Slashdot Mirror
The Decline of Google's (and Everybody's) Ad Business
Hugh Pickens writes "Rebecca Greenfield writes that during their recent earnings call, Google reported a 16 percent decline in Cost-per-Click (CPC), meaning the value of each advertisement clicked has gone down. This follows a 12 percent drop last quarter and 8 percent the quarter before that showing an unfortunate reality of online advertising — unlike the print world, internet ads lose value over time. The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency, writes Michael Wolff. 'The nature of people's behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command attention, has meant a marked decline in advertising's impact.' This isn't just Google's problem. Overall, Internet advertising has decreased in value over the years as online advertising continues its race to the bottom. 'I don't know anyone in the ad-supported Web business who isn't engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues,' adds Wolff, 'or who isn't manically inflating traffic to compensate for ever-lower per-user value.' For Google's overall business, this loss doesn't mean as much, since it has since expanded its business beyond AdWords — including its recent acquisition of Motorola. For companies that didn't just buy big hardware companies however, it's a scarier proposition. Like Facebook, for example."
Adblock: Savior of the Internet.
No. According to the summary (and common sense), you'd see that their response is going to be more ads, to compensate for their less effective nature.
The internet had plenty of good content before it was ad supported, and it will have plenty of good content afterwards. Come to think of it, the content was actually better before it was add supported.
Give me Classic Slashdot or give me death!
...who clicks on ads? The only time I click them is by mistake and then in frustration I close the new window, usually before it loads. My value per click is $0.
Great warrior...hrmph! Wars not make one great.
You should be so lucky... If Facebook stops having luck with the ad sales, they can just set up a new HQ somewhere in Langley and provide bespoke social-mapping solutions to a shadowy array of government and corporate customers(assuming that they don't already).
The problem is the quality of the adds.
Internet adds will be far more useful if we could somehow trust the content in them. If Companies like Google, did the extra work to verify the authenticity of the companies and was willing to put its own brand reputation behind the quality of the people placing the adds, I think the value of the adds will go right up. Because right now there isn't any good way to tell the difference from a stable start-up/small company with a snake oil sales man.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Facebook stock is hugely overpriced. Based on current revenue, Facebook is worth about $7 per share. The stock price assumes a huge growth in revenue
Unless you're a real pro financial analyst you can't claim it is overpriced and then immediately point out that it's priced assuming a huge growth model. Just because ads look like they're going to do poorly doesn't mean Facebook can't still see a huge growth in revenue, they have a huge segment of the world economy that has facebook but mostly sketchy shitty ads, they have the option to bundle up your data and sell that, and the more users they have and the more information they have the more they can bundle up and sell that info for. Not to mention some very valuable infrastructure they could sell in some way shape or form to other companies which could be extremely lucrative (think Amazon's cloud). Or some other business plan that may not seem central to Facebook but might have some serious value.
Ads on content have always been 'irrelevant interruptions', but they're also much harder to quantify in value. People aren't going to buy a car because of a magazine or facebook ad, or even likely click on a car ad on facebook. But GM advertising on facebook at least shows they're still in business (which, for a while there, was important to tell people). TV ads were always about trying to convince people they wanted to buy your product, and hammer away at that point with repetition, while at the same time generally keeping people aware of the brand. Ads on searches are, on an individual basis going to have the potential to be much easier to quantify, because you can track clicks and sales per click and you can monitor user behaviour after they clicked on an ad and that sort of thing.
"Yes, we're going to do the same thing, only moreso"
"Insanity is defined as doing the same thing and expecting a different result"
"We lose money on every sale, but we make it up on volume"
Any others?
So far, for all of my life, at least as well as I can remember...I've never been made aware of a product due to an ad, never decided to buy something due to an ad, and never decided to buy or get behind some other product/service/person as a result of an ad. Of course, this may be because I used to make ads and I know that most of them are full of semi truths and information not meant to be combined cobbled together with the intent of making me think something other than what I currently think, to someone elses benefit.
Meh, no thanks.
We could only be so lucky.
If it could take Twitter with it to the grave, so much the better!
There's a big difference between ads and Facebook/Twitter.
Ads are prevalent throughout the web. You are likely to come across them no matter what your browsing habits (unless you use AdBlock).
Facebook and Twitter require you to visit them and/or sign up. I see no impact to my life from Twitter because I don't use it. I do see an impact from Facebook because I choose to use it and it is a valuable tool for keeping in touch with friends and family all around the world.
I've never understood why so many people on Slashdot complain about Facebook. Nobody is forced to use it. Plenty of people choose to ignore it and their lives go on. Similarly, plenty of people choose to use it, aware of potential pitfalls, and their lives do not explode in flames.
If you dislike it for whatever reason, then don't use it. If you don't sign up for a Facebook account, Zuckerberg is not going to send proselytes to your door to pass on the good word. If you do sign up for a Facebook account, don't give them your cell phone number and address.
Google, on the other hand, collects all manner of data about you from the myriad of services you use, even if you don't sign up for an account.
I expect several replies about Facebook's abuse of privacy, poor security, etc. Don't sign up.
Only if you are a logical person. The teams of accountants running big Internet outfits that are dependent on advert revenue just see this as a que to "Hey! There's a spot we haven't put an ad on!".
Honestly though, from personal experience, redefining your ad strategy to something much more minimal, elegant and integrated seems to be working atm. The Plain advertisement times on the net are over. Now it seems to be all about social recommendation. (Which is nicer IMHO)
-- no sig today
I stopped reading there. What magic do "real pro financial analysts" have which slashdotters do not have?
They can convincingly spout bullshit.
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