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The math’s not pretty on digital advertising’s future revenues? (2017)

172 点作者 taigeair超过 6 年前

26 条评论

manigandham超过 6 年前
Another nonsensical article about adtech. This is not how the industry works.<p>Apple does not have a chance at buying Google because they have the same market cap. Google and Facebook have a massive advantage in scale and precision which is why 2 of the top 10 biggest companies on the planet are ad networks. The valuations come from the sheer profit they generate, not their assets, and how much Disney spends on content is utterly irrelevant. You cannot easily replicate what they do otherwise it would&#x27;ve already been done. Half of the world&#x27;s population still isn&#x27;t online so there&#x27;s plenty of room for growth in the future too.<p>Everyone loves to talk about waste but skip over how much worse it is with TV and print ads. What matters is getting a positive return. Even if you can&#x27;t measure anything else, you can see what sales were like before and after doing any advertising, and that&#x27;s as simple as it gets. Advertising is a key component of marketing, and marketing is how a company grows and creates customers, so unless you change human behavior advertising is not going away.
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MarkMc超过 6 年前
Wow this article is so very wrong - Google and Facebook have enormous advantages over Disney because (a) they have other people producing valuable content <i>for free</i>; (b) they know much more about each viewer than Disney.<p>Google&#x27;s revenue today is six times as large as it was a decade ago. And I expect its revenue in a decade to be at least 3 times as large as it is today. The reason is that many of the causes of past growth will continue for the foreseeable future:<p>1. The people who are connected to the internet will continue to become richer - in particular booming poor countries like India and Indonesia<p>2. The amount of time people spend on the internet will continue to grow<p>3. The amount of advertising Google can show people per hour will continue to grow. For example, Google can show many more ads on YouTube and still be less saturated than the old network TV model. Another example: The Economist app currently shows untargeted ads copied from their print magazine - but in 10 years these ads will probably come from Google.<p>4. Google can continue to improve its algorithm for placing of ads. Google knows so much about me yet I&#x27;m amazed how stupidly untargeted its ads sometimes are. Eg. if my photo stream doesn&#x27;t include pictures of cats, don&#x27;t show me ads for cat food!<p>5. Google can continue to collect more personal data. Right now it doesn&#x27;t know when I last purchased toothpaste, but it might in 10 years from now.<p>6. The number of people connected to the internet will continue to grow (although of course at a slower rate than in the past)<p>[Disclaimer: I own shares in Google and Facebook]
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samspenc超过 6 年前
But... here&#x27;s the revenue and profits for Google and Facebook since 2017 (when the article appears to have been written), including analyst forecasts for the next year (* are analyst forecasts).<p><pre><code> 2017 2018* 2019* Google revenue $110.86B $136.47B $162.64B Facebook revenue $40.65B $55.36B $68.87B Apple revenue $265.60B $277.91B $289.25B </code></pre> While Apple&#x27;s growth rate seems to be slowing down (due to iPhone sales slowing), both Google and Facebook are apparently predicted to be growing well (by 20% - 30% growth each year.)<p>Sources: Google: <a href="https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;goog&#x2F;analysis&#x2F;" rel="nofollow">https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;goog&#x2F;analysis&#x2F;</a> Facebook: <a href="https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;fb&#x2F;analysis&#x2F;" rel="nofollow">https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;fb&#x2F;analysis&#x2F;</a> Apple: <a href="https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;aapl&#x2F;analysis&#x2F;" rel="nofollow">https:&#x2F;&#x2F;finance.yahoo.com&#x2F;quote&#x2F;aapl&#x2F;analysis&#x2F;</a>
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tomrod超过 6 年前
This is an open secret among techonomists and others in the arcane space of digital campaign measurement.[0][1- preprint] Digital advertising has a lot of smoke and mirrors. There is _some_ incrementality, but it seems oversold.<p>[0] <a href="https:&#x2F;&#x2F;academic.oup.com&#x2F;qje&#x2F;article-abstract&#x2F;130&#x2F;4&#x2F;1941&#x2F;1914592" rel="nofollow">https:&#x2F;&#x2F;academic.oup.com&#x2F;qje&#x2F;article-abstract&#x2F;130&#x2F;4&#x2F;1941&#x2F;191...</a><p>[1] <a href="https:&#x2F;&#x2F;papers.ssrn.com&#x2F;sol3&#x2F;Delivery.cfm&#x2F;SSRN_ID2498290_code1130222.pdf?abstractid=2367103&amp;mirid=1" rel="nofollow">https:&#x2F;&#x2F;papers.ssrn.com&#x2F;sol3&#x2F;Delivery.cfm&#x2F;SSRN_ID2498290_cod...</a>
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chillacy超过 6 年前
&gt; But these stocks are based on a reality that no longer exists. The emperor has no clothes.<p>Ok, buy deep OTM put options for tech stocks then?<p>They say the market can stay irrational longer than you can remain solvent. I’d say the market wasn’t all that rational to begin with. At some level investing is a big game of chicken where you try to get out before everyone realizes how inflated it’s become.<p>As Taleb says, don’t tell me what you think, show me your portfolio.
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millstone超过 6 年前
This should have 2017 in the title. In particular Facebook&#x27;s P&#x2F;E has dropped from 37 to 20.
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sologoub超过 6 年前
This article completely missed the forest for the trees - the battle for TV is not just a battle for content, it’s a battle for the delivery medium itself!<p>Think about it - how was TV delivered to you before? There are over the air broadcast, satellite, cable&#x2F;settop, and what’s been called OTT. Except, more and more settop boxes are Rokus, Android TV-based and even some Apple TVs (Verizon 5G was offering those in test markets). So now you have a convergence of what was OTT&#x2F;cord-cutter audience with the settop box. And who owns these platforms? Hint, it’s not the cable company.<p>So now the battle ground for those as dollars looks very different - why bother produce content when you can own the entire ecosystem where that content is delivered?<p>Amazon doing an amazing job with this - their FireTVs include ability to target based on your purchases and search&#x2F;other activity within Amazon. That’s insanely powerful for brands and where brand dollars will definitely be spent. Not all of the dollars, but enough to matter.
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chiefalchemist超过 6 年前
&gt; &quot;There is zero reason to think that a tech company can create content better than anyone else — which is the only way anyone knows of to capture any future ad growth. They have zero advantage over Disney.&quot;<p>I was following but til this point. Unfortunately, it is false assumption, fatally false.<p>I&#x27;m going to over-simplify a bit but...The tech companies know what you watched, how much you watched, at what point you stopped, what you shared (or didn&#x27;t), etc. If Spotify can guess &#x2F; predict what you might want to hear, the same can be done for other content.<p>Furthermore, the traditional media companies spent a fair amount on marketing hoping to get the message out to the appropriate target markets. FB and Google already know who is where, when, why, etc.<p>Correct me, but didn&#x27;t Netflix use viewing data &#x2F; analysis to understand which film&#x27;s and even scenes &quot;worked&quot; and which did not in order to grow their own content.
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tanilama超过 6 年前
Well, when people abandon TV they go to YouTube, and Google owns YouTube, end of story...<p>Video hosting is, by surprise, a very technology driven business, not as simple as upload a file then waiting for the profit. And as regulations tightens up, Google&#x27;s advantage is only going to grow.
gpsx超过 6 年前
The article talks about people companies and factories, and I think it is calling a tech company a people company. Lawyers and engineers are not the same in the sense that lawyers have to spend hours of time to bill clients (in theory at least). With a software company, if all the engineers walk out, the company can still go on serving the same product (in theory at least). Once software is made you can make as many copies as you want essentially for free. And there is a huge barrier to entry for something like Google or Apple, or any large software product, so it is difficult to replace these companies. So I think they deserve to be in a different multiples category.<p>But this isn&#x27;t the only reason someone like Google can have such a large multiple. I think there is the possibility of transformation into a new market, not just dominance of its existing market. You could call Google an AI company instead of an advertising company. There might be some big economic potential for AI and that is what the large multiple can capture. The same applies for Amazon in that they could become a strong player in everything that is purchased, not just in online shopping. And they seem to have a real chance of moving in this direction. And, to underscore the fact that they are trying to do this, they are taking a very small profit right not to try to build their presence, and then they will start pulling profit later when they have a more dominant position.
icelancer超过 6 年前
This guy not knowing why Amazon&#x27;s P&#x2F;E ratio is <i>intentionally</i> over 200 sums up his &quot;expertise&quot; on the situation - he has absolutely none.
jameslk超过 6 年前
Troll bait 2017 article that compares the P&#x2F;E of growth stocks with heavy R&amp;D budgets to blue chip stocks. The author and those reading would be better off spending time reading this instead: <a href="http:&#x2F;&#x2F;www.efficientfrontier.com&#x2F;t4poi&#x2F;Ch1.htm" rel="nofollow">http:&#x2F;&#x2F;www.efficientfrontier.com&#x2F;t4poi&#x2F;Ch1.htm</a>
nicodjimenez超过 6 年前
In media you roughly have 3 segments:<p>1) High end (HBO, Disney, ...) 2) Medium end (TV, Netlix, ...) 3) Low end (Youtube, Facebook, Instagram)<p>The supply of (1) and (2) are limited. There&#x27;s only so many shows that can be produced at the quality of Sopranos, and only so many sports people are willing to sit though commercials to watch (in the US it&#x27;s NFL, NBA, MLB, NHL, UFC).<p>The supply of (3) (mostly user generated content) is nearly infinite because the curation is low touch and automated with software.<p>Ultimately the big constraint for media is the amount of time people are willing to spend watching either high end content with no ads, or low end content with ads. Time is precious.<p>In the long term there will probably be a backlash against tech addiction and people will spend less time on low end user generated content. But even that is hard to predict.
HillaryBriss超过 6 年前
&gt; <i>There is zero reason to think that a tech company can create content better than anyone else — which is the only way anyone knows of to capture any future ad growth. They have zero advantage over Disney. They are coming from a position of weakness — Disney already has significant TV ad revenue, and extensive experience in making content we love.</i><p>totally agree. and, in November, we had this crazy agreement between Google and Disney for online digital ads: <a href="https:&#x2F;&#x2F;variety.com&#x2F;2018&#x2F;digital&#x2F;news&#x2F;disney-google-digital-advertising-deal-1203037372&#x2F;" rel="nofollow">https:&#x2F;&#x2F;variety.com&#x2F;2018&#x2F;digital&#x2F;news&#x2F;disney-google-digital-...</a><p>I gotta wonder what kind of terms Disney squeezed out of Google for this.
o_nlogn_420超过 6 年前
It&#x27;s important to bring up that in the last year AT&amp;T bought Time Warner, Direct TV, and other media companies, as well as As Tech pioneer AppNexus to try and merge Digital, OTT, and linear advertising all together in an effort to make up ground on Google and Facebook
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harry8超过 6 年前
Elon musk seems to have digital advertising figured with a spend with goog&#x2F;facebrick&#x2F;etc of precisely $0. Why is this so seldom mentioned when digital advertising is mentioned?<p>He sells a crapload of stuff with fantastic advertising campaigns with no paid spots at all.
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z3t4超过 6 年前
Web ads is already dead, but if you have users, you can still monetize, for example by product endorsement, up-selling additional services, etc. Companies will still pay for the top spots in the search result though, and Facebook will make it harder to block ads. But for normal web sites, like news sites, they have to focus on quality instead of quantity in order to make people pay. And also we badly need micro-payments for the web.
therealmarv超过 6 年前
This is a bubble which will not burst because we are speaking of Google. If (theoretical) Google will be valued by it&#x27;s real profits and downgraded by ads profit the WHOLE online ad industry will go bankrupt. But this is really unlikely because ads pricing is not the same as stocks on an a stock exchange.
partingshots超过 6 年前
The funny thing is that Disney is now using the Google Ad platform for 100% of it’s online advertising.
mudil超过 6 年前
Regardless of the article&#x27;s arguments regarding tech&#x27;s p&#x2F;e ratios, I believe that Disney stock is a screaming buy, esp since Disney is coming up with its Disney+ service next year. But that&#x27;s just my opinion.
beezle超过 6 年前
A good way to get me to stop reading your article is to be sloppy or confused with basic terminology.<p>Calling revenues earnings is an immediate stop, do not continue flag.
user5994461超过 6 年前
&gt;&gt;&gt; Eight seven percent of Google’s revenue comes from advertising<p>Is this eight or seven or eighty seven? First line and the author is already confusing.
irishcoffee超过 6 年前
2017
gaius超过 6 年前
<i>So, here we are in 2017</i><p>Here we almost are in 2019. The authors premise seems sound, but it hasn’t happened (yet).
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jiveturkey超过 6 年前
lead sentence: “Today, its market cap — the total value of the company ...”<p>really? there’s a single person reading this that won’t know what market cap is? i stopped reading.<p>edit: also, TFA is dated material and could use a 2017 tag. also important because its predictions have failed to come true.
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goatherders超过 6 年前
Thank you for posting this one. Saving for later.
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