welcome back to segment two of the show
now we’re going to talk a little bit
about scale and reach you always hear
marketers looking for scale and reach
and that usually means that so long as
you have more users and you reach more
viewers that advertisers will be happy
but I think now that there’s a sort of
realize I realization with AOL and Yahoo
that they could have all this audience
and all this reach but what does that
reach actually represent so let’s start
off with a bit of a theoretical question
which is do the laws of does the law of
diminishing return also apply to reach
and scale with regards to advertising
well I think to an extent it has to
apply across the board in just about
every industry as sooner or later you’re
your overhead or the cost of servicing
all your reach is just going to hell
weigh the benefits and you’ve got to
look at either expanding your scope or
reducing your scale it’s interesting you
look at this from the cost perspective
you’re right that’s servicing you know
serving up I mean myspace is losing
apparently hundreds of millions of
dollars each year it’s not just because
of the headcount it’s because of all the
server and infrastructure that they need
to maintain those pageviews the reason
why those pages are maybe not profitable
is because a lot of it is is
user-generated content or pirated
content Yahoo supposedly is largely
professionally produced content they
have the rights to I think the issue is
mainly that take a look at what’s
happening with facebook facebook last
year when they decided to raise fifty
billion dollars through goldman sachs
they said that they were going to do
about 2.2 to 2.7 billion dollars of
revenue from advertising it now turns
out that even though that they’re
killing it they’re actually missing that
projection like twenty-five percent I
think the theory has been that AOL and
Yahoo the portals are doomed because
people are move it like we’re moving
away from portal them right moving now
to a world where you get your news from
Twitter on Facebook so i think the
conventional wisdom was the reason why
AOL and yahoo are dying is because
facebook is posing a threat but now you
realize that even though Facebook does
750 + million users they’re not really
monetizing the way that they should you
would think with that user base they
would be generating 5 10 billion in
advertising already under or not well I
think Facebook is a completely different
beast than it in like yahoo or AOL the
way they’re trying to monetize is
they’re trying to actually monetize
social interaction as opposed to just
straight-up content no one’s really
figured out the best way to do that yet
we’ve seen people play with in a lot of
different ways of Facebook
from you know hyper targeted ads based
on my user demographic and social book
graph right down to sponsored stories
that they shove into my stream but at
the end of the day these are all new
ideas no one’s played with this before
and I don’t think that Facebook is
missing its projections because of them
you know suffering from economies of
scale I think they’re hitting they’re
missing their projections because
product development is taking a little
bit longer and again they haven’t even
started pushing aggressively into a
mobile see I don’t want to be like a
bear on facebook but I just like call BS
on all the hype I think Facebook is
fantastic their growth has been nothing
but impressive but you know when you
look at Google everybody’s like oh my
god facebook social is going to kill
search and Facebook is going to kill
Google I go hold on not so fast why when
I search for something and there’s a
text you know paid text link that is
actually valuable you know at least
fifty percent of the time sometimes that
paid advertisement has the info on
looking for with facebook I mean they’re
Janning 5 ad impressions per page I
never look at the ads I think this is
the biggest sort of obstacle if Facebook
really wants to kill Google they need to
come up with a add product that the
users actually want do you ever look at
the ads on Facebook no I really look at
the ad on google and you do raise a good
point the sensor on Google I sometimes
look at them and but you can’t really
compare the two because we’d searched
all the ads are intentionally targeted
I’m actively looking for something
whereas Google might be able to
completely sorry Facebook might be able
to completely read my mind and show me
an ad for something I’m kind of
interested in but if I’m not in a like
purchasing mindset which I’m in when I’m
actually searching for something I’m not
going to pay attention and that’s what I
mean is that I don’t think Facebook has
found yet found the magic formula on how
to put the ads in there we’re still
evaluating them based on like something
that’s more along the lines of a
conventional CPC or impression at when
in actuality it’s probably going to be
more along the kinds of integrated
marketing that you see inside your
friend fee but you really want to get
commercial mess it’s very different when
you’re searching for information you
might have a commercial need but if I’m
like sending a note to my brother or
saying ayo to a friend hey was nice
seeing you yesterday at the concert or
whatever I don’t really think that
there’s really that much room the
majority of the time for a commerce
introduction or relationship and that’s
why I say they haven’t figured it out
yet because you’re right you know when
I’m just
talking to someone about the concert
last night I don’t necessarily want to
be sold to but if they’re smart about it
and they can get their semantic
algorithm up to par stuff will appear my
friend feed from let’s say brands whose
pages I haven’t even liked do you think
content is a solution I’m a big bowl
obviously on content started watchmojo
as a belief that content is king though
without distribution it’s like the tree
that falls in the forest who’s going to
know about your piece of content but its
content the solution like Google her
face ok ok so Google has moved towards
content right I don’t think the question
of Google anymore is are they a media
company the yes they are they on YouTube
you know I think the acquisition of
Zagat clearly is all about content local
social and mobile but whether content is
first or the fourth factor content will
play a big part of that I think the
question with Google now is is it even a
Content company it doesn’t produce all
that content on YouTube it has the
rights to it but it will get more and
more into originals Zagat clearly is
original content so if is content the
solution for maybe Google to get to the
next sort of tier of revenue that they
want and if and if contents not the
solution for facebook what is for
facebook okay well first start to start
with Google I don’t think the solution
is actually content per se they’re
they’re not I don’t see them as a media
company I don’t see them as a as a
Content company I see them as an
advertising company all they do is they
acquire things to slap ads alongside and
that’s primarily what their revenue
revenue model is and they all those
search drives ninety-nine percent of
their there at advertising business
local and all that stuff is still really
knew the difference with Facebook is
that well what’s the difference no but
what’s real what’s the big difference
between Facebook the difference between
Facebook is they are the art typical
problem you’ve seen in social networking
which is you’re just assuming there’s a
linear direct relationship between the
growth and eyeballs and the growth in
advertising and that’s just not the case
and it will never be the case with
social networking projections this is
why by and large social networking
advertising projections always got
reduced downwards the only reason why
they’re still growing though is just
because facebook keeps growing so people
assume that the number one play facebook
in social networking will push social
networking industry revenues up which i
think is the false fact all right let’s
take a break we’re going to come back
lightning round for questions we’ll be
right back
now we’re going to talk a little bit
about scale and reach you always hear
marketers looking for scale and reach
and that usually means that so long as
you have more users and you reach more
viewers that advertisers will be happy
but I think now that there’s a sort of
realize I realization with AOL and Yahoo
that they could have all this audience
and all this reach but what does that
reach actually represent so let’s start
off with a bit of a theoretical question
which is do the laws of does the law of
diminishing return also apply to reach
and scale with regards to advertising
well I think to an extent it has to
apply across the board in just about
every industry as sooner or later you’re
your overhead or the cost of servicing
all your reach is just going to hell
weigh the benefits and you’ve got to
look at either expanding your scope or
reducing your scale it’s interesting you
look at this from the cost perspective
you’re right that’s servicing you know
serving up I mean myspace is losing
apparently hundreds of millions of
dollars each year it’s not just because
of the headcount it’s because of all the
server and infrastructure that they need
to maintain those pageviews the reason
why those pages are maybe not profitable
is because a lot of it is is
user-generated content or pirated
content Yahoo supposedly is largely
professionally produced content they
have the rights to I think the issue is
mainly that take a look at what’s
happening with facebook facebook last
year when they decided to raise fifty
billion dollars through goldman sachs
they said that they were going to do
about 2.2 to 2.7 billion dollars of
revenue from advertising it now turns
out that even though that they’re
killing it they’re actually missing that
projection like twenty-five percent I
think the theory has been that AOL and
Yahoo the portals are doomed because
people are move it like we’re moving
away from portal them right moving now
to a world where you get your news from
Twitter on Facebook so i think the
conventional wisdom was the reason why
AOL and yahoo are dying is because
facebook is posing a threat but now you
realize that even though Facebook does
750 + million users they’re not really
monetizing the way that they should you
would think with that user base they
would be generating 5 10 billion in
advertising already under or not well I
think Facebook is a completely different
beast than it in like yahoo or AOL the
way they’re trying to monetize is
they’re trying to actually monetize
social interaction as opposed to just
straight-up content no one’s really
figured out the best way to do that yet
we’ve seen people play with in a lot of
different ways of Facebook
from you know hyper targeted ads based
on my user demographic and social book
graph right down to sponsored stories
that they shove into my stream but at
the end of the day these are all new
ideas no one’s played with this before
and I don’t think that Facebook is
missing its projections because of them
you know suffering from economies of
scale I think they’re hitting they’re
missing their projections because
product development is taking a little
bit longer and again they haven’t even
started pushing aggressively into a
mobile see I don’t want to be like a
bear on facebook but I just like call BS
on all the hype I think Facebook is
fantastic their growth has been nothing
but impressive but you know when you
look at Google everybody’s like oh my
god facebook social is going to kill
search and Facebook is going to kill
Google I go hold on not so fast why when
I search for something and there’s a
text you know paid text link that is
actually valuable you know at least
fifty percent of the time sometimes that
paid advertisement has the info on
looking for with facebook I mean they’re
Janning 5 ad impressions per page I
never look at the ads I think this is
the biggest sort of obstacle if Facebook
really wants to kill Google they need to
come up with a add product that the
users actually want do you ever look at
the ads on Facebook no I really look at
the ad on google and you do raise a good
point the sensor on Google I sometimes
look at them and but you can’t really
compare the two because we’d searched
all the ads are intentionally targeted
I’m actively looking for something
whereas Google might be able to
completely sorry Facebook might be able
to completely read my mind and show me
an ad for something I’m kind of
interested in but if I’m not in a like
purchasing mindset which I’m in when I’m
actually searching for something I’m not
going to pay attention and that’s what I
mean is that I don’t think Facebook has
found yet found the magic formula on how
to put the ads in there we’re still
evaluating them based on like something
that’s more along the lines of a
conventional CPC or impression at when
in actuality it’s probably going to be
more along the kinds of integrated
marketing that you see inside your
friend fee but you really want to get
commercial mess it’s very different when
you’re searching for information you
might have a commercial need but if I’m
like sending a note to my brother or
saying ayo to a friend hey was nice
seeing you yesterday at the concert or
whatever I don’t really think that
there’s really that much room the
majority of the time for a commerce
introduction or relationship and that’s
why I say they haven’t figured it out
yet because you’re right you know when
I’m just
talking to someone about the concert
last night I don’t necessarily want to
be sold to but if they’re smart about it
and they can get their semantic
algorithm up to par stuff will appear my
friend feed from let’s say brands whose
pages I haven’t even liked do you think
content is a solution I’m a big bowl
obviously on content started watchmojo
as a belief that content is king though
without distribution it’s like the tree
that falls in the forest who’s going to
know about your piece of content but its
content the solution like Google her
face ok ok so Google has moved towards
content right I don’t think the question
of Google anymore is are they a media
company the yes they are they on YouTube
you know I think the acquisition of
Zagat clearly is all about content local
social and mobile but whether content is
first or the fourth factor content will
play a big part of that I think the
question with Google now is is it even a
Content company it doesn’t produce all
that content on YouTube it has the
rights to it but it will get more and
more into originals Zagat clearly is
original content so if is content the
solution for maybe Google to get to the
next sort of tier of revenue that they
want and if and if contents not the
solution for facebook what is for
facebook okay well first start to start
with Google I don’t think the solution
is actually content per se they’re
they’re not I don’t see them as a media
company I don’t see them as a as a
Content company I see them as an
advertising company all they do is they
acquire things to slap ads alongside and
that’s primarily what their revenue
revenue model is and they all those
search drives ninety-nine percent of
their there at advertising business
local and all that stuff is still really
knew the difference with Facebook is
that well what’s the difference no but
what’s real what’s the big difference
between Facebook the difference between
Facebook is they are the art typical
problem you’ve seen in social networking
which is you’re just assuming there’s a
linear direct relationship between the
growth and eyeballs and the growth in
advertising and that’s just not the case
and it will never be the case with
social networking projections this is
why by and large social networking
advertising projections always got
reduced downwards the only reason why
they’re still growing though is just
because facebook keeps growing so people
assume that the number one play facebook
in social networking will push social
networking industry revenues up which i
think is the false fact all right let’s
take a break we’re going to come back
lightning round for questions we’ll be
right back
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