> Facebook’s formidable ad business, along with Alphabet Inc.’s Google, soaked up 99% of the online ad industry’s growth last year, according to Pivotal Research.
In this case then since the users are the product and rightfully as said product pay zero dollars to be the product, maybe fb is an advertising monopoly?
If I recall correctly in the US court case history they ruled one couldn't both own the means of production (ie movie studios) and the means of distribution of content (ie movie theaters). Not sure if the movie business used market power in one to take over the other, but that would be interesting to know. If you take it as an assumption that the only things that changed with the internet were 1) the volume of content increased and 2) the barrier to entry reduced, then it gets tricky. Example: the Huffington Post proved that content creators would be willing to do so for personal brand exposure instead of pay (kind of like I'm doing now as I am now realizing...). FB has created a content collection and distribution engine "employing" people who are willing to populate it for free in exchange for some non-monetary benefit. This doesn't really get FB out of the antitrust problem IMO.
That's the issue here. Price as a proxy works in a world where manufactured goods account for a large portion of economic value being generated but not in this new unprecedented digital world where the value is intangible and the services are often free.
Networks are the new monopolies in this new world and Facebook has the largest and most engaged one which makes it damn near impossible for new incumbents to participate in the market. Just look at Snap.
The question is this: how many companies or products were not created or could not sustain due to Facebook's built in monopoly? And of those that were created, how many will thrive? And of those that can thrive, how many can afford to not to be bought by FB?
I don't have the answers, but I'm convinced that these are the right questions. Price as a proxy just doesn't seem to make sense in this context.
The point of anti-trust laws is not to punish success, but to police against an entity using their dominant position in one market to take over a different market.
This is an interesting question for two-sided operations like Google and Facebook. Having a near-monopoly in online search also gives Google a near-monopsony in online search advertising. Likewise for Facebook with social networking.
I'm wary of introducing regulation without clear evidence of its necessity. However, there is a reasonable argument that if exploiting a monopoly to gain advantage in an adjacent market can be harmful, then exploiting a monopoly to gain an advantage in an opposing market could be harmful too. It therefore seems reasonable to ask whether the traditional applications of anti-trust principles are still appropriate for these huge modern tech markets.
Businesses too small to have a real point of contact with either Google or Facebook living or dying by the whims (or mistakes) of their algorithms, for one thing.
Prices paid by the advertisers more generally, for another. There are only two games in town, and both of them go out of their way to obscure what you're really getting in return for your money.
So what about FB replicating all of SNAP and overtaking them rapidly, taking the advertising growth market share they would of had otherwise? Time to breakup FB?
Is Snap actually in a separate market for antitrust purposes? Looks like the same market to me, but of course that decision is always a somewhat arbitrary judgment call made by the antitrust enforcers and court system.
That just means SNAP sucked if it was that easy for Facebook to entice users. They in no way forced people to use their SNAP replica or charged less than SNAP did.
Also pity the people paying for ads. The lack of competition means Facebook and Google/whatever can get away with some awful practices and quality control. With so few serious alternatives, falling the wrong side of an algorithmic glitch at one of these giants can literally cause a small business to fail, and that's not healthy at all for the economy as a whole.
Not at all - and I think it will, as much as it can, only get more consolidated as Facebook buys more platforms/apps to grow ad inventory opportunities. Google will also face this same pressure. Amazon will do the same in the retail space.
Yeah, they sold their open source version to Revive and OpenX is now only closed source. Revive is the only existing option. I don't run mysql nor php on my server so I'm a bit reluctant to have to manage it, but it looks like I have no choice.
No, it is reality. Having worked in mobile ads, this saying is quite common: "You can buy ads from Google or Facebook, everything else is worthless."
The long tale companies are not worth it. The amount of hassle it takes to reach out to "Glam Media" and start working out your own ad deal is a stupid waste of time. You are smarter investing in monitoring your cpi on google/fb.
I also have friends running small businesses that have given up on Google as well. They say time is a limiting factor, and for them spending all their time optimizing the FB campaigns has a better ROI than using Google.
I am surprised that the Taboola style related articles ads that appear below pretty much anything news like online these days aren't a bigger growth area.
it is strange.
couldn't we make up a law that would say each state must license internet ads supplier.
And that license does not cross state lines (to protect the quality of the service)
Some fun Facebook facts from the earnings call/report
- Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.
- Facebook's headcount is now at 20,658. That's up 43 percent since last year
- Average Revenue Per User Rises 23% to $4.73, Down from 4Q 2016
- Facebook Offers No Break Out of Instagram Revenue
- 2Q Daily Active Users 1.32 Billion, Monthly Active Users 2.0 Billion
- Shares Up 1.6% After-Hours, Near Session Highs
- Zuckerberg: WhatsApp and Instagram Stories each have more than 250 million people using them daily. Each of those is a single SNAP whose entire daily user base is around 170 million.
Wow, this is a company that is killing it right now.
Facebook and Google combine to account for up to 99% of advertising growth.
As this relates to SNAP, I have to think that investors will spend atleast a year spending marketing budges with SNAP but after that, RIP Snap......
Also as a crazy aside, Meg Whitman just resigned from the HP Board and has been reported to be visiting Uber.....
Important to remember that advertising revenue _always_ peaks in Q4, and that was an election year too, so even if they're down YoY this Q4 I wouldn't worry too much about it.
Given Facebook's global reach, every year is going to be election year. I appreciate nobody spends on elections quite like the USA, but there's still a lot of money to go around in other countries.
- Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.
How many companies in total have more than $35.5B cash/equivalents? Including Apple, for example.
Microsoft ($126b), Apple ($256b), Facebook ($35b), Berkshire Hathaway (near $100b), Cisco ($68b), Google ($92b), Oracle ($66b), Softbank (a lot), Amgen ($38b), Ford ($40b), Samsung ($73b), Johnson & Johnson ($39b), GE ($82b)
There are a lot of financial entities and the like that have more cash than that of course. It's held under a different financial context than the cash that eg Apple is sitting on. JP Morgan for example has $650b, Citi has $422b, Bank of America has $643b, etc.
I put most of it together off the top of my head, from knowing a bunch of the companies that were cash rich, then checked on a few I suspected were (like Samsung), and then finally cross checked a few lists for any stragglers I missed (eg Amgen). I dug through some of China's companies (eg BABA or CHL), but didn't run across any offhand that made the list (their banks obviously do as with US banks).
Maybe. Net tangible assets are $30 billion. Obviously much like GM, they're carrying a large pile of liabilities around on their balance sheet. I suspect Ford has to keep a significant amount of cash on hand for numerous legacy reasons (pensions?) to support their credit rating. $244b in assets stacked against $213b in liabilities.
GM is far more profitable than Ford, has $22b in cash, and $39b in net tangible assets. With a $53b market cap, GM is sporting a realistic 4.x to 5.x PE ratio currently (depending on how you want to account for their 4Q16).
In any real scenario, debt should obviously never be ignored, but we're counting cash in a vacuum here basically.
Some of these companies are carrying vast amounts of debt now, Microsoft and Apple for example. They can't discharge all of that cash without suffering severe consequences due to their need to sustain a high credit rating.
I added the ignoring debt tag, because who knows which of those cash / cash-like instruments are being used in what way in relation to some of those immense debt piles.
Microsoft for example has $76 billion in debt, accumulating at a rapid pace. Apple is in a similar situation. They're adding debt at a historic pace.
Despite the immense profitability the companies have, their debt holders will get freaked out if those large cash piles were to get discharged down toward zero. For example, Berkshire Hathaway got slapped for allowing its cash to drop a bit low (relatively speaking) a number of years ago (also coincided with the worst of the great recession), their credit rating got dropped a notch in part because of it (despite it being very unrealistic they were actually more risky just because cash was briefly at $30 billion versus $50 billion). You'll often see the ratings agencies & analysts talk about wanting to see Berkshire maintain a large amount of cash due to its obligations.
Apple and Microsoft are paying very, very low interest rates on their debt. Given the scale of those debt piles now, they'll desperately want to maintain those low rates. Maintaining a sizable pile of cash will assist them in doing so.
I am naive in this area, but if the creditors freak out, what does that mean? Seems like a "freak out" would mean higher interest rates, and when those rates cross the return from the cash stockpile, they just would stay paying down the debt more aggressively?
Sure; it's just that we're talking about spending the cash stockpile. Microsoft has $126b "in the bank" but that doesn't mean they could actually spend all $126b on some moonshot, because by the time they'd spent half of it it would affect their interest rates and they'd have to start doing something about their debt.
They take on debt instead of drawing down their cash pile because they'd be paying much higher taxes on foreign cash than interest on their loans. The low rate they receive on loans is tied to the existence of their massive cash piles
If they spent all of their cash (in a not-obviously-investment way) it would hurt their credit rating (and their business can't operate the way it does without a high credit rating). So they might have $43B (say) "in the bank", but that doesn't necessarily mean they could actually spend that $43B if the debt markets didn't think what they were spending it on was sensible.
It is odd, but not as ridiculous as it sounds. For one, many companies couldn't issue 10s of billions in debt so you do have access to that much capital (normally at reasonable costs).
This is a problem, a lot of money that is not going back to the market. It's taken out of economy making it impossible to redistribute it again. It's not healthy.
as I understand it, that cash is not sitting in actual bills under mattresses, it's sitting in bank accounts of some sort or other (could be short-term notes perhaps and still qualify as 'cash'). Those banks in turn invest those funds (in loans, etc) to other people and businesses. So the money isn't completely taken out of the economy - it stays in the system and is put to work (by other people). So I'm not sure how it's an actual problem for the economy.
It seems like it would be a disaster to break up Facebook. You can't really have more than one social network that everybody uses. Forcing everyone to split off into groups wouldn't work, to put it mildly.
They could be the global distributor for individual companies operating different regions, like a franchise but without regional providers existing under one corporate umbrella. That could open the market to competing distributors and regional operators.
Unlikely and less efficient but that could be one way to handle it.
Split it into Facebook back-end, Facebook Red, FB Green, and FB Blue. FB back-end is the current back-end. The Red, Green, and Blue are separate front end that all have equal access to the back-end so a user of FB Red can friend a user of FB Blue. FB Red, Blue, and Green compete with each other on prices they charge to advertisers and can change their user interface to compete for users. Any user can use any one of FB R, G, or B and to get full access, but with their preferred UI
That's a good point - how could one even break it up? It depends on the network effect to get revenue from the ad platform. Maybe all the acquisitions or something - it's all so intertwined. Instead of it being a cable company, its more like "TV" as a whole.
But we could have an open social network that operates outside a single company... building on the foundational principles of the internet.
These "social networks" exist because it's still too hard to setup and manage a personal website, and those sites lack the interactiveness of FB.
Imagine if everyone had their own 1-click website with glorified RSS feeds, webrtc-based chat, access control, media sharing, and standard APIs for 3p apps - plus, perhaps, a web-of-trust or some other mechanism for validating identity. All rolled into standardized APIs backed by large competitors of FB (perhaps MS/Goog/etc?).
If the ISP monopolies can be broken, perhaps all that could be hosted on a little Android-like box connected to a home ISP - your little social box, connecting you to every human on earth... always online, it caches messages from friends when your phone looses signal, p2p shares videos from friends so you can watch high quality with no load time, and automatically curates content from connected feeds (perhaps with some on-board ML).
No ads, no big brother, for pennies a month.
I know Google's ad revenue is getting eaten by FB - perhaps they would profit from something like this. Cap FB at the knees by giving people FB's functionality without the corporate data-mining/lock-in, and reap ad revenue from the increased relevance of el Goog's search.
There are similar benefits to shops, manufacturers, services, bands, etc all too. Standard information/inventory protocols, and a review system connected to those individual personal identities, could undermine Yelp and even AMZN.
I've been thinking about this quite a bit and I think it's mostly a matter of execution. There is prior art covering all of the pieces, but no one has assembled all the pieces into a compelling product (think: iPod vs prior mp3 players, FB versus the myriad of ex-competitors)... hard but tractable with the right support.
The vast majority of Facebook users don't want to install and maintain a home server. A distributed social network will never take off if it requires users to purchase another dedicated piece of hardware.
Make it run on as a part of a distributed cloud computing service on a device that consumers are paid to install and keep. Maybe its a radiator/secondary water heater too. The payment is for reduced datacentre cooling expense.
If you have protocols and software that lets someone run a social OS on their personal hardware and connected to the global network, then the walls have been broken. Any 3rd party can integrate or offer hosting.
You could also take the rabbit hole of battery improvements leading to running this on mobile devices or sending data through a distributed p2p network instead of personal HW. None of those are orthogonal to the proposal.
The biggest issue is what the rules are and how that affects the user interface.
Using email, the rule is that if someone sends you something, you own it; they could ask you to do delete it, but you can refuse. Facebook and other social networks let you edit and delete posts. Snapchat became big because you can send pictures that are automatically deleted after you view them.
Sure, you can reimplement basic message exchange in a decentralized way, but figuring out how to enforce the same rules in a decentralized system is nontrivial.
I think RSS is a closer analogy than email, but anyway... it could be argued those rules don't really exist today.
Good snaps get stored and shared forever, everyone knows to screenshot dumb posts on FB, and there are plenty of twitter archival tools. Youtube's DRM and takedowns work OK against film pirates, but it's still easy to find many movies and redistributed personal content online.
Though I'd be curious what fraction of those instances are someone speaking without thinking, or accidentally sharing to a broader audience... the former seems PEBKAC and the latter is a solvable UX issue.
Despite the exceptions and workarounds, the defaults matter for the user experience and social dynamics of an online forum.
Even on Hacker News, the various moderation features and things like being able to edit your post after publishing make a difference to how the community works. It's not only what you can get away with but also what people feel like they have a right to do.
An interesting proof of concept might be to try to create a forum like Hacker News, but using distributed software.
I think those features are compatible with this model - RSS handles edited content just fine (clients can store the old content, but there is a canonical "latest" version).
>I know Google's ad revenue is getting eaten by FB
No it's not.
>For the first three months of this year, Alphabet reported just over $26 billion in revenue, up 21 percent from the same period last year. Without the EU fine, it would have notched $6.87 billion in operating income, up around 15 percent from the second quarter of 2016.
The market is growing, of course both FB and Google will keep growing for a bit - but FB's 39% (and growing) share is nothing to sneeze at. FB is a cancerous walled garden that is increasingly hostile to search engines.
It doesn't necessarily need to be broken up, but if you wanted to weaken Facebook you could mandate that they made their APIs open so that social networks that wanted to spring up would be able to automatically show you content from Facebook in their UI.
That's a good one. I'm not sure how enforceable that would be, but in principle that'd be beneficial for competition.
There are a multitude of problems, like privacy concerns and the fact that FB would have no incentive to keep the API very up to date or reliable, but I wonder if something like that could work.
I guess the Microsoft Office anti-trust rulings should be instructive here. Their monopoly is effectively broken in the sense that you can read Office documents in other software, but that hasn't really killed their business; though it did make the transition to Google Docs easier for me.
I'd argue that the monopoly action against Microsoft was an unqualified success, even if the consent decree ended up being weak tea.
Before the antitrust action Microsoft was knifing the baby and cutting off the air supply whenever anyone threatened their hegemony. Afterwards, a million little inroads were made that ended up making their monopoly irrelevant.
In fact the continued existence of Apple is a product of the antitrust action. Bill Gates struck the deal with Jobs in order to keep Apple alive as a "showcase competitor." If Gates didn't feel the need to keep up appearances he would have crushed Apple by ending the Office port.
The anti-trust action certainly changed Microsoft, and Microsoft has lost it's Monopoly power, I'm just not sure how closely those two are linked and what the lessons to learn are.
I feel like the thing that really hurt Microsoft the most was the web, which made the OS far less relevant and has largely been their downfall. The failure of the mobile web seems to be largely why mobile OSs do matter.
Clearly, without the anti-trust ruling Microsoft was doing all it could to make the web proprietary, but the web wasn't pre-ordained to happen, and if it hadn't we might still be locked into Windows, regardless of what the anti-trust authorities did. Or maybe we'd be largely where we are today with the web having never happened and the focus shifting to mobile anyway.
And to look at Office, I feel like the real downfall of the network effects of Office was when PDF readers became ubiquitous and embedded in browsers, so that you could export a PDF from whatever editor you were using and send it to everyone and expect that they could read it.
Bills of Attainder were against humans. Limited liability corporations exist by consent of the state and the state has no obligation to grant them new charters or continued use of their existing one.
Facebook could continue operating as a partnership - that would be much harder to stop - but they might not want to given the liability implications.
>You can't really have more than one social network that everybody uses. Forcing everyone to split off into groups wouldn't work, to put it mildly.
Of course you can, you just need to have standardized protocols.
You and I can use any email provider we like, your client can use exchange to talk to it's server and mine can use a version of POP from the 80's and it /doesn't matter/ because the servers talk over a standardized protocol.
Facebook and Google used to support this. There was once a time when Facebook and Google Plus both had XMPP gateways for their real time chat traffic, which meant you could send a message from Google Plus to Facebook Messenger with no problems.
They shut it down because they both have a strong incentive to push vendor lock-in. They've been so successful that you've started to forget that life could ever be otherwise.
Take a look at projects like diaspora and mastodon. There's nothing stopping Facebook from reaching out to these projects and working with them to incorporate Facebook nodes into their network using the same protocol.
But it'll never happen, because Facebook needs the corral nice and enclosed before they can start tagging you and selling you off.
There's a real engineering cost to federation. Your email example is a good one, I think. But digging a little deeper, what's the last major feature that got added to email? For example, we've been trying to get encryption in email for longer than WhatsApp has ever existed. WhatsApp rolled out encryption for everyone on its network last year. That's a billion people! I'd be surprised if 100 thousand people regularly used encrypted email, and even fewer used effectively encrypted email.
Social networks have been adding lots of features over the years to compete with each other. Realistically I think that fractured platforms would struggle to catch on because each provider would prioritize different features. Since social networking grows in utility superlinearly with the connectivity with your friends, features get less useful and the whole thing stagnates.
Basically: Microsoft Outlook is a social network of the kind you envision. Even Outlook for Mac versus Outlook for Windows is a sharp divide in terms of features! Do you think that people would use social networks if they looked like Outlook?
The idea that centralization leads to better UX results is demonstrably false. Popcorn Time is a great example of distributed streaming providing a considerably better UX than most commercial solutions.
Additionally, the notion that the necessity of making group decisions on a protocol must lead to stagnation is not guaranteed. There's plenty of space for Facebook, Google, LinkedIn and Twitter to form an an industry working group and make a protocol that meets their needs, and then throw it out and say "this is what we're using. Keep up or get left behind".
However, to more directly answer your concerns, there's nothing stopping Facebook from exposing basic functionality via an established and fairly firm protocol, and keeping advanced features as their competitive advantage. Textual Timeline posts, IM's and event RSVP's are good candidates for things to be exposed by the protocol. Facial tagging of images is a good example of something that a core social protocol could skip.
I'm not convinced that is sufficient. Facebook at 80% isn't really any different than facebook at 99, or whatever. Google has a viable competitor in Bing, but google still dominates search to a massive degree.
I don't disagree, but it's more like having a viable alternative in the background that gets relatively popular and stable.
As long as it's there, then if there's every a major ball drop on Facebook's part that makes a lot of people want to switch to something else they'll have somewhere to go. When people moved to Facebook from MySpace it was driven by a lot of issues with MySpace that pushed people away.
Something like this past year's election with all of the controversy over how the trending news was handled could have promoted a movement of "Enough, I'm done. Going to X." Enough "me too's" and you start a trend.
A lot of that happened with Instagram. People wanted a place they could go free of political rants and Instagram largely provided that...and Facebook owns them.
You've seen a lot of "quitting Facebook" trends this year and I believe that it's largely a result of lack of a viable alternative.
Sure you can break Facebook up without destroying the Facebook.com social network. Facebook's dev tools and infrastructure (including Oculus) is spun off into a developer tools focused company. Facebook advertising is spun off into a separate "ad agency." Facebook.com can be this new ad agency's launch customer, but they're free to add their ads to other sites such as Twitter. Instagram and Whatsapp are spun off into separate entities.
Slightly interesting aside, 3.9B for 20,658 employees is ~$188K/employee profit, which is about a 20% drop from a few years ago[1]. I'm not an economist nor statistician.
Well, one thing is that the marginal profit of labour is bound to be diminishing at such scale. However, keep in mind that it's not marginal revenue, but profit. This means that it's still a viable strategy to increase the amount of employees for them. That drop is not necessarily an issue in accounting terms.
This can't possibly be right. Why would you forego making extra money to keep your statistical average up? What are you getting from the average number?
Your theory predicts that price discrimination can't happen because companies would rather sell M widgets at X price than sell M widgets at X price and N widgets at Y price.
Why would you invest $250K for a year's pay of an employee for $0 return. You can invest that $250K in a CD for 2% and get $5,000.
Shareholders are going to have no interest (long term) having companies invest their capital in the form of cash on the balance sheet at below market rates. Hence dividends or buybacks if they can't demonstrate sufficient roic on internal projects.
You can back into a target revenue/employee by looking at risk free rate of return + equity premium (say 7%), net margin (35% for FB this Q), and say if an avg employee earns $250K .... then they'd want a bit less than $800K/employee (35/100 * x >= 250k + (.07 * 250k)).
I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No, they'd distribute it to shareholders so they could invest it in bonds or other companies, and that's the analogy.
> I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No
Who said anything about zero margin? You're claiming that if I can sell one widget at a high price (high margin!), I should be unwilling to sell any at a lower price (but still high margin!) than the first one would sell for, because my rate of return on investment would go down (assuming the cost of producing a widget is dominated by variable costs). This does not describe the behavior of anything.
> This can't possibly be right. Why would you forego making extra money to keep your statistical average up? What are you getting from the average number?
You're serving the best interests of your shareholders, who have other things to be doing with their capital. They'd often rather invest $10 and get 10% than invest $20 and get 7%, even though that means getting $.10 rather than $.14.
No, because the set of users that would take FB up on this offer are the ones advertisers would like to reach most, and the subscription revenue would not come close to offsetting advertiser losses.
Are you aware that facebook is very popular in the developing world? It basically is the internet for large amounts of SEA users. If that $5/month isn't sizeable to you then chances are that they make a shitload more off of your demographic than $1.60.
I offered to pay 3x the average rate to account for some of that. I think that moves me into covering the average spread across the US and Western Europe (about a third of their active users). Now, I'm still probably one of the more valuable people, but it would be the average cost if all the revenue was spread across people who could afford that cost.
Facebook already claims they don't use a profile to market to me. (It took some digging, but you can delete your tracking profile conclusions and turn off a lot of things.) Which means (assuming they're honest), I'm probably not a high value user because they can't target me for high value ads. This would just be giving them an alternative revenue stream to compensate for that. (So a strict improvement for Facebook.)
Maybe I'm just a crazy millennial, but I absolutely loathe the idea of FB / Insta stories. Snapchat going under wouldn't convince me to move over -- I'd just stop using the service and move on to communicating some other way. And Stories aren't the only appeal of SNAP, though I suppose they are a large producer of revenue.
HN just loves to hate SNAP, and I can't really fathom why. I can get being skeptical but every comment here seems like they /want/ to see the company fail.
Another crazy millennial here. I don't have an Instagram either, and frankly I don't want one.
As for why HN hates Snap, I'm not exactly sure. Is it because the average user on HN is older and isn't targeted by Snap? Maybe it's seen as a frivolous plaything? No matter what the reason, there's definitely a lot of hate for Snap on this site.
Sounds like they made the right choice because the platform collapsed. It makes no sense spending design and dev time on a platform that simply isn't taking off.
I think he's on about allowing a third party to create and support a Snapchat app for Windows devices. There was 6Snap which worked really well, but got shut down because Snap were forcing third parties to close their apps. Someone also created an open source app on Windows, but I'm not sure what happened to that one.
I don't loathe Snap, but I do dislike their decision for not supporting Windows 10. Microsoft even offered a cash incentive to Snap for creating an app and Snap still outright said no. Surely no matter how much you hate a platform, if you're being offered an incentive, you would say yes?
There's a huge opportunity cost in putting some of your developers on creating an app for a niche market. Snap probably felt that Microsoft's incentive didn't cover that cost.
Why must it be hate? Couldn't it just be, simply, that we're not that interested in yet another chat application? To me, Snap is a slightly modified ICQ client. Fine, but not very interesting.
Real progress would be some sort of open standard, so who you're speaking with isn't determined by which company's chat server you connect to. But then again email has supported this for several decades already, so maybe the demand isn't there.
I have an android phone (S7 edge). Before I got this phone, I was a light user of snapchat. On the new phone, Whatsapp, Facebook and Instagram were pre-installed. I set them up, they started working perfectly. I downloaded snapchat. It crashed on login. I literally could not get it to work on my brand new flagship device. That's my reason.
PS: also a millennial here, not very crazy though, regrettably
At first, I dismissed snapchat thinking "people will hack the protocol and save messages anyway, and the whole idea will fall apart". Then, I was a little envious that someone else had the idea, and I now think it was a good idea, and that I was blinded by an overly-technical analysis of their product.
But it doesn't look like the couple good ideas they had were enough to make a long-term business. So, unless they do something cool in the next 12 months, RIP. Founders got a nice payday, so who cares?
40 year old, here. I mainly use snap to play with filters with my young kids. I'd never use it for communication because the UX is horrendous. A while ago, there was an odd corporate push to try to use snap internally (was there some marketing push?). And, all of my co-workers spent lots of time brainstorming how to even use snap effectively.
The swarms of 13 years olds that roam through my house only ever seem to use their mobile for Instagram, snap, and youtube. However, more recently I've noticed that the boys have been walking around with bluetooth headsets on as they have a large group chat going on in the background. Not sure what app they're using.
I'm not rooting for Snap to fail, any negative comments I made (and have seen here) were because I thought their IPO price was absurd. I think they can carve out a niche and be profitable but the expectation that they grow to the size of FB / GOOGL I just don't see it, and the IPO seemed to be priced based on that.
I also thought their stock set up with zero voting rights was crazy but that's a separate issue.
Yeah, I don't get it either. As far as I'm concerned Snap is one of the most interesting startups recently because they started with as a software company that managed to actually make a Good consumer hardware item that I wear everyday. I love my Spectacles, I wasn't even a snapchat user before they released, but they are a slick device.
I've seen a few people with them on, and my immediate gut reaction every time is to get out of their eyesight. I'm sure I'm not the only one and it makes me wonder if most spectacles owners even think about it.
I'm definitely getting older. I have never liked my picture taken without my permission. I've begrudgingly put up with it, but inside despise people/companies/goverment taking my picture for any reason.
I just figured people under thirty despised all the picture taking? Am I wrong?
I get the sexting. I wish I had this tech around in my day, but you people are o.k. with some stranger snapping your pic?
It doesn't bother you when your employer makes you pose for a company picture? Or, bring surveilled when you walk into a retail establishment? Hell--I never even liked having to take that Costco pic? (By the way, you can use the pharmacy without being a member.)
My point is you people don't seem to mind random people, companies, and government taking your picture? (Yes--I said you people, but hate those generational tags. I mean under 35--I guess? I don't know what's considered young anymore.)
I quite like the idea of them, but I can't get past the design (which I know would look ridiculous on myself). Would be interested in playing around with a pair but they're not very common where I am.
I dunno, my friends (in their mid-late 20s) are much more active on Snapchat for stories. Most of the people I follow on Insta aren't my friends, so their stories aren't very interesting to me
Where did you see hate for SNAP? GP's comment said Facebook is killing it and speculated that SNAP has no chance against them.
Like 5/6 of the comment is an excellent summary of the call (on a story that is behind a paywall), and then a couple of sentences of opinion and speculation and from that you get HN hates SNAP? I don't get it.
HN is bearish on SNAP, just like Wall Street is. Sure, they could end up hugely successful, it would just surprise people. Even their own underwriters gave them a HOLD rating as soon as they were allowed to. http://www.cnbc.com/2017/07/11/snap-underwriter-morgan-stanl...
> HN just loves to hate SNAP, and I can't really fathom why
Their entire product was marketed on the lie of ephemeral messaging. That's why I've always hated it. I don't like it when people talk down to the general public like that and lie to them about what technology can and cannot do.
Snapchat's founder always came across as hubristic in a way Facebook's wasn't. I try not to hate, but I don't like it when people act like they've made something wonderful when actually they built the thing with other people's money and made hardly any revenue.
This makes me sad. I wish it was the case that the top companies have produced the most productivity/useful goods, not a messaging site with advertise that people use at their off times.
Facebook lets over a million companies get their products in front of people who are inclined to purchase them.
When those Facebook users do in fact click and make purchases it is often (not always) a profitable exchange for the companies advertising. Those companies take the revenue from the sales and use it to pay people to do other work for them. Wherever it is you work, they probably advertise on Facebook.
Creating a profitable revenue engine for a million companies is absurdly useful.
If not with Facebook and Alphabet, there would still be most of those companies selling their products, with other means or site. There's not much that Facebook adds other than number of people it has using their site during their off times. If people needed to buy things, they could have easily looked it up on other sites or real places. There are many companies that do much more important things, produces more useful goods/productivity/services.
If you are producing a useful good or service would you honestly prefer to market it pre-Facebook? The volume, price and ability to focus narrowly on only the people most likely to care... It's worth a lot to a lot of makers.
If it's worth so much to so many people, why can't people simply accept that there are also people who find all of it useless and highly unimpressive?
Yeah, I would like to market pre-Facebook. In exactly the same way I wouldn't want to advertise with Stalin, no matter how effective his apparatus. I bet you there were people who couldn't understand that either.
My life is a painting. I already have brushes and paint, and while I could of course use more and better brushes and paint, there are also those offers to shit all over my painting for a truckload of generic, lame colours, and thousands of stamps with all sorts of shapes designed by "professionals", because making those with your own brush is just too hard. I say no to that, that is a net negative value for me. I don't live to earn money, I earn money to live. FB is right out. As the song goes: you might win some but you just lost one. Nothing more, but also never anything less.
> - Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.
It's "massive" but compared to AAPL's $250 billion in cash, FB's cash it is still fairly small.
> Facebook and Google combine to account for up to 99% of advertising growth.
They both pretty much dominate the search/video/social media space.
What is most astounding to me is that every nation doesn't develop their own google/FB. I still find it incredible that most of europe is dominated by google and facebook. Even india.
I respect what FB and GOOGL have done, but their "tech" isn't hard to replicate. With regulation and government authority, countries like germany, india, france, etc can develop their own FB and GOOGL.
China, Russia, Japan, Korea, etc are smart in developing their own local tech/social media/etc industries. I'm so astounded that germany, france, india, etc have completely ceded their territories to google/FB/etc.
I can understand britain/canada/australia ceding control to the US since we are anglo nations with similar culture, language and historical roots. But why don't spanish speaking countries, german speaking countries, french speaking countries, etc have their own "google/FB"?
The jump in EPS from the last earnings call a few months ago is just a few percent - nowhere near that. It's about 18% above expectations. This is good if you're a shareholder for sure, but the title is misleading.
The consensus I remember was that Facebook posed a real threat to a free and open internet, because it's a kind of walled garden. That consensus, alas, is as current as ever.
At the time of the IPO there were lots of "finally I can short this disaster". Then the stock went down a bit and "I'm making so much money shorting this anchor! Short now before it hits zero!" You don't see as many of those comments these days.
Sure, I called it wrong. I thought adblocking would grow more than it has, because it makes life so much better, and I thought Facebook would never be able to get good ad performance. I still don't really understand how Facebook manages to get good ad performance - I don't know who it is who's clicking on Facebook ads, it certainly isn't me - but evidently they do.
Interesting thing is that GOOG's results which were released several days ago weren't so stellar. It's good to see real competition in advertisement market.
It is competition, but whether it's enough competition to achieve the beneficial effects we usually associate with a competitive market is a different question entirely.
On a tangential note, that might not be the case anymore next year. The Thunder got Paul George, the Rockets traded for Chris Paul, Gordon Hayward is now on the Celtics, and Jimmy Butler is in Minnesota. Meanwhile, there's rumors that Kyrie Irving wants to be traded.
Competition doesn't have anything to do with number of players. As long as there is more than one party and they are not colluding, they will compete for each others market and push prices down or increase the quality of service.
Pro-competition laws aren't about what's fair for other people that might want to compete, they are about what's best for consumers.
I remember seeing a paper that in any market where the top 4 players have more than 60% of the market, they'll naturally behave in a cartel-like way in terms of pricing etc.. So it's not ideal. But still, two players seems much better than one in terms of, if nothing else, limiting quite how much customers are soaked for.
Not surprised. My wife started a local franchise that provides a service and I've been doing the Internet marketing. I ran local ads on Google...lots of clicks and cost lots of money...but no one came in saying they were referred by Google.
Other owners I've talked to told me to use Facebook, it's more effective.
Respectfully without knowing your background, I hear this sort of anecdotal story a lot. Often times it is from people who ran a tiny amount of spend, didn't have their account properly setup, didn't have solid conversion tracking setting for the areas that matter, and then arrived at the conclusion that it failed because it "drove lots of clicks and cost lots of money" without any mention of whether they reached statistical significance for testing conversion performance, or any of those other things I mentioned. Waiting for people to come in saying they were referred by Google is just a really poor way to go about measuring performance of local advertising on Google with things like the ability to upload offline conversions, promoting coupons with unique codes, click-to-call ads, etc.
More often than not I've found the issue is with the advertiser, not Google. And I'm saying this as someone who has done paid search across many verticals, many size clients, and helped lead the paid search group at a top search agency.
My take on the reason for this is Google and FB make a genuine effort to make it easy for mom and pop businesses to advertise with them. However they also tend to push them towards things that maximize their revenue and margins in the process (as one might expect) even if it wasn't necessarily in the best interest of the advertiser.
For example, when you click to create a new campaign, Google has "Search Network with Display Select" as the first option, and they say "best opportunity to reach the most customers." That is easily the most salesy wording in that entire list. And inexperienced advertisers might think it was the right choice. But it is not. I can't think of a single experienced advertiser I know who would ever mix search and display network traffic. I just can't think of any real reason that could potentially offset the downsides of doing so. But you'd be hard pressed to figure that out just by taking their UI and docs and recommendations at face value.
There is a reason that an entire media career path has sprung up around managing search and display, and that's because it is highly technical, extremely complex, and changing at a breathtaking pace--much like engineering.
You're right, my advertising experience is limited. My background is software engineering and only touched advertisement with placements on my blogs, and advertising on Facebook back in like 2005 when they were still college only...those were the days you paid a flat fee, based on the number of users at a university, to advertise at an entire university!
In regards to measuring performance - discounts were offered if they mentioned the 'web special'. Zilch. We actually spent money on Direct Mail, and mailing out coupons within those packs in an envelope. Direct Mail...is not cheap...thousands of dollars. Other franchise owners said word of mouth will drive the most customers.
We only had 1 customer come in with a coupon, and she was already with communication with my wife prior and just wanted to know if she could stack it with another promotion.
My wife has been up and running for 3 months, and every customer is by word of mouth. It is a franchise, so their friends and family have used it. They would drive by and see the pylon sign, or searched online and found our location. The amount of customers is say, 60 over 3 months. It is a service that families pay reoccurring.
The service, without being specific, is tutoring. So the customer base would be say, within 5 mile radius with kids in elementary - high school. Ads were targeted to the 3 zip codes that surround and specific key words were used, including generic "math classes", to competitor's brand, to the local school names. We've had luck by sponsoring a school, as well.
I don't know what metric is most telling, or if you have time. But I pasted some censored metrics here (http://imgur.com/a/j69Qv). I would be open to giving Google ads another shot if you feel I can tweak it for better performance...and any resources you feel would help would be appreciated.
Without knowing more about how many prospective customers are in a 5 mile radius it is hard to advise.
That said, right off the bad I get concerned when I see zero data on conversions, CPAs, click-to-call conversions, etc. You can't really measure performance for this sort of thing just by spend and clicks, particularly at that low volume.
Get tracking setup first and foremost. And even if they can't pay online, look for other events you can tag as "micro-conversions" that that help form a funnel. Maybe it is checking pricing, maybe it is submitting a form for more info. Just get SOMETHING there to make a more informed decision off of. And then make sure you actually keep at it until you get a decent amount of data with which to make a decision.
That's the best I can suggest to start. Everything else stems from that.
Thanks for your reply. Just to clarify - when you say, zero data on conversations, you are referring to some way to track if any Google ads customers, take action on the ad?
After clicking on an ad, a potential customer is brought to the website that explains pricing. The website then says if you mention the 'web special' you get $50 off the first month.
Also, this kind of business, typically has active ~150 customers to make $100k. In a month, you may have 20 sign up, 10 drop, etc. So, we're not going to have huge data set similar to an app download or an online store.
# of potential customers...well a student between 1st grade and 12th grade are potential customers. With 4 elementary schools, 3 middle schools and 2 high school near by...back of the napkin (I don't have the #'s on me right now) would be 7000...in reality, no one in the USA has more than 1,200 customers, and that is in major city like Los Angeles (which we are not in).
Yes, that's what I'm referring to. Mentioning a web special is not a great way to track. People don't remember those things, get confused by the question often, and it doesn't get you the data in the places you need it to be.
Instead, look to track micro-conversion events around things like maybe creating an onClick() event that fires a conversion when someone clicks to reveal a code for a web special. Or do call tracking, or track address link clicks, or things like that. You'll have a much higher volume of these things than you will actual new customers, so you can make some optimizations sooner than you would if you needed to wait for sufficient data with a limited budget.
Beyond that, you can use similar thinking to get offline data back into AdWords and Google Analytics via uploading of offline conversions[1,2].
Beyond that, Google Analytics has a beta for tracking Lifetime Value which is CRITICAL for any subscription-based business like this.
Also, correct me if I'm wrong, but I'd be willing to wager that students are actually not your customers. Rather, parents are. So think about what keywords parents might be using. Search might be a good channel for you here, but well-targeted FB ads might be as well.
Maybe I live in a bubble, but I just assumed that Facebook would be on a decline trajectory by now.
Their website is almost meaningless to my day-to-day life at this point. I login once every couple of weeks, upload some pics of my kids for Grandma to look at, and then log off. I don't personally know anyone who still uses it regularly as we did back in 2007. I don't know a tactful way to put this... but it seems like mostly older people and Walmart shoppers, posting angry bumper sticker nonsense about Obama or Trump.
Am I just COMPLETELY out of touch? Or it is an Eternal September situation (https://en.wikipedia.org/wiki/Eternal_September), where the unwashed masses are still coming on board faster than people like me are leaving?
Even if it's the latter, aren't they near a saturation point by now? Once everybody's signed up, where's the growth come from? How do you squeeze out additional monetization from a platform once there are no new members coming in, and old ones trickle away because the content is so poor?
> I login once every couple of weeks, upload some pics of my kids for Grandma to look at, and then log off
Pretty much proves the point: Even people who actively dislike the company and product exhibit engagement and retention that other consumer apps would kill for. It sounds like you've been using it for a decade!
It's less of a 'product' than a globalized, cross-generation, ubiquitous social norm.
Also mundane communication among family members, friends, coworkers and relatives have been brought online and monetized the very first time on a massive scale of billions of people. So your mom says "happy birthday" to you and FB monetizes. You check that person you were curious, and FB monetizes you.
I believe Facebook is very perfected form of Dopamine delivery and it's leveraging the attention deficit behavior of entire generations. Could it fizzle out the way you anticipate? We have seen it before but if you look at Zuckerberg's ambitious vision for Facebook and the new verticals he plans to enter/trail-blaze then there's reason to assume the goal is not to ride on Facebook's success but to continue aiming at the next place the population will look for it's fix.
If you look at some of early data and research about the effect fake news spread via Facebook has had you can see Facebook has itself firmly planted in millions of American's everyday life to the extent where it's platform can distort the very perception it's citizens have of themselves. Certainly not all but healthy chunk, large enough chunk for there to be real effects.
As far as market saturation, again I'd point to Zuckerberg's heavy investment in VR and plans to invest in more emerging verticals going forward. Not to mention that Google has been at market saturation, especially in America, for many years and we do not see it's ad revenue waning in any substantial way. And Google took that ad revenue and put it into various risky forms of R&D that has now clearly lead to potentially enormous new growth verticals like Waymo.
I'm not an avid Facebook user but I get roped back in by push notifications of someone mentioning me or tagging me in a picture. In addition, about a year ago I got so tired of only seeing "mostly older people and Walmart shoppers, posting angry bumper sticker nonsense about Obama or Trump" that I searched for my favorite tech, science and political media sources on Facebook and followed them so now my feed is of more utility to me but still not ideal.
>to the extent where it's platform can distort the very perception it's citizens have of themselves
yes. and that's why it has to fall.
some power can't be used responsibly, and facebook has shown that they don't give a single care about their users so long as they are producing money, as evinced by their non-consensual experimentation a couple years back.
I know your quoting a parent post, but I sometimes wonder if sometime in the distant future people will say thing like: "mostly older people and Amazon shoppers"
> Once everybody's signed up, where's the growth come from?
> New markets like India.
Even without much further user expansion (such as via India), once 2 billion are signed up, that's when the real money starts pouring in. From zero to 2 billion monthly users, is nothing compared to how much money they'll print as they slowly climb from 2 billion to 2.5 billion or similar.
From 0 to 2 billion over ~13 years, cumulative $15-16? billion in profit. Which is likely to be about what they earn just in 2017. Their money printing machine is just about to get interesting.
With 2 billion users, Facebook can start pressing their monopoly in all sorts of lucrative directions if they see fit. They could buy up PayPal and Shopify, integrate them into the core Facebook platform, enable real ecommerce directly within Facebook, and go after Amazon etc with an attack more like Alibaba (no inventory, a platform that makes money via ads).
Are you truly logged off? Are you sure you don't see ads based on your online behaviour? It's easy for FB to still make money from a user who uses FB rarely. Your action (of uploading photos) leads to your grandma providing engagement for Facebook. To show banner ads, video ads etc.
Even I was thinking FB will be down any time soon, but it looks like they are doing a good job, milking more and more money from the market!
I’m 26 and still visit the site every day, as do many of my friends (ages 20–30 or so), and we do most day-to-day communication via Messenger. It all depends on what happened to gain traction and retention with your friend group, I guess.
There’s certainly a lot of political bickering on public posts—good lord, look at the comments on Donald Trump’s page—and I think FB is the go-to place for older people to do that, but it’s not something I engage in, so you just don’t see my part of the iceberg.
To be fair, your behaviour does count you in the MAU.
I'm from the UK and just left university. Everything social at university is organised on Facebook still, through Groups and Events. Weirdly, I can't even think of any competing service that societies and sports clubs would move to.
One of the reasons Facebook (and Google) are working on bringing internet to third world countries and remote locations is to increase access to new users.
I don't know if you're out of touch and I don't believe my usage is typical but I get lots out of facebook.
First of, messenger is my most common form of communication with friends and family. I use both the messenger app and messenger.com
The next biggest concrete use is event planning. Pretty much all my friends use facebook events to plan their events so I get invited to the event on facebook. I probably wouldn't not get invited otherwise. That's not because my friends aren't thoughtful, rather it's because it's the path of least resistance. Create an event, look at your friend list, add everyone you hope will come, done. Also if it's an open event it makes it easier for friends to add friends.
I also found out about tons of activities. If a friend is going to or has shown interest in an event facebook will often show that to me so I found out about several activities I wouldn't have attended otherwise.
Friends also directly accounts events they're promoting so I find out about those. A simple example, the Tokyo Indies (indie gamedev) meetup is announced on facebook (among other places but I don't use those other places)
Then, even if I were to ignore all my friends my mother and my sister post semi-regular updates.
A few things that help though
1. I've aggressively unfollowed tons of people. Anyone I don't really care about. Anyone I probably won't see again in my life. Anyone who posts too much (except my sister). Anyone who posts too much political stuff (just don't want to frustration). Anyone who used to be kind of part of life but no longer really is.
2. If FB shows me something I don't want to see I always tell it "hide post", "show me less of this". Their algos suck unfortunately but it helps a little
3. I'm running FBPurity to filter out lots of inane posts. Any "so-and-so commented on" or "so-and-so replied to a post" or "so-and-so was mentioned in a comment" and lots of others.
I will say the more FB tries to tempt me to interact the more I think I'll eventually have to quit. The latest is the popups for comments. I get that it would be useful for people but it's just such a distraction for me I want it off.
> Maybe I live in a bubble, but I just assumed that Facebook would be on a decline trajectory by now.
It's coming. Every time I open the FB app, I see mainly "Sponsored" items or "Suggested" items (most of them videos) and fewer and fewer updates from friends. As a result, my usage of FB has declined by about 80% in the past month or two, and it's only going to get worse. My wife recently uninstalled the app.
I don't suggest putting in enough money to risk insolvency. If you're confident that the decline will happen in, say, five years, then I expect you could buy a few put options and make some healthy profit.
Over the past two years, the number of users has grown by around 30%. Rich areas like US and Europe have only grown 13%. So if revenue per user was static then I would expect Facebook's total revenue growth to be around 20%. Instead revenue has grown more than 100%, which suggests that Facebook is extracting much more $ per user.
I work at an agency that does a decent amount of digital PPC advertising. A year ago, we'd almost entirely steer our customers away from Facebook to PPC-search advertising. Back then, the campaigns we ran on Facebook were almost entirely wasted money.
But today, Facebook has really improved their ad platform. They offer pretty much unparalleled user targeting features, coupled with some clever tools like product ads that are much easier to use and integrate than Google's.
For some advertisers, we've been able to deliver a much lower CPA on Facebook than Adwords or other platforms.
> I work at an agency that does a decent amount of digital PPC advertising. A year ago, we'd almost entirely steer our customers away from Facebook to PPC-search advertising. Back then, the campaigns we ran on Facebook were almost entirely wasted money.
A year ago? You sure you don't mean like 3-4 years ago? 1-2 years ago Facebook advertising was also really awesome with a high ROI. Almost all the people I work with who has done, or still does marketing, has moved almost all of their money into Facebook over the past 2 years because they get a far higher ROI than any other service including Google AdWords.
I'm actually surprised to not hear about huge declines in AdWord spending (unless I missed it).
> I'm actually surprised to not hear about huge declines in AdWord spending (unless I missed it).
There have been some pretty big signals, the most significant of which has been the pricing of Google phones, tablets, chromebooks, etc.
Google found that simply selling high margin consumer electronics was a better investment than growing the user base and delivering a subsidized top-tier experience.
Thus Adwords faltering has left the door open for Apple to take over some of Google's former strongholds.
The cost of commodity storage tech and mature open source infrastructure means that Google's free cloud products compete mainly on the basis of features. Google's early lead and infrastructure advantage is no longer much of a factor, and Google's recent attempts at product have been (in my opinion) weak compared to Apple and even Microsoft.
The problem with Adwords is that pagerank-driven ad units end up being purchased only by the companies willing to blindly pay the most for the ads.
Since there are better ROI options out there, only the stupidest (or richest, thus already best-known and tolerant of the lowest yield) companies are the ones buying Adwords ads. Since Google has departed from its original low profile ads and moved into a dark pattern where sponsored content is commingled with actual results, this means that the quality of Google's content (when viewed simply as content) is declining.
Another big signal was YouTube Red. The ads got so bad that the only way Google could avoid destroying the platform was to bifurcate it, allowing the ads-present version to sell all the inventory to the poorest people who can't pay $10/month to stop the annoyance.
There are two kinds of marketers, those who need to care about ROI, and those who are expected to spend a percentage of their budget on the top few ad options. Google is now catering mainly to the second group, mainly because the second group is larger and cares little about ROI.
The way I see it, they're going to settle into their niches eventually, where Facebook is the best brand advertising platform and Google is the best direct response advertising platform. In that case, FB would take significant bites of Adsense and YouTube's lunch, but Search would remain unharmed.
> I'm someone who does not click on ads, but the last 3 ads I've clicked on
I'm not sure what you mean when you say you don't click on ads.
I don't click on ads. None of the ads I've clicked on have resulted in purchases. Instead, they've resulted in me swearing at the website showing a popup or otherwise being deceptive about user interactions.
I've actually bought a few cool products based on FB ads where I never clicked on ads in my previous couple of decades online. Unfortunately I can't remember what I bought or explain what was different about the product or FB ad experience that caused me to click.
This is what happened for me too. I have clicked on 3 Facebook ads in the past year (and made two purchases), and prior to that I think I've clicked on perhaps three other ads in the past 15 years and made zero purchases from any of those companies.
Interestingly, Twitter's problem is not monetization, it's cost vs scale.
They managed to do $2.5 billion in sales with about 300 million monthly actives for 2016 (the 300m is wonky, I don't know what the avg was for the year etc, but they were near that anyway).
If you scaled them to Facebook's size, they'd be at an equivalent $16.5 billion annually. Account for the benefits of scale that Facebook derives, and it's reasonable to say they're monetizing OK given their 300x million users.
The problem? Their costs are well out of line. When Facebook had $2 billion in sales (2010), they generated $600 million in net income. Instead, at that scale, Twitter is bleeding half a billion dollars on the net income line; they've basically got a billion dollar profit imbalance vs what Facebook was doing at the same scale.
Also worth noting, Facebook hit around 500 million users in July 2010 (the year they did $2b in sales). Twitter is monetizing better than Facebook was at the same user scale. The negative comparison of course, is that Facebook had far more users, and still generated $600m in net income (radically better cost management).
Great point. It's easy to judge twitter here, and by many different data points FB has been an exceptionally well run company, but engineers are a lot more expensive now than they were in 2010. I imagine Twitter has to pay interns today what Facebook was paying experienced engineers in 2010 (100% serious).
I definitely agree with the salary inflation. Here's another interesting contrast between them given that.
Twitter has roughly twice as many employees, versus what Facebook had at a comparable monthly active user count. It's costing them something in the neighborhood of $200 million per year to keep those employees.
Twitter's organization size was built up on the assumption of a much larger userbase that never materialized. Then their leadership chose not to adjust to the new reality (until perhaps recently, as they seem to be finally focusing on costs).
Wait, Twitter are paying $200m on employees, bringing in $2.5bn and spending $3bn (draining half a billion)? I assumed their biggest expense would be employees, what are they spending $2.8bn/year on?
At that scale spending 4x what Facebook spent on employees at the same level (assuming 2x as many with 2x salary inflation) barely registers.
Twitter's spending is just bonkers out of control. And from my understanding, they haven't even tried to curb it. Twitter could be a happily profitable company if they just shed some of the fat.
One thing I just can't get my head around... who is clicking on online ads? I click on maybe one a year, and probably less than that, and I don't think I've ever bought anything based on what I was shown in an online ad. Perhaps I'm an outlier, but considering the popularity of ad blockers I don't think my lack of engagement with online ads is that extreme.
There are people out there that fall for 419 scams and spam email. You are on Hacker News. It's safe to say you're not the average measurement when it comes to who clicks ads.
On the whole ad blockers are not as popular as you might think, you just hear about them more frequently due to the circles you browse in.
In any case you say you click on one a year. Lets assume everyone does likewise and multiply that alone by Facebook's userbase and you've got a good 5 million ad clicks per day.
You're an outlier. On HN we all are I guess. Most people don't or can't really distinguish between ads and real content and of course the quality of those ads is increasing - with all the information available to Facebook and other companies ads start to become actually relevant. Unless it's one for the product you just bought an Amazon and now see everywhere.
Hopefully their newly unionized cafeteria workers can extract a bit more from them, then Google would have to do the same to Google Express drivers, then Apple to its coach drivers, and this trickle down effect to non-tech jobs may actually work. http://www.mercurynews.com/2017/07/24/hundreds-of-facebook-c...
Considering how Facebook still has so many giant monetization levers to pull(Groups, Events, Video, Whatsapp and Messenger) their financial performance is nothing short of amazing,regardless of opinion on the product itself.
Anyone please explain what is the utility of FB. The newsfeed quality is terrible, with lots of spam and inaccurate content. I stopped using FB a while back, I don't get why a Billion people are still hooked on to this social media trap.
Very useful for events of all scale, especially in countries where services like meetup don't exist.
Groups for making money. Need an instagram bot, find the best cryptocurrency, learn how to sell on amazon, there are groups out there with people that will help.
It's actually becoming more useful for me and people I know, though their feed is focused on attention and not quality as you mentioned.
• All my friends are already there (and many of them are thousands of miles away from me) so it’s a convenient way to stay in touch or just get a passive awareness of what they’re up to. Other services don’t fill that same niche for me.
• It’s an easy way to organise events and participate in small online social groups for common interests or memes or whatever. (It’s a partial replacement for forums and newsletters.)
• My newsfeed is now mainly stuff that’s interesting & relevant to me—hell, even the ads sometimes—because I’m proactive about unfollowing people who post stuff I don’t care about, hiding uninteresting content, and reporting spam.
• Even though I was an active user before, I worked there, and after having met many of the the people running the show, I generally trust that they’re technically competent and care about making something useful & good for people.
It's still the only decent free-at-point-of-use way to do event organization. That connects up with: it's easy to publish which events you're going to, without interrupting people to tell them. And it's nicely integrated with individual-to-individual messaging, and photo-sharing afterwards.
I have met very very few people who actually like Facebook, and still it continues to make impressive strides, technologically and financially. May be I am living in a filter bubble where no one likes Facebook and there's a world somewhere where people are all the time hooked on FB, Instagram and WhatsApp.
P.S. I use WhatsApp and like it, so it makes me minor hypocrite.
The insane thing to me is that they've barely gotten started on monetising outside the Facebook feed. They've taken that, injected ads and garbage until it's useless for me and almost everyone I know, and billions still use it every day. Me and almost everyone I know use some combination of instagram, WhatsApp and Messenger, and they could inject way more ads into all of those. I'd probably end up not using them any more, but that's clearly not representative. It's insane how much un-monetised space they have right now.
A problem with monetizing messaging is that messaging services are a commodity. Buying WhatsApp mitigated this problem. Still:
Fancy non-messaging features aside, I have at least two or three functionally identical channels I use to talk to my contacts. If one service gets too clumsy with content injection I could probably change the channel without the other end even noticing it.
I'll be watching a video lets say it's a downbeat makes-you-feel sort of video. In the middle Facebook decides it's cash-in time and you get some zany wacky advert for something or other. Yeah cheers Facebook.
The overall effect is I realise I'm wasting time watching videos and exit out during the ad, I imagine eventually I'll just not bother watching videos at all.
I'm also aware most of the videos I'm watching out of convenience are freebooted too, it's a bit cheeky to profit on those.
293 comments
[ 5.0 ms ] story [ 329 ms ] threadhttps://news.ycombinator.com/item?id=14860289
Does that seem crazy to anyone else?
https://en.wikipedia.org/wiki/Sherman_Antitrust_Act
Networks are the new monopolies in this new world and Facebook has the largest and most engaged one which makes it damn near impossible for new incumbents to participate in the market. Just look at Snap.
The question is this: how many companies or products were not created or could not sustain due to Facebook's built in monopoly? And of those that were created, how many will thrive? And of those that can thrive, how many can afford to not to be bought by FB?
I don't have the answers, but I'm convinced that these are the right questions. Price as a proxy just doesn't seem to make sense in this context.
I'm wary of introducing regulation without clear evidence of its necessity. However, there is a reasonable argument that if exploiting a monopoly to gain advantage in an adjacent market can be harmful, then exploiting a monopoly to gain an advantage in an opposing market could be harmful too. It therefore seems reasonable to ask whether the traditional applications of anti-trust principles are still appropriate for these huge modern tech markets.
Prices paid by the advertisers more generally, for another. There are only two games in town, and both of them go out of their way to obscure what you're really getting in return for your money.
If Snap starts showing signs of accelerating DAU/MAU growth, then there's a chance that they'll be >1% of the market.
The long tale companies are not worth it. The amount of hassle it takes to reach out to "Glam Media" and start working out your own ad deal is a stupid waste of time. You are smarter investing in monitoring your cpi on google/fb.
Edit: Glam media shutdown. https://www.recode.net/2016/9/15/12936470/mode-media-glam-sh...
- Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.
- Facebook's headcount is now at 20,658. That's up 43 percent since last year
- Average Revenue Per User Rises 23% to $4.73, Down from 4Q 2016
- Facebook Offers No Break Out of Instagram Revenue
- 2Q Daily Active Users 1.32 Billion, Monthly Active Users 2.0 Billion
- Shares Up 1.6% After-Hours, Near Session Highs
- Zuckerberg: WhatsApp and Instagram Stories each have more than 250 million people using them daily. Each of those is a single SNAP whose entire daily user base is around 170 million.
Wow, this is a company that is killing it right now.
Facebook and Google combine to account for up to 99% of advertising growth.
As this relates to SNAP, I have to think that investors will spend atleast a year spending marketing budges with SNAP but after that, RIP Snap......
Also as a crazy aside, Meg Whitman just resigned from the HP Board and has been reported to be visiting Uber.....
The scale is nowhere close. Maybe if you include black money, India might be a contender, but how much of that is spent online?
Not much. And besides, I don't think you could spend it online even if you wanted to. Unless Facebook is accepting cash payments for ads in India ;-).
You pay influencers/fake news outlets/biased media sources.
Though, not much is probably spent in India this way, but it's definitely there
How many companies in total have more than $35.5B cash/equivalents? Including Apple, for example.
Microsoft ($126b), Apple ($256b), Facebook ($35b), Berkshire Hathaway (near $100b), Cisco ($68b), Google ($92b), Oracle ($66b), Softbank (a lot), Amgen ($38b), Ford ($40b), Samsung ($73b), Johnson & Johnson ($39b), GE ($82b)
There are a lot of financial entities and the like that have more cash than that of course. It's held under a different financial context than the cash that eg Apple is sitting on. JP Morgan for example has $650b, Citi has $422b, Bank of America has $643b, etc.
Out of curiosity, how did you put together that list? Googling seems to only bring up second-hand lists like https://thenextweb.com/insider/2011/08/22/big-money-the-comp... but I think I'm using the wrong terms.
(That's an interesting list too -- for comparison, Apple apparently had $76.2B in 2011.)
http://www.barrons.com/articles/apple-plans-to-sell-lots-of-...
Edit: I guess I missed "Ignoring Debt" they have too much debt.
[0] https://finance.yahoo.com/quote/F/balance-sheet?p=F
GM is far more profitable than Ford, has $22b in cash, and $39b in net tangible assets. With a $53b market cap, GM is sporting a realistic 4.x to 5.x PE ratio currently (depending on how you want to account for their 4Q16).
Some of these companies are carrying vast amounts of debt now, Microsoft and Apple for example. They can't discharge all of that cash without suffering severe consequences due to their need to sustain a high credit rating.
I added the ignoring debt tag, because who knows which of those cash / cash-like instruments are being used in what way in relation to some of those immense debt piles.
What do you mean by this?
Despite the immense profitability the companies have, their debt holders will get freaked out if those large cash piles were to get discharged down toward zero. For example, Berkshire Hathaway got slapped for allowing its cash to drop a bit low (relatively speaking) a number of years ago (also coincided with the worst of the great recession), their credit rating got dropped a notch in part because of it (despite it being very unrealistic they were actually more risky just because cash was briefly at $30 billion versus $50 billion). You'll often see the ratings agencies & analysts talk about wanting to see Berkshire maintain a large amount of cash due to its obligations.
Apple and Microsoft are paying very, very low interest rates on their debt. Given the scale of those debt piles now, they'll desperately want to maintain those low rates. Maintaining a sizable pile of cash will assist them in doing so.
Thoughts on anti-trust? If you're capturing every single part of the growth of a huge previously diversified market, whats the arguments against?
Unlikely and less efficient but that could be one way to handle it.
These "social networks" exist because it's still too hard to setup and manage a personal website, and those sites lack the interactiveness of FB.
Imagine if everyone had their own 1-click website with glorified RSS feeds, webrtc-based chat, access control, media sharing, and standard APIs for 3p apps - plus, perhaps, a web-of-trust or some other mechanism for validating identity. All rolled into standardized APIs backed by large competitors of FB (perhaps MS/Goog/etc?).
If the ISP monopolies can be broken, perhaps all that could be hosted on a little Android-like box connected to a home ISP - your little social box, connecting you to every human on earth... always online, it caches messages from friends when your phone looses signal, p2p shares videos from friends so you can watch high quality with no load time, and automatically curates content from connected feeds (perhaps with some on-board ML).
No ads, no big brother, for pennies a month.
I know Google's ad revenue is getting eaten by FB - perhaps they would profit from something like this. Cap FB at the knees by giving people FB's functionality without the corporate data-mining/lock-in, and reap ad revenue from the increased relevance of el Goog's search.
There are similar benefits to shops, manufacturers, services, bands, etc all too. Standard information/inventory protocols, and a review system connected to those individual personal identities, could undermine Yelp and even AMZN.
I've been thinking about this quite a bit and I think it's mostly a matter of execution. There is prior art covering all of the pieces, but no one has assembled all the pieces into a compelling product (think: iPod vs prior mp3 players, FB versus the myriad of ex-competitors)... hard but tractable with the right support.
If you have protocols and software that lets someone run a social OS on their personal hardware and connected to the global network, then the walls have been broken. Any 3rd party can integrate or offer hosting.
You could also take the rabbit hole of battery improvements leading to running this on mobile devices or sending data through a distributed p2p network instead of personal HW. None of those are orthogonal to the proposal.
Using email, the rule is that if someone sends you something, you own it; they could ask you to do delete it, but you can refuse. Facebook and other social networks let you edit and delete posts. Snapchat became big because you can send pictures that are automatically deleted after you view them.
Sure, you can reimplement basic message exchange in a decentralized way, but figuring out how to enforce the same rules in a decentralized system is nontrivial.
Good snaps get stored and shared forever, everyone knows to screenshot dumb posts on FB, and there are plenty of twitter archival tools. Youtube's DRM and takedowns work OK against film pirates, but it's still easy to find many movies and redistributed personal content online.
Though I'd be curious what fraction of those instances are someone speaking without thinking, or accidentally sharing to a broader audience... the former seems PEBKAC and the latter is a solvable UX issue.
Even on Hacker News, the various moderation features and things like being able to edit your post after publishing make a difference to how the community works. It's not only what you can get away with but also what people feel like they have a right to do.
An interesting proof of concept might be to try to create a forum like Hacker News, but using distributed software.
No it's not.
>For the first three months of this year, Alphabet reported just over $26 billion in revenue, up 21 percent from the same period last year. Without the EU fine, it would have notched $6.87 billion in operating income, up around 15 percent from the second quarter of 2016.
There are a multitude of problems, like privacy concerns and the fact that FB would have no incentive to keep the API very up to date or reliable, but I wonder if something like that could work.
Before the antitrust action Microsoft was knifing the baby and cutting off the air supply whenever anyone threatened their hegemony. Afterwards, a million little inroads were made that ended up making their monopoly irrelevant.
In fact the continued existence of Apple is a product of the antitrust action. Bill Gates struck the deal with Jobs in order to keep Apple alive as a "showcase competitor." If Gates didn't feel the need to keep up appearances he would have crushed Apple by ending the Office port.
I feel like the thing that really hurt Microsoft the most was the web, which made the OS far less relevant and has largely been their downfall. The failure of the mobile web seems to be largely why mobile OSs do matter.
Clearly, without the anti-trust ruling Microsoft was doing all it could to make the web proprietary, but the web wasn't pre-ordained to happen, and if it hadn't we might still be locked into Windows, regardless of what the anti-trust authorities did. Or maybe we'd be largely where we are today with the web having never happened and the focus shifting to mobile anyway.
And to look at Office, I feel like the real downfall of the network effects of Office was when PDF readers became ubiquitous and embedded in browsers, so that you could export a PDF from whatever editor you were using and send it to everyone and expect that they could read it.
Facebook could continue operating as a partnership - that would be much harder to stop - but they might not want to given the liability implications.
Of course you can, you just need to have standardized protocols.
You and I can use any email provider we like, your client can use exchange to talk to it's server and mine can use a version of POP from the 80's and it /doesn't matter/ because the servers talk over a standardized protocol.
Facebook and Google used to support this. There was once a time when Facebook and Google Plus both had XMPP gateways for their real time chat traffic, which meant you could send a message from Google Plus to Facebook Messenger with no problems.
They shut it down because they both have a strong incentive to push vendor lock-in. They've been so successful that you've started to forget that life could ever be otherwise.
Take a look at projects like diaspora and mastodon. There's nothing stopping Facebook from reaching out to these projects and working with them to incorporate Facebook nodes into their network using the same protocol.
But it'll never happen, because Facebook needs the corral nice and enclosed before they can start tagging you and selling you off.
Social networks have been adding lots of features over the years to compete with each other. Realistically I think that fractured platforms would struggle to catch on because each provider would prioritize different features. Since social networking grows in utility superlinearly with the connectivity with your friends, features get less useful and the whole thing stagnates.
Basically: Microsoft Outlook is a social network of the kind you envision. Even Outlook for Mac versus Outlook for Windows is a sharp divide in terms of features! Do you think that people would use social networks if they looked like Outlook?
Additionally, the notion that the necessity of making group decisions on a protocol must lead to stagnation is not guaranteed. There's plenty of space for Facebook, Google, LinkedIn and Twitter to form an an industry working group and make a protocol that meets their needs, and then throw it out and say "this is what we're using. Keep up or get left behind".
However, to more directly answer your concerns, there's nothing stopping Facebook from exposing basic functionality via an established and fairly firm protocol, and keeping advanced features as their competitive advantage. Textual Timeline posts, IM's and event RSVP's are good candidates for things to be exposed by the protocol. Facial tagging of images is a good example of something that a core social protocol could skip.
They need something on the other side of the "or" in "Uses Facebook or ..."
They do their best to buy anybody that sneaks in there.
I'm not convinced that is sufficient. Facebook at 80% isn't really any different than facebook at 99, or whatever. Google has a viable competitor in Bing, but google still dominates search to a massive degree.
As long as it's there, then if there's every a major ball drop on Facebook's part that makes a lot of people want to switch to something else they'll have somewhere to go. When people moved to Facebook from MySpace it was driven by a lot of issues with MySpace that pushed people away.
Something like this past year's election with all of the controversy over how the trending news was handled could have promoted a movement of "Enough, I'm done. Going to X." Enough "me too's" and you start a trend.
A lot of that happened with Instagram. People wanted a place they could go free of political rants and Instagram largely provided that...and Facebook owns them.
You've seen a lot of "quitting Facebook" trends this year and I believe that it's largely a result of lack of a viable alternative.
Worth it.
[1]https://www.businessinsider.com.au/facebook-and-google-domin...
Next thing you know, Facebook and Google end up merging.
Please knock on some wood for me.
1. https://www.buzzfeed.com/peterlauria/what-18-of-the-biggest-...
Companies should hire more people until marginal profit per new hire is $0 to maximize profits. And that number says nothing about marginal profits.
Your theory predicts that price discrimination can't happen because companies would rather sell M widgets at X price than sell M widgets at X price and N widgets at Y price.
Why would you invest $250K for a year's pay of an employee for $0 return. You can invest that $250K in a CD for 2% and get $5,000.
Shareholders are going to have no interest (long term) having companies invest their capital in the form of cash on the balance sheet at below market rates. Hence dividends or buybacks if they can't demonstrate sufficient roic on internal projects.
You can back into a target revenue/employee by looking at risk free rate of return + equity premium (say 7%), net margin (35% for FB this Q), and say if an avg employee earns $250K .... then they'd want a bit less than $800K/employee (35/100 * x >= 250k + (.07 * 250k)).
I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No, they'd distribute it to shareholders so they could invest it in bonds or other companies, and that's the analogy.
Who said anything about zero margin? You're claiming that if I can sell one widget at a high price (high margin!), I should be unwilling to sell any at a lower price (but still high margin!) than the first one would sell for, because my rate of return on investment would go down (assuming the cost of producing a widget is dominated by variable costs). This does not describe the behavior of anything.
You're serving the best interests of your shareholders, who have other things to be doing with their capital. They'd often rather invest $10 and get 10% than invest $20 and get 7%, even though that means getting $.10 rather than $.14.
I feel like this pattern could be applied more often in real life... some company is being "evil"... don't just abandon them, buy stock in them!
...Can I just give FB $5/mo to not keep their creepy profile on me? They get more money, I get not as creepily tracked.
The fact that you want/can pay $5/mo probably means FB earns a lot more than the avg on you.
Advertisers pay more to reach people with higher disposable incomes.
I offered to pay 3x the average rate to account for some of that. I think that moves me into covering the average spread across the US and Western Europe (about a third of their active users). Now, I'm still probably one of the more valuable people, but it would be the average cost if all the revenue was spread across people who could afford that cost.
Facebook already claims they don't use a profile to market to me. (It took some digging, but you can delete your tracking profile conclusions and turn off a lot of things.) Which means (assuming they're honest), I'm probably not a high value user because they can't target me for high value ads. This would just be giving them an alternative revenue stream to compensate for that. (So a strict improvement for Facebook.)
HN just loves to hate SNAP, and I can't really fathom why. I can get being skeptical but every comment here seems like they /want/ to see the company fail.
As for why HN hates Snap, I'm not exactly sure. Is it because the average user on HN is older and isn't targeted by Snap? Maybe it's seen as a frivolous plaything? No matter what the reason, there's definitely a lot of hate for Snap on this site.
Why must it be hate? Couldn't it just be, simply, that we're not that interested in yet another chat application? To me, Snap is a slightly modified ICQ client. Fine, but not very interesting.
Real progress would be some sort of open standard, so who you're speaking with isn't determined by which company's chat server you connect to. But then again email has supported this for several decades already, so maybe the demand isn't there.
PS: also a millennial here, not very crazy though, regrettably
But it doesn't look like the couple good ideas they had were enough to make a long-term business. So, unless they do something cool in the next 12 months, RIP. Founders got a nice payday, so who cares?
The swarms of 13 years olds that roam through my house only ever seem to use their mobile for Instagram, snap, and youtube. However, more recently I've noticed that the boys have been walking around with bluetooth headsets on as they have a large group chat going on in the background. Not sure what app they're using.
I also thought their stock set up with zero voting rights was crazy but that's a separate issue.
I've seen a few people with them on, and my immediate gut reaction every time is to get out of their eyesight. I'm sure I'm not the only one and it makes me wonder if most spectacles owners even think about it.
I just figured people under thirty despised all the picture taking? Am I wrong?
I get the sexting. I wish I had this tech around in my day, but you people are o.k. with some stranger snapping your pic?
It doesn't bother you when your employer makes you pose for a company picture? Or, bring surveilled when you walk into a retail establishment? Hell--I never even liked having to take that Costco pic? (By the way, you can use the pharmacy without being a member.)
My point is you people don't seem to mind random people, companies, and government taking your picture? (Yes--I said you people, but hate those generational tags. I mean under 35--I guess? I don't know what's considered young anymore.)
Like 5/6 of the comment is an excellent summary of the call (on a story that is behind a paywall), and then a couple of sentences of opinion and speculation and from that you get HN hates SNAP? I don't get it.
For me its killer feature was how easy it was to send videos. But it's not worth all the advertising they're stuffing into the app.
Their entire product was marketed on the lie of ephemeral messaging. That's why I've always hated it. I don't like it when people talk down to the general public like that and lie to them about what technology can and cannot do.
When those Facebook users do in fact click and make purchases it is often (not always) a profitable exchange for the companies advertising. Those companies take the revenue from the sales and use it to pay people to do other work for them. Wherever it is you work, they probably advertise on Facebook.
Creating a profitable revenue engine for a million companies is absurdly useful.
Yeah, I would like to market pre-Facebook. In exactly the same way I wouldn't want to advertise with Stalin, no matter how effective his apparatus. I bet you there were people who couldn't understand that either.
My life is a painting. I already have brushes and paint, and while I could of course use more and better brushes and paint, there are also those offers to shit all over my painting for a truckload of generic, lame colours, and thousands of stamps with all sorts of shapes designed by "professionals", because making those with your own brush is just too hard. I say no to that, that is a net negative value for me. I don't live to earn money, I earn money to live. FB is right out. As the song goes: you might win some but you just lost one. Nothing more, but also never anything less.
Just as a reminder of how insane this is, the population of the entire world is 7.5 billion.
It's "massive" but compared to AAPL's $250 billion in cash, FB's cash it is still fairly small.
> Facebook and Google combine to account for up to 99% of advertising growth.
They both pretty much dominate the search/video/social media space.
What is most astounding to me is that every nation doesn't develop their own google/FB. I still find it incredible that most of europe is dominated by google and facebook. Even india.
I respect what FB and GOOGL have done, but their "tech" isn't hard to replicate. With regulation and government authority, countries like germany, india, france, etc can develop their own FB and GOOGL.
China, Russia, Japan, Korea, etc are smart in developing their own local tech/social media/etc industries. I'm so astounded that germany, france, india, etc have completely ceded their territories to google/FB/etc.
I can understand britain/canada/australia ceding control to the US since we are anglo nations with similar culture, language and historical roots. But why don't spanish speaking countries, german speaking countries, french speaking countries, etc have their own "google/FB"?
The jump in EPS from the last earnings call a few months ago is just a few percent - nowhere near that. It's about 18% above expectations. This is good if you're a shareholder for sure, but the title is misleading.
Thats right.
They left.
Moral of the story is.... Never believe the consensus that is hacker news.
Dare i say inverse
Edit: why the downvotes? Is it because my networth is 23 mil?
Then suddenly people started complaining about the walled garden effect...
A better metaphor would be 2 people playing golf. They can both achieve personal bests during the same match.
Some sports metaphors really don't work.
Pro-competition laws aren't about what's fair for other people that might want to compete, they are about what's best for consumers.
Other owners I've talked to told me to use Facebook, it's more effective.
More often than not I've found the issue is with the advertiser, not Google. And I'm saying this as someone who has done paid search across many verticals, many size clients, and helped lead the paid search group at a top search agency.
My take on the reason for this is Google and FB make a genuine effort to make it easy for mom and pop businesses to advertise with them. However they also tend to push them towards things that maximize their revenue and margins in the process (as one might expect) even if it wasn't necessarily in the best interest of the advertiser.
For example, when you click to create a new campaign, Google has "Search Network with Display Select" as the first option, and they say "best opportunity to reach the most customers." That is easily the most salesy wording in that entire list. And inexperienced advertisers might think it was the right choice. But it is not. I can't think of a single experienced advertiser I know who would ever mix search and display network traffic. I just can't think of any real reason that could potentially offset the downsides of doing so. But you'd be hard pressed to figure that out just by taking their UI and docs and recommendations at face value.
There is a reason that an entire media career path has sprung up around managing search and display, and that's because it is highly technical, extremely complex, and changing at a breathtaking pace--much like engineering.
In regards to measuring performance - discounts were offered if they mentioned the 'web special'. Zilch. We actually spent money on Direct Mail, and mailing out coupons within those packs in an envelope. Direct Mail...is not cheap...thousands of dollars. Other franchise owners said word of mouth will drive the most customers.
We only had 1 customer come in with a coupon, and she was already with communication with my wife prior and just wanted to know if she could stack it with another promotion.
My wife has been up and running for 3 months, and every customer is by word of mouth. It is a franchise, so their friends and family have used it. They would drive by and see the pylon sign, or searched online and found our location. The amount of customers is say, 60 over 3 months. It is a service that families pay reoccurring.
The service, without being specific, is tutoring. So the customer base would be say, within 5 mile radius with kids in elementary - high school. Ads were targeted to the 3 zip codes that surround and specific key words were used, including generic "math classes", to competitor's brand, to the local school names. We've had luck by sponsoring a school, as well.
I don't know what metric is most telling, or if you have time. But I pasted some censored metrics here (http://imgur.com/a/j69Qv). I would be open to giving Google ads another shot if you feel I can tweak it for better performance...and any resources you feel would help would be appreciated.
Thanks!
That said, right off the bad I get concerned when I see zero data on conversions, CPAs, click-to-call conversions, etc. You can't really measure performance for this sort of thing just by spend and clicks, particularly at that low volume.
Get tracking setup first and foremost. And even if they can't pay online, look for other events you can tag as "micro-conversions" that that help form a funnel. Maybe it is checking pricing, maybe it is submitting a form for more info. Just get SOMETHING there to make a more informed decision off of. And then make sure you actually keep at it until you get a decent amount of data with which to make a decision.
That's the best I can suggest to start. Everything else stems from that.
After clicking on an ad, a potential customer is brought to the website that explains pricing. The website then says if you mention the 'web special' you get $50 off the first month.
Also, this kind of business, typically has active ~150 customers to make $100k. In a month, you may have 20 sign up, 10 drop, etc. So, we're not going to have huge data set similar to an app download or an online store.
# of potential customers...well a student between 1st grade and 12th grade are potential customers. With 4 elementary schools, 3 middle schools and 2 high school near by...back of the napkin (I don't have the #'s on me right now) would be 7000...in reality, no one in the USA has more than 1,200 customers, and that is in major city like Los Angeles (which we are not in).
Instead, look to track micro-conversion events around things like maybe creating an onClick() event that fires a conversion when someone clicks to reveal a code for a web special. Or do call tracking, or track address link clicks, or things like that. You'll have a much higher volume of these things than you will actual new customers, so you can make some optimizations sooner than you would if you needed to wait for sufficient data with a limited budget.
Beyond that, you can use similar thinking to get offline data back into AdWords and Google Analytics via uploading of offline conversions[1,2].
Beyond that, Google Analytics has a beta for tracking Lifetime Value which is CRITICAL for any subscription-based business like this.
Also, correct me if I'm wrong, but I'd be willing to wager that students are actually not your customers. Rather, parents are. So think about what keywords parents might be using. Search might be a good channel for you here, but well-targeted FB ads might be as well.
[1] https://support.google.com/adwords/answer/2998031?hl=en [2] https://support.google.com/analytics/answer/3191589?hl=en
Usually, "it" in "killing it" refers to some kind of game, so they're "killing the game", or doing a really good job beating the game.
http://www.urbandictionary.com/define.php?term=Killing+It
Heard in the context of many competitive activities.
E.g. at a jazz club, someone might say "He's killing it, man!" if they were really connecting to what the trombonist was doing.
1. Performing a task exceptionally well.
2. Facebook
Ex: "You got an A on that midterm? Dang Carl, you're Killing it!"
Their website is almost meaningless to my day-to-day life at this point. I login once every couple of weeks, upload some pics of my kids for Grandma to look at, and then log off. I don't personally know anyone who still uses it regularly as we did back in 2007. I don't know a tactful way to put this... but it seems like mostly older people and Walmart shoppers, posting angry bumper sticker nonsense about Obama or Trump.
Am I just COMPLETELY out of touch? Or it is an Eternal September situation (https://en.wikipedia.org/wiki/Eternal_September), where the unwashed masses are still coming on board faster than people like me are leaving?
Even if it's the latter, aren't they near a saturation point by now? Once everybody's signed up, where's the growth come from? How do you squeeze out additional monetization from a platform once there are no new members coming in, and old ones trickle away because the content is so poor?
Pretty much proves the point: Even people who actively dislike the company and product exhibit engagement and retention that other consumer apps would kill for. It sounds like you've been using it for a decade!
It's less of a 'product' than a globalized, cross-generation, ubiquitous social norm.
If you look at some of early data and research about the effect fake news spread via Facebook has had you can see Facebook has itself firmly planted in millions of American's everyday life to the extent where it's platform can distort the very perception it's citizens have of themselves. Certainly not all but healthy chunk, large enough chunk for there to be real effects.
As far as market saturation, again I'd point to Zuckerberg's heavy investment in VR and plans to invest in more emerging verticals going forward. Not to mention that Google has been at market saturation, especially in America, for many years and we do not see it's ad revenue waning in any substantial way. And Google took that ad revenue and put it into various risky forms of R&D that has now clearly lead to potentially enormous new growth verticals like Waymo.
I'm not an avid Facebook user but I get roped back in by push notifications of someone mentioning me or tagging me in a picture. In addition, about a year ago I got so tired of only seeing "mostly older people and Walmart shoppers, posting angry bumper sticker nonsense about Obama or Trump" that I searched for my favorite tech, science and political media sources on Facebook and followed them so now my feed is of more utility to me but still not ideal.
yes. and that's why it has to fall.
some power can't be used responsibly, and facebook has shown that they don't give a single care about their users so long as they are producing money, as evinced by their non-consensual experimentation a couple years back.
I know your quoting a parent post, but I sometimes wonder if sometime in the distant future people will say thing like: "mostly older people and Amazon shoppers"
Or "mostly older people and Facebook users" etc.
Correct.
> Am I just COMPLETELY out of touch?
Yes.
> Even if it's the latter, aren't they near a saturation point by now? Once everybody's signed up, where's the growth come from?
New markets like India.
> New markets like India.
Even without much further user expansion (such as via India), once 2 billion are signed up, that's when the real money starts pouring in. From zero to 2 billion monthly users, is nothing compared to how much money they'll print as they slowly climb from 2 billion to 2.5 billion or similar.
From 0 to 2 billion over ~13 years, cumulative $15-16? billion in profit. Which is likely to be about what they earn just in 2017. Their money printing machine is just about to get interesting.
With 2 billion users, Facebook can start pressing their monopoly in all sorts of lucrative directions if they see fit. They could buy up PayPal and Shopify, integrate them into the core Facebook platform, enable real ecommerce directly within Facebook, and go after Amazon etc with an attack more like Alibaba (no inventory, a platform that makes money via ads).
Even I was thinking FB will be down any time soon, but it looks like they are doing a good job, milking more and more money from the market!
There’s certainly a lot of political bickering on public posts—good lord, look at the comments on Donald Trump’s page—and I think FB is the go-to place for older people to do that, but it’s not something I engage in, so you just don’t see my part of the iceberg.
I use it every day and so does virtually everyone I know.
I started college a few years late in life, and it launched when I was in school.
No major complaints about it.
I'm from the UK and just left university. Everything social at university is organised on Facebook still, through Groups and Events. Weirdly, I can't even think of any competing service that societies and sports clubs would move to.
Maybe?
First of, messenger is my most common form of communication with friends and family. I use both the messenger app and messenger.com
The next biggest concrete use is event planning. Pretty much all my friends use facebook events to plan their events so I get invited to the event on facebook. I probably wouldn't not get invited otherwise. That's not because my friends aren't thoughtful, rather it's because it's the path of least resistance. Create an event, look at your friend list, add everyone you hope will come, done. Also if it's an open event it makes it easier for friends to add friends.
I also found out about tons of activities. If a friend is going to or has shown interest in an event facebook will often show that to me so I found out about several activities I wouldn't have attended otherwise.
Friends also directly accounts events they're promoting so I find out about those. A simple example, the Tokyo Indies (indie gamedev) meetup is announced on facebook (among other places but I don't use those other places)
Then, even if I were to ignore all my friends my mother and my sister post semi-regular updates.
A few things that help though
1. I've aggressively unfollowed tons of people. Anyone I don't really care about. Anyone I probably won't see again in my life. Anyone who posts too much (except my sister). Anyone who posts too much political stuff (just don't want to frustration). Anyone who used to be kind of part of life but no longer really is.
2. If FB shows me something I don't want to see I always tell it "hide post", "show me less of this". Their algos suck unfortunately but it helps a little
3. I'm running FBPurity to filter out lots of inane posts. Any "so-and-so commented on" or "so-and-so replied to a post" or "so-and-so was mentioned in a comment" and lots of others.
I will say the more FB tries to tempt me to interact the more I think I'll eventually have to quit. The latest is the popups for comments. I get that it would be useful for people but it's just such a distraction for me I want it off.
It's coming. Every time I open the FB app, I see mainly "Sponsored" items or "Suggested" items (most of them videos) and fewer and fewer updates from friends. As a result, my usage of FB has declined by about 80% in the past month or two, and it's only going to get worse. My wife recently uninstalled the app.
I take it you plan to short the stock, to take advantage of what you know that the market doesn't?
Over the past two years, the number of users has grown by around 30%. Rich areas like US and Europe have only grown 13%. So if revenue per user was static then I would expect Facebook's total revenue growth to be around 20%. Instead revenue has grown more than 100%, which suggests that Facebook is extracting much more $ per user.
I can't help it when the ads are for cool things like a $20 USB endoscope.
But today, Facebook has really improved their ad platform. They offer pretty much unparalleled user targeting features, coupled with some clever tools like product ads that are much easier to use and integrate than Google's.
For some advertisers, we've been able to deliver a much lower CPA on Facebook than Adwords or other platforms.
A year ago? You sure you don't mean like 3-4 years ago? 1-2 years ago Facebook advertising was also really awesome with a high ROI. Almost all the people I work with who has done, or still does marketing, has moved almost all of their money into Facebook over the past 2 years because they get a far higher ROI than any other service including Google AdWords.
I'm actually surprised to not hear about huge declines in AdWord spending (unless I missed it).
There have been some pretty big signals, the most significant of which has been the pricing of Google phones, tablets, chromebooks, etc.
Google found that simply selling high margin consumer electronics was a better investment than growing the user base and delivering a subsidized top-tier experience.
Thus Adwords faltering has left the door open for Apple to take over some of Google's former strongholds.
The cost of commodity storage tech and mature open source infrastructure means that Google's free cloud products compete mainly on the basis of features. Google's early lead and infrastructure advantage is no longer much of a factor, and Google's recent attempts at product have been (in my opinion) weak compared to Apple and even Microsoft.
The problem with Adwords is that pagerank-driven ad units end up being purchased only by the companies willing to blindly pay the most for the ads.
Since there are better ROI options out there, only the stupidest (or richest, thus already best-known and tolerant of the lowest yield) companies are the ones buying Adwords ads. Since Google has departed from its original low profile ads and moved into a dark pattern where sponsored content is commingled with actual results, this means that the quality of Google's content (when viewed simply as content) is declining.
Another big signal was YouTube Red. The ads got so bad that the only way Google could avoid destroying the platform was to bifurcate it, allowing the ads-present version to sell all the inventory to the poorest people who can't pay $10/month to stop the annoyance.
There are two kinds of marketers, those who need to care about ROI, and those who are expected to spend a percentage of their budget on the top few ad options. Google is now catering mainly to the second group, mainly because the second group is larger and cares little about ROI.
I'm not sure what you mean when you say you don't click on ads.
I don't click on ads. None of the ads I've clicked on have resulted in purchases. Instead, they've resulted in me swearing at the website showing a popup or otherwise being deceptive about user interactions.
Versus say, Twitter, which i don't use and still don't understand how it even exists.
They managed to do $2.5 billion in sales with about 300 million monthly actives for 2016 (the 300m is wonky, I don't know what the avg was for the year etc, but they were near that anyway).
If you scaled them to Facebook's size, they'd be at an equivalent $16.5 billion annually. Account for the benefits of scale that Facebook derives, and it's reasonable to say they're monetizing OK given their 300x million users.
The problem? Their costs are well out of line. When Facebook had $2 billion in sales (2010), they generated $600 million in net income. Instead, at that scale, Twitter is bleeding half a billion dollars on the net income line; they've basically got a billion dollar profit imbalance vs what Facebook was doing at the same scale.
Also worth noting, Facebook hit around 500 million users in July 2010 (the year they did $2b in sales). Twitter is monetizing better than Facebook was at the same user scale. The negative comparison of course, is that Facebook had far more users, and still generated $600m in net income (radically better cost management).
Twitter has roughly twice as many employees, versus what Facebook had at a comparable monthly active user count. It's costing them something in the neighborhood of $200 million per year to keep those employees.
Twitter's organization size was built up on the assumption of a much larger userbase that never materialized. Then their leadership chose not to adjust to the new reality (until perhaps recently, as they seem to be finally focusing on costs).
At that scale spending 4x what Facebook spent on employees at the same level (assuming 2x as many with 2x salary inflation) barely registers.
On the whole ad blockers are not as popular as you might think, you just hear about them more frequently due to the circles you browse in.
In any case you say you click on one a year. Lets assume everyone does likewise and multiply that alone by Facebook's userbase and you've got a good 5 million ad clicks per day.
Groups for making money. Need an instagram bot, find the best cryptocurrency, learn how to sell on amazon, there are groups out there with people that will help.
It's actually becoming more useful for me and people I know, though their feed is focused on attention and not quality as you mentioned.
• It’s an easy way to organise events and participate in small online social groups for common interests or memes or whatever. (It’s a partial replacement for forums and newsletters.)
• My newsfeed is now mainly stuff that’s interesting & relevant to me—hell, even the ads sometimes—because I’m proactive about unfollowing people who post stuff I don’t care about, hiding uninteresting content, and reporting spam.
• Even though I was an active user before, I worked there, and after having met many of the the people running the show, I generally trust that they’re technically competent and care about making something useful & good for people.
P.S. I use WhatsApp and like it, so it makes me minor hypocrite.
Fancy non-messaging features aside, I have at least two or three functionally identical channels I use to talk to my contacts. If one service gets too clumsy with content injection I could probably change the channel without the other end even noticing it.
I'll be watching a video lets say it's a downbeat makes-you-feel sort of video. In the middle Facebook decides it's cash-in time and you get some zany wacky advert for something or other. Yeah cheers Facebook.
The overall effect is I realise I'm wasting time watching videos and exit out during the ad, I imagine eventually I'll just not bother watching videos at all.
I'm also aware most of the videos I'm watching out of convenience are freebooted too, it's a bit cheeky to profit on those.