Latest on failure of the ad only model for internet business
The Ad-Based Internet Is About to Collapse. What Comes Next?
web as we know it relies on advertising, but that model is headed for a
crash. Fortunately, we can build something better from the wreckage.
It is often the case that the "change" advocated by politicians, particularly left wing politicians, is actually harmful to small business and those on low and middle incomes and greatly beneficial to global corporations, banks and billionaire investors. A case in point is online banking, very useful to me because I'm tech savvy, but an absolute nightmare to others. As our personal banking has been forced online, local branches have closed, costing many jobs in the community, and people who don't have or struggle to use computers or smartphones have been abandoned.
There's an old woman who can't walk far lives nearby, and as we are not on a main public trasport route, if I or one of the other people in the close is not available she has to get a cab into town (£3 each way) to pay a bill or obtain cash. This wonderful "change" in the way we organise our finances hasn't done her any favours. Just one example, there are many more. The girl bringing up three kids alone (her name is Kelly as it happens,), living on a sink estate, one of the renewal projects stated under a socialist government's dreams of creating a brave New World. Unfortunately the Brave New World went the way of other socialist utopias because the planners forgot even socialists need shops, pubs, local ameneties. The one shop on the estate closed in the 1990s and the bus service was cancelled because scumbags kept trashing the buses so now as well as having to get into town somehow to cash her benefit cheque, (banks will not touch people like Kelly,) she has to schlep back from the supermarket with six bags of shopping. Three cheers for "change".
It's easy to talk of people power, but once The Powers That Be have decided something much change for the benefit of their corporate cronies there is little we can do to stop it. We rely on politicians or governments overreaching themselves. And in the case of the "change" that was going to enrich our lives by putting all our activity on line, that may be about to happen. A truly massive scandal is brewing in Big Tech.
This scandal concerns the fact that 60% of advertising “clicks” are in fact NOT coming from humans; they are generated bots or automated algorithms that don’t buy anything. EVER.
If you don’t believe me, and think I’m just making this up, consider what Keith Weed had to say last month.
Weed is head of Marketing for the consumer goods giant Unilever. In this role, he oversees a marketing budget of $8+ BILLION per year. And here are his statements on the impact of bots in digital advertising.
What does this mean?
The Tech Giants, Facebook and Alphabet (formerly Google), make the bulk of their money by charging advertisers a certain amount for every click the advertisers’ ads receive online.
The price that Facebook and Alphabet can charge for advertising space is based on the amount of web traffic that ads receive. The more traffic these ads receive, the HIGHER the prices Facebook and Alphabet can charge advertisers for ad space.
So if 60% of ALL AD CLICKS are in fact BOTS, not HUMANS, the reality is that these ad prices are in fact MASSIVELY overstated.
Again, if you think I’m making this up, consider that another consumer goods giant, Proctor and Gamble cut its online marketing budget by $100 million and found… ZERO IMPACT ON GROWTH.
Again, Proctor and Gamble cut online advertising by $100 million and had ZERO impact on its results.
These are two massive companies both of which spent BILLIONS in advertising. And both of them are stating point blank that the value of digital advertising via companies like Facebook and Alphabet is
What happens if these companies have to begin accurately pricing their ads? What happens if more advertising giants start pulling funding?
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How effective is internet advertising?
Internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue. We present results from a series of large scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase behavior are correlated, we show that returns from paid search are a fraction of conventional non-experimental estimates. As an extreme case, we show that brand-keyword ads have no measurable short-term benefits. For non-brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.The NBER version is here, an ungated version is here.
- June 12, 2014 at 2:34 pm
Another Tech Scandal In Waiting As Unicorns Continue To Eat Cashhttps://www.zerohedge.com/news/2018-02-10/what-headlines-about-tesla-snap-twitter-earnings-should-have-said
SNAP, Twitter and Tesla Issue Misleading Finance FiguresWhen Snap reported “earnings” this week – in quotes because it was its biggest loss ever – media headlines were euphoric, from TechCrunch (“Snap shares skyrocket on first earnings beat with revived user growth”) to The Wall Street Journal (“Snap Climbs Back Above IPO Price After ‘Shocker’ Earnings”). The theory was that Snap had reported “better-than-expected earnings.” Thanks to these headlines, over February 7 and 8, Snap shares skyrocketed 48% to $20.75, though they have fallen off somewhat since then. So here are some modest suggestions as to what the headlines should have been, based on Snap’s “earnings” report:
Snap losses surge 106% to $350 million in Q4, and 570% to $3.4 billion for the year, the most ever.Twitter also reported earnings this week, and the media headlines showered it with love, from The New York Times (“Twitter Has Good News for Once: Its First Quarterly Profit”) to CNBC (“Twitter rockets more than 20 percent after the company reports first-ever net profit”).
Snap lost more money than it generates in revenues; what is it doing with all this money?
Snap burned $820 million in cash in 2017, but still sits on $2 billion from investors and can keep going at this cash-burn rate through 2019, so no problem.
Snap Q4 loss soars to $350 million, on $286 million in revenues. Stop and think about that for a moment.
Losses are ballooning faster than revenues, and from a larger base, which is the road to financial perdition, but no problem for analysts.
Twitter’s shares jumped 27% on the announcement, after they’d already soared 60% over the past year on takeover hype that never materializes but keeps getting trotted out time and again to pump up shares. Since the spike following the earnings announcement, shares have declined 10%.
So here are some suggestions for headlines to describe Twitter’s situation:
Twitter 2017 revenues shrink 3.4%, Q4 revenues inch up 2%, as company embarks on Cost-Cutting as strategyTesla’s earnings report late Wednesday triggered more mixed and somewhat impatient headlines, as it is becoming increasingly difficult, even for the fawning media, to willingly and blindly fall prey to Tesla’s hype and broken promises.
Twitter makes $91 million in Q4 profit after gutting R&D and sales and marketing expenses, which might explain revenue stagnation. But still loses $457 million for the year.
Twitter cuts $68 million from R&D and $71 million from sales and marketing expenses in Q4, trying to shrink itself to growth. Good luck.
Even the ceaseless promos from President Trump and the media circus around his Twitter actions fail to boost Twitter’s revenues.
No other company has ever gotten this much constant and free promo from any White House, but Twitter still can’t make it work.
So these mixed headlines ranged from The Street (“Tesla’s Earnings Report Was Remarkably Drama-Free, by Its Standards”) to CNBC (“Tesla shares fall as Wall Street doubts the slowing cash burn is for real”).
Before the “earnings” report, Tesla shares traded at $345, giving it an inexplicable market capitalization of $58 billion. Shares have since fallen about 10% to $309. So here are some suggestions, based on Tesla’s “earnings” report, for headlines that are less mixed:
Tesla loses $675 million, the most ever, in Q4, and nearly $2 billion for the year, also the most ever.
Tesla has no clue when or if its Holy-Grail $36,000 Model 3 will ever be mass-produced.
Tesla would lose so much money on its Holy-Grail $36,000 Model 3 that it cannot afford to mass-produce it, if it actually could mass-produce it.
Tesla shows “slowing cash” burn caused by its failure to mass-produce Holy-Grail max-cash-burning $36,000-Model 3.
Tesla cut capital expenditures by $223 million from guidance to show slowing cash burn, just when it should invest to get production going.
Tesla’s global market share is an invisible 0.1%. Why is its market cap $58 billion?
Tesla now ominously “targets” rather than “forecasts” a production rate of its Holy-Grail Model 3 of “2,500 by the end of Q1 and 5,000 by the end of Q2,” nearly a year behind prior hype, and might never get there RELATED
Big Tech Ban President Trump, But Reveal Their Contempt For Free Speech And Diversity Of Opinion
As the Trump presidency enters its final week in the USA the haters are sharpening their knives and drooling at the prospect of taking revenge on Trump and his supporters for denying them the power they crave for four years ...