I've run ads for well over a decade: above the line and digital. All media works, to some extent and the main issue is the way marketing teams on the advertiser measure them. I've also run campaigns you'll all have seen or heard of.
Because in Europe no one has made money from consumer facing businesses.
European investors are all ex-banking / private equity spread sheet modelling morons who do not understand risk capital and are looking for risk free bets.
When you have this lens u eschew anything that can harm you holding onto your career. That is why.
B2B businesses have a very clear path to revenue / margin / profit.
A B2C business is effectively a punt, yes a punt, US VCs arent some sort of fucking oracles. If you look at the analysis Social Capital did for who backed the biggest co's at the series a level its effectively spread evenly so there is no "science" here.
"Facebook does emotional experiments on you without your direct knowledge or any outside influence. Facebook has been hell-bent on testing to see if it can make hundreds of thousands of people simultaneously depressed. They can do that and they are proud of it."
Evidence please?
There was one test conducted with 600-700k users (out of 2 billion plus). This is negligible and honestly not statistically significant enough.
Plenty of reasonable concerns around political advertising, bad actors, transparancy into who is funding / buying ads are largely things to be concerned about.
However, errant ranting as above is not exactly helpful to this debate.
Also calling $FB not successful is laughable? On what grounds can you actually say this?
There is almost no evidence that the ad product actually influenced america (it was more likely TV). If you need to be educated about advertising i'm happpy to help you here but as someone who does this for a living I can categorically tell you this - the ads did not sway the election based on the pseudo-science bullshit from Wylie, Nix and anyone else in CA.
I've worked on every single vertical and 3rd party data / Partner Categories is rarely used by big or small advertisers a like.
The cost of the advertising increases i.e. higher CPMs for using this data. I've spent north of $40ml across all digital ads with a large chunk being on $FB and it isn't the main kind of targeting that is used and its the most expensive kind as well.
I am not hugely convinced this will dramatically affect $FB given there are so many other targeting options out there it isn't much of a concern in my eyes just a shame this is one avenue that will now be closed but its one of so many marketers can use.
Companies where the founders own a large % of the stock will tend to do better. This will play out more strongly across all sectors over the long-term.
Also, given that I am a target customer that interacts with Snapchat and runs their ads and invests reasonably heavily I am better placed to judge than you are.
The ad products need a lot of work, no doubt about it, but the engagement and earned media generated is super high for a product that doesnt have a biddable solution in place just yet. My clients would agree with me.
The lack of data is being worked on, as I mentioned there are partnerships with Millward Brown and Nielsen. The business will also end up buying 3rd party data and matching it against its user base in order to provide a competitive solution to FB.
The difference is Snapchat doesn't want to collect every single datapoint about a user like FB does.
Despite a set of ad products that are far from the best they can be, this hasnt stopped advertisers wwanting to use the platform for campaigns. Early results are very positive and improvements will come leaps and bounds. Plenty of my most talented peers / colleagues have recently joined snapchat. They wouldn't if the company wasn't doing well, it is.
I am betting it will succeed where Twitter has sadly failed based on the fact it has created a completely different form of communication and expression.
"Probably going out of business due to a lack of revenue."
No. This isn't really that true, the business has placed a great deal of investment on the following: hiring sales people, partnering with measurement (millward brown, nielsen) selling ads like crazy at a premium to the largest F500 brands in the world.
The biggest content creators, celebrities and normals are on the platform. They are creating new forms of expression which have been copied by incumbents namely Instagram.
They have made their first steps into hardware with spectacles which have generated similar type of hype as Yeezys.
So your arguments are not strong enough, its actually laughable you think it lacks revenue. When the S-1 document is public and the gross margins and employee count are revealed we'll see all the risk factors clearly.
Given that the founders most likely own most of the stock, this is a company that is definitely going to succeed as so many people want to work with them.
For an internet marketer you are woefully off the mark with comments like the above.
Do you know how to read 3 financial statements because this is a well run business that not only is printing money but it has created so much economic value around the world via jobs it has created in other industries.
"Substaining a company on advertising is a dead model"
A Deloitte report explained FB has created $40bn of economic value across the world. Let me explain to you how:
- People are selling shit on social all day everyday
- Every organisation markets themselves using social
- social media is where most attention on mobile is
- All social media platforms make ads
- Ads are charged on CPM (Cost per 1000)
- Trillions of impressions are served, therefore billions of ad dollars flow to the platform, billions with a b
- All these businesses have 100s of millions if not billions in cash on their balance sheets
For the record these ad products have kept 1000s of people in advertising jobs around the world and helped around 3 million advertisers spending billions collectively sell shit online.
All sorts of very mis guided comments below. Here are some points:
1/ Im an advertiser I can tell you that big brands still love the platform (and spend heavily)
2/ Revenue is $2bn+ a year, how is this not successful?
3/ Balance sheet has $1bn+
4/ NFL deal is huge, ditto bloomberg streaming
5/ Product needs to ship much quicker than Facebook does to stay relevant
6/ It is the only place that has nailed real time properly, if there is a bomb in a major city you will hear it first on twitter no where else has this edge, nowhere
7/ The worlds most important people are on this platform and readily accessible in most cases, not true on FB in terms of accessibility
8/ 80% Gross Margin business
9/ Needs to stay independent and ramp up advertising spend once logged out tweets ad product rolls out
10/ True reach of Twitter is almost 1bn users when we consider tweets appearing on TV, off the platform, in newspapers etc. This is comparable to FB
Some of the ignorant stuff people are saying about all the employees is disrespectful.
WhatsApp and IG when they were acquired were making very little money, if they had stayed independent and no one acquired them they would not be running today (they would exhaust the capital chain). WhatsApp maybe was making £10ml a year but was losing money; IG was making £0. I can tell you with certainty if they were independent and around today the growth would be stalling and there is a high chance they would not be able to continue raising venture money, it is very easy to grow products to 1bn users when you add FB growth's team which is best in class to an already solid product.
Twitter has been generating solid revenue from around 2009/10 (someone correct me if im off here) and big brands love it and there is lots of data I have seen to support the value to advertisers around the world.
Twitter does however need to tell its story a lot better afterall a Tweet means many different things to many people, its just not as easy to communicate as Facebook to an outside but this doesn't mean it is not valuable or should not exist independently.
Facebook (and Google) have the best ad products on the market without any question.
I have so many DR clients printing money via FB ads, CTRs are not the metric we even focus on, it is all about conversions or measurement studies to support even investing in the platform. All my clients (big and small) love the platform, ad formats and service level.
Its funny a lot of people discount this but Zucks father wrote him a $100k cheque that a lot of people miss.
I'm looking at my FB friends list, counts well over 600 people, the bulk are from well to-do families all privately educated, top unis, top careers. I don't think any, would have their parents allow them to drop out of Uni irrespective of whether it was the next FB they were building and write them a $100k cheque to get going.
This is an example of luck that many ignore in the narrative. However major kudos to Zuck his ad product has basically guaranteed me a career for the rest of my life. For that alone I'm grateful for FB being invented.
I believe Snapchat will not grow in three years to be a one billion user company (I'm happy to be proven wrong here though). I do believe that once the ad product matures in terms of ad formats, measurement, ROI across both brand and DR metrics there will be some strong revenue figures all at the typical 70-80% gross margin you would expect from a software business. So from a revenue POV I expect it to ramp significantly and faster than we would expect. They have raised enough money to build or buy the tech needed for a biddable solution, measurement capabilities and a platform of true scale. I would not surprised if they add a third party solution a la Video on Demand for Snapchat ads to be served onto to increase scale of the platform off the core Snapchat platform to drive more revenue via advertising. Lets also not discount things like stickers etc which have been extremely profitable for companies in the Far East like WeChat.
I do expect the revenue to ramp significantly for FB, TWTR, IG, Snapchat etc over the next 3-5 years based on client demand. In five years time, all the strongest aspects and best practices will really be established by brands and agencies and the ad dollars will subsequently follow. Much of the overall digital budget is moving quickly downstream to social platforms. This pace will quicken over time as all brands will need to spend on these platforms to fulfill reach capabilities. All big brands need to be able to reach millions of users at scale which comes with significant media investment or revenue for these social platforms. We're only four years in and it will be an area I am betting the next 5-7 years of my career on.
"Snapchat does not have a clear monetization strategy and the content they have is ephemeral. If a snapchat clone came out tomorrow, snapchat wouldn't be as sticky. Snapchat looks like twitter, the poster child for massive high engagement with disposable content and horrible biz fundamentals. In fact, twitter or facebook could clone snapchat probably super easy and enjoy crazy leverage and synergy. The only reason a 3rd unknown party can't is network penetration."
This is fundamentally wrong. I'm an advertiser and I have seen so many Snapchat campaigns work tremendously well for brand advertisers. All for large established brands who are spending solid amounts with the platform.
Much of the hard work is ahead for the platform in terms of measurement and clear steps to defining and achieving ROI metrics such as awareness, brand uplift all the way through to DR elements such as traffic, leads, mobile installs and conversions.
The company makes huge strides very often updating media packs, incorporating measurement (Nielsen) etc. I expect very smart acquisitions in terms of continuing to drive user growth on the consumer side and build out of measurement / ads API to cater to the agency world in the next 12-18 months.
An IPO for snapchat is some time away but it is building a very real commercial organisation amongst brands, advertisers, agencies, the TV community (look at the viacom deal recently).
Also to your point here:
"FB raised 16B in a horribly botched IPO."
You can't say a company raised $16bn and had a horrible IPO. This really doesn't make any sense irrespective of all the ratchets and clawback clauses (none of which will keep any FB exec up at night let alone the CEO). Look at FB today, you should be kicking yourself if you had the chance or even thought about buying the stock at $17 when it was being shorted like crazy by Wall Street.
100% incorrect. Uber has definitely won over most Londoners it is a complete game changer for the following reasons irrespective of your minimal bad experiences.
I've spent several thousand pounds via work on Uber. This has resulted in 2-3 bad trips (which round out to 0.02%).
- Quick pick up times
- Usually responsive and helpful drivers (no complaining)
- Helpful carrying heavy items (almost 100% of the time)
- Cheap fees
- Bill splitting is easy no friction
- UberPool does make me slightly nervous
The service works and is default for myself and 100s of business users, personally it works well too esp for date night.
In comparison, London Black Cab drivers are rude, racist, crass, willing to rip you off and take advantage of you. They do not have their cars auditing a lot of the time, refusal to take cash is unacceptable in this day and age and should be in place in ALL taxis. There is no excuse for this.
So the idea it is a scam is stupid.