Sunday, July 15, 2012
Advertising and The Facebook Business Model
It's time to start writing again. Since I turned down my startup several years ago, I've largely ignored tech blogs and the startup space, as I was plain worn out. I spent time diving back into a corporate job. I tried half a year at Symantec. But going from startup to an archaic technology company more interested in resting on its laurels, just wasn't for me. I've since found the perfect place.
Since I now work in the online ad space, I thought I'd share something I've been telling people for a few years now. Something that finally seems all that more logical to those observing the industry.
Advertising based on profiles or online self selected interests or other user generated data - just doesn't work. Things like remarketing, contextual, or search advertising do.
There's one simple reason with search ads. It's intent. Contextual - though not as powerful as search, casts a wider net. It's all over the place. Remarketing. Obvious.
Think about Facebook. When you're on it, do you even notice the ads? Are you on Facebook with the intent to buy?
The only way I've ever though FB would be able to make money is to either:
A) Create an AdSense style platform and augment contextual WITH their profile data
B) Sell their data on a DMP or Data Exchange
Since they likely won't do B), their only option is A). Little hints like the deal with Zynga and the launch of their exchange, which was far from an exchange, may show their intent.
As usual - I remain bearish on Facebook. 100B? Really? It's even way overvalued today at $65B. I'd say a more appropriate valuation would be about half that.