

Why I’m betting my retirement on Facebook stock today - daryn
http://www.geekwire.com/2012/betting-retirement-facebook-stock-today/

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tworats
I hope he's not actually putting his retirement money on the line here.

It's not about the quality of the ads, which he argues will get better with
more data. It's about intent.

When I search on Google, my natural next action is to click a link. That link
can be organic or an ad. If it's an ad Google stands to make money.

When I browse Facebook, my natural next action is not to click a link to an
outside service/store. It's to continue to read status updates and browse
around. Clicking an outside link is unnatural and unpleasant in this context.

This is the same reason ads on other Google properties such as gmail do so
poorly - they may know exactly what you're likely to buy and could therefore
present you with the perfect ad, but the activity you're engaged in does not
naturally lead to clicking on ads.

~~~
vibrunazo
I just checked and Facebook gives you the option to buy ads per click, around
$0.25 per click in my category. So why does it even matter if it has a low
CTR? If the user didn't click, you didn't pay for it anyway. If the user does
click, well there's your intent.

From my point of view as an advertiser, how is the CTR even relevant? Why do I
care if google has 1% CTR and Facebook has 0,1%? If you assume both has the
same cost per click. And I spend $100 on each. I'll still get the exact same
amount of people clicking my ads on both.

Why does everyone keep repeating that facebook ads are only for branding,
there's no intent, CTR is low? Doesn't the pay per click auction makes all of
these irrelevant?

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jack-r-abbit
CTR is one piece. But conversion in another. And intent is important. Take two
identical ads on Facebook and Google, with the same CTR and CPC, if the Google
traffic has more intent to take action _beyond_ the click (I'm not saying they
are necessarily) then Google traffic is worth more. I worked in the LeadGen
space for a good number of years and conversion rate is a very important piece
of the puzzle. Generally speaking, intent leads to a better conversion. Plus,
advertisers do them selves a disservice to attract higher clicks if that means
their conversion rate is lower because the ad was bait. I've noticed that FB
ads tend to have a spammy/scammy feel to them... bait.

~~~
vibrunazo
That perfectly answers my questions, thanks a lot.

Does anyone happen to have some real world example data of conversion rates
between these ad platforms?

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fjorder
Say I decide to buy a new set of speakers. Do I tweet that I'm looking for
speakers? Do I announce on facebook that I'm looking for speakers? Or do I
just start googling?

Twitter and Facebook might occasionally be clued in about some of my
purchases, but google is in on virtually all of my purchases that are
considered while I'm at a computer. They're first past the post and privy to a
much higher percentage of what I buy.

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debacle
Google's pageviews have more value (because they know exactly what people are
looking for), Google IPOed at a valuation of 20% of what Facebook wanted in
valuation, and Google is already entrenched into the market that the author is
suggesting Facebook is going to have such an easy time moving into.

My money is on Google.

~~~
galenward
Sure, 20% of Facebook's valuation but also 1/2 of Facebook's revenues.

Facebook still has a lot to prove, but they also have a lot more opportunity
to improve.

~~~
debacle
> but they also have a lot more opportunity to improve.

What's your case for that? They have almost a billion users. How many more are
they going to get, and are users outside of the US and Europe (and a few
scattered nations) of any value to Facebook at all?

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jonknee
Facebook has a lot of data about what you say you like, but Google has a lot
more data about what you actually like. Hope you really didn't bet your
retirement.

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eshrews
Betting one's retirement on a single security seems like a bad strategy
regardless of how successful it's likely to be. I'm hoping the title is just
hyperbole.

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gawker
I've never clicked on the ads in Facebook. I've clicked on more ads while
using Google. When I'm looking to buy something, I use Google. As with
tworats, I do hope he's not actually planning on retiring with Facebook stock.
Privacy laws could easily render the data that we give to Facebook off-limits.

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jack-r-abbit
So... Facebook has some code you can put on your page and you have an instant
like button. Well... what if Facebook starts providing a neat little bit of
code that also embeds an ad? If the Like button knows who you are... so will
the ad widget. So now they are serving "Facebook ads" on other sites. Of
course that is what Google does with AdSense... but does Google know as much
about _you_ on that page as it does about that page? I could see it _possible_
for Facebook to grab eyeballs on other sites... sites that are currently
monetizing with AdSense. Not that I'm convinced they would make a dent with
this approach... but you can't just compare the ads ON Facebook to the ads on
Google search. If Facebook was putting the ads on pages that had a different
focus than what you do on Facebook... there is a chance.

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sicxu
AdSense has much lower margin compared with AdWords because Google has to pay
publisher for displaying the ads. In the early days, (AdSense revenue around
1B) I remember google was almost paying every penny they got from AdSense back
to the publisher. Only later, they started to make money, but still capped by
the competition from microsoft/yahoo.

Facebook entering the AdSense market? It won't generate a lot of profit for
facebook. The true profit engine for facebook is still the facebook site.

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apalmblad
I feel like the author is overstating the benefits of a like button on every
page. Google - and many other ad networks - also know the products being
viewed if the site owner is using retargetted ads. Might facebook offer
compelling retargetting? Sure. But I imagine the conversion rates would be, at
best, comparable to other retargetting networks. Probably not a game changer.

I'm not even mentioning the reach of analytics.

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Havoc
All the author of that article managed to convey is an overwhelming sense of
fuzziness in his thinking. e.g.

>Do the math on this: instead of growing it organically, we wake up one day
and Facebook has taken over Google’s Adsense business. That’s $10B in revenues
alone.

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audeamus
Bit awkward given the recent happenings over the weekend
[http://www.smh.com.au/business/world-business/lawsuits-
pile-...](http://www.smh.com.au/business/world-business/lawsuits-pile-up-over-
facebook-ipo-20120524-1z5yy.html)

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sethish
The graphs he cites as evidence are referring to google's display network
verses google's total revenue. If that is the case, then the author is
presenting no information about facebook. I hope that he did not invest based
on these graphs.

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jriley
This struck me: "Even if you didn’t click on the Like button, Facebook
probably has a pretty good idea of what your next purchase will be."

I imagine the people best able to predict my next purchase issued my debit
card, no?

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joe_the_user
You should never substitute a belief for an investment strategy. Seriously,
even if your idea of Facebook's long term potential is correct, you can take a
haircut on whatever random thing occurs today. Balance the utility of what you
gain if you're right compared to the utility of what you lose if you're wrong
(think twice if you _really_ want to make a "heads, double your house's square
footage, tails live off dumpsters at 65" bet).

If you want to start investing based on your beliefs, go ahead. But have a
pool of money for that and be ready to lose it.

But for your retirement, diversify.

~~~
gm
Agree. Did not read the story because once you say "I'm putting all my eggs in
[this one basket]" then you are taking WAY too much risk on a single
investment.

The guy probably should take some courses on retirement/investment planning.

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SagelyGuru
Don't do it, unless you plan to work long years and/or die young. FB price
might well be around $10 before long.

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fourstar
Sensationalist headline. Bad mistake.

