to say is there is no way Twitter is worth only 1/10 of Facebook. I'm not sure what Facebook is worth, but I'm sure the gap between those two companies is much closer than that.
I really like the Twitter platform, and while I know they messed up by restricting their API, I think their leadership generally make good decisions.
I'm skeptical about Tech IPOs. I wonder if as many people are going to buy into the hype as they did with the Facebook IPO.
Isn't FB now at a high a year after its IPO?
Quantitative easing floats all boats...
FB is 15% above its IPO;
LNKD is 2.6x above IPO;
TSLA 8.2x above IPO.
> TSLA 8.2x above IPO
Last year around the FB IPO I thought about what stock to buy. Either FB or Tesla.
It boiled down to a company that is revolutionizing transportation with real world products VS. a company that enables people to click on virtual pixel cows without a real business model.
The choice was easy.
Last year around the FB IPO I thought about what stock to buy. Either FB or Tesla.
It boiled down to a company that is revolutionizing transportation with real world products VS. a company that enables people to click on virtual pixel cows without a real business model.
The choice was easy.
So you chose facebook right?
[deleted]
Really bad advice. Yes, you get to gloat because you got lucky...
However, I hope people stop and think before listening to you. Yes, it's really cool that Elon hit it out of the park, but at the end of the day, that's not the way to make investment decisions. The market is a fickle place. TLSA could be worth have as much in a year and FB could be worth double. Of course, TSLA will still be worth more since its IPO price.
However, I hope people stop and think before listening to you. Yes, it's really cool that Elon hit it out of the park, but at the end of the day, that's not the way to make investment decisions. The market is a fickle place. TLSA could be worth have as much in a year and FB could be worth double. Of course, TSLA will still be worth more since its IPO price.
Tesla's doing cooler shit, in my opinion, than FB is. Stuff that matters more, again in my opinion, for at least the U.S. and reducing our total dependency on oil. Look here (http://www.teslamotors.com/supercharger) for their plan to cover the US in two years, albeit through backwards routes, with supercharging stations. Tesla actually makes a good-looking electric car. This is all about marketing, and Americans love performance and slick cars - they don't care about the happy and petite (though not really, just going by marketing here) Prius or Nissan Leaf. Tesla is gonna' be huge and their stock is going to go up. It could halve, but I doubt it right now. I'm not an investor by any means - I don't have the money to invest, but I've watching them for a while. We should stop relying on oil, and Tesla is one of the few companies selling part of that dream with a beautiful product.
Whether they are doing cooler "shit" or not, is irrelevant to investing in them. It's way too geeky to get into one of these Android vs iOS, Steve vs Elon, Microsoft vs Apple, Superman vs Mighty Mouse debates.
Let's just say that when a company like Facebook or Google, which builds large data centers, and has a billion customers, make small changes, or increases in efficiency, they have an opportunity to make a big impact too.
Where you want to rank them in your mind on an absolute scale, well, that's really up to you. It's probably meaningless, but I guess people like to believe in people/companies. It's how we're wired.
Let's just say that when a company like Facebook or Google, which builds large data centers, and has a billion customers, make small changes, or increases in efficiency, they have an opportunity to make a big impact too.
Where you want to rank them in your mind on an absolute scale, well, that's really up to you. It's probably meaningless, but I guess people like to believe in people/companies. It's how we're wired.
Basically, from a fundamental investment analysis standpoint Tesla is way more logical than Facebook.
Tesla makes a tangible good for sale with a straight forward business model. You can evaluate Tesla using the same criteria that Ford was evaluated with 90 years ago, same way that Westinghouse, or GE were evaluated. They are a new technology with a potential to revolutionize a major industry, with a high risk of failure and high return on investment if they succeed. For Facebook or Twitter a savvy investor has to first theorize how to even evaluate them.
The investment potential in a facebook or a twitter is there definitely... but its much easier for an investor to evaluate a tesla compared to a facebook.
Tesla makes a tangible good for sale with a straight forward business model. You can evaluate Tesla using the same criteria that Ford was evaluated with 90 years ago, same way that Westinghouse, or GE were evaluated. They are a new technology with a potential to revolutionize a major industry, with a high risk of failure and high return on investment if they succeed. For Facebook or Twitter a savvy investor has to first theorize how to even evaluate them.
The investment potential in a facebook or a twitter is there definitely... but its much easier for an investor to evaluate a tesla compared to a facebook.
YELP at 4x above IPO
That's amazingly easy to do when your stock tanks out of the gate.
I don't know, personally I think 10% growth in the value of a mature company over a year is pretty good.
I don't think it's reasonable to expect all tech companies to gain 20% on the day of the IPO. If they do, that's an indication that existing investors are reliably leaving a ton of value on the table.
I don't think it's reasonable to expect all tech companies to gain 20% on the day of the IPO. If they do, that's an indication that existing investors are reliably leaving a ton of value on the table.
I think what he's saying is that it's at all-time high, inclusive of IPO price.
Yeah it is, but you didn't make nearly as much money if you bought during the IPO than if you got in when the stock fell to $17-$20 range. It was highly over-valued at IPO
I think those who held onto it when they bought the initial stock are happy with their gains. If the current price is stable or even growing, that means it was never over-valued. You are thinking too short term.
If you have bought a stock at one price, and it currently has a higher price, that means you have made a good investment, regardless of what happened in between.
If you have bought a stock at one price, and it currently has a higher price, that means you have made a good investment, regardless of what happened in between.
This is a matter of your investing preference and whether you are a buy-hold investor or a day-trader type who wants to get in at the lowest price. I simply wanted to point out I was skeptical and that FB stock tanked after IPO. I am by no means an expert on the stock market or IPOs :)
"It was highly over-valued at IPO"
Actually, the current stock price suggests that the IPO valuation was just about right and that other factors contributed to the initial tanking.
Actually, the current stock price suggests that the IPO valuation was just about right and that other factors contributed to the initial tanking.
yes, and I am kicking myself for not buying it when it was around 16/share. I'm not missing out on twitter if I see similar fluctuations.
I think Twitter probably saw this as a good time to file.
You should be skeptical about all IPO's. They have a below avg market returns.
The Intelligent investor mentions that many decades ago (maybe the 50's) IPO's were for accredited investors, because they were a known way for the saavy ones to profit from the ingenuity of the common investor.
IPO's are overhyped and hence many people buy it regardless of its underlying asset, and hence drives the price up.
As i mentioned before, IPO's in general have bad performances and the gain is more for the company and early stock investors that cash out, since getting into the market immediatelly gets you lots of fund/index and "silly" money.
The Intelligent investor mentions that many decades ago (maybe the 50's) IPO's were for accredited investors, because they were a known way for the saavy ones to profit from the ingenuity of the common investor.
IPO's are overhyped and hence many people buy it regardless of its underlying asset, and hence drives the price up.
As i mentioned before, IPO's in general have bad performances and the gain is more for the company and early stock investors that cash out, since getting into the market immediatelly gets you lots of fund/index and "silly" money.
/shrug. My FB stock is up 80% since purchase.
Don't get me wrong, I'm not bashing the stock. Simply pointing out that after IPO it tanked. But congrats on the gains!
http://gigaom.com/2013/09/12/twitter-files-papers-to-go-publ... - interesting; secondary valuations are in the $14-15B range per GigaOM. I'm a believer at some level.
Nice! Another shorting opportunity.
How's the FB short working out for you?
I realize this is pure snark, but fixating on daily price fluctuations is no way to think about a FB short thesis. It's always long term play if you're betting against the company. You're waiting for the market to come to its senses, which can take a long time.
Shorting is never a long term play. The cost of shorting increases with time.
It's not really a daily price thing at this point. If you shorted FB from the beginning and got out in the 20s or teens, sure you made a lot of money. But since it bottomed out (with plenty of people still calling for shorting), it rose to $31 before it started another sustained flat/downward trend. If you've had it short for the past two months, you're position is hurting quite a bit. I haven't seen a lot of evidence that a FB short is a good idea since it first IPO'd.
Cue all the folks who got burned BADLY on shorting TSLA.
Disclaimer: TSLA stock owner.
Disclaimer: TSLA stock owner.
It was just tongue in cheek snark on snark. And short theories can be based on hour, day, week, month, quarter year. So it's not always a long term bet.
There's plenty of reasons to not do shorts, but the FB IPO might not be one of them.
Delivering ads could be the lesser half. Realtime sentiment analysis on Twitter's scale will explode and hyper-accelerate advertising in ways advertisers cannot yet foresee -but will surely be willing to pay for. They're just getting started.
Another bubble appearing I see. Their user base to revenue ratio is pretty average. Their revenue by itself is not that impressive and I'm pretty sure they will be priced in tens of billions. Solely because they are visible and known.
What a Dick move.
1.16B in funding, any ideas on profits and how much they ask to get via IPO?
http://www.crunchbase.com/company/twitter
http://www.crunchbase.com/company/twitter
Revenue must be <$1b/year to qualify for the filing technique they used. No indication of profit, but if you know the cap on their revenue and estimate their costs based on the number of employees and what has been disclosed about their datacenters...
Per the updated article, we at least know revenues are sub $1B, as this is a requirement for being allowed to file confidentially
Any idea about their valuation? Facebook is now worth more or less what they claimed at the time of their IPO. Is it safe to assume this is will be around the same range (i.e., $100b)?
Six months ago eMarketer estimated that Twitter's 2013 revenue will be about $582 million and 2014 revenue about $1 billion (http://www.emarketer.com/Article/Twitter-Forecast-Up-After-S...).
Facebook's market cap as I write this is $109 billion, and 2014 revenue estimates are ~$11 billion (sorry, I don't have the source for that handy), so it trades at about 10x 2014 revenue. Using this metric would value Twitter at $10 billion.
But I expect that Twitter has more room to grow than Facebook since they haven't monetized as heavily yet. I'm guessing Twitter goes out at $15 billion to $20 billion.
Disclaimer: I own some Twitter shares, so I'm not objective.
Facebook's market cap as I write this is $109 billion, and 2014 revenue estimates are ~$11 billion (sorry, I don't have the source for that handy), so it trades at about 10x 2014 revenue. Using this metric would value Twitter at $10 billion.
But I expect that Twitter has more room to grow than Facebook since they haven't monetized as heavily yet. I'm guessing Twitter goes out at $15 billion to $20 billion.
Disclaimer: I own some Twitter shares, so I'm not objective.
The last round of funding came in at around a 10B valuation. I would expect the valuation to be much greater this time.
Not necessarily. Zynga came public at about the same valuation as its last round, so that's not always the case.
One of the criticisms of SarBox is that companies go public much later in their maturity, so public investors miss out on much of the market cap growth.
One of the criticisms of SarBox is that companies go public much later in their maturity, so public investors miss out on much of the market cap growth.
Still plenty of opportunities http://goo.gl/sJnTmQ
I heard $14 bil (on twitter)
twitter presents a unique opportunity to choose the 'people' you want to follow & tailor your own feed. It's like handmade versus machine made feed. The former worth much more than the latter nowadays. I imagine if they could establish a business where people build/manage personalized feeds for others & in turn get paid - that would be fun!
Sorry for my ignorance, but what's the general timeline for the IPO process? When could I start buying shares on the open market?
I hope they make a cool stock certificates. People were upset that facebook didn't do this.
Entertaining. Now will the blue bird fare better than the blue chips ?
Well, hope that does not shoot up housing prices in SF area again.
I hope they keep the prospectus to 140 characters or less.
Well, there goes that.
Do people still actively use twitter?
Only millions of people everyday... Is this a real question?
Yes.
Three of the largest, most influential and defining technology companies of our lifetime (Google, Facebook, Twitter) make money pretty much solely through advertising. Is there no other way companies can use this data to generate revenue other than to sell ads? I don't have anything against ads, but I'm just trying to understand how (if at all) this could change in the near future. What is the future of advertising? Will it continue to remain relevant 10 or 20 years down the line in its current form, allowing so many massive companies to be built on its back?