

Hot Dogs & Caviar - olivercameron
http://daltoncaldwell.com/hot-dogs-and-caviar

======
tptacek
I think Facebook and Twitter ads are being unreasonably benchmarked against
Google adwords ads. Facebook in particular.

Google ads typically convert to a total handoff of the user from Google to the
ad buyer. That's the only dynamic Google really admits to. But that's OK,
because people routinely engage with Google in order to find products and
services. Very low conversion rates are repaid by purchase intent.

People don't engage with Facebook to find products and services. So the ad
dynamic Google has doesn't work very well on Facebook. And so, story after
story about how nonperformant Facebook ads are compared to Adwords.

But Facebook has a compensating strength: it admits to other dynamics.

So for instance, after "Liking" almost everything (I actually liked) from the
"Recommended" block on Facebook, my feed is awash in announcements from
brands. Not an entirely welcome development, but not a horrifying "hope you
like hot dogs" experience either, since those announcements tend to actually
be announcements. So far as I know, every one of the brands that got something
on my page that way paid nothing to Facebook to do that.

People _do_ engage with Facebook in order to "Like" things, for the same
reason they fill out personality quizzes: benign narcissism.

So Facebook ads can have the objective of generating "Likes", which give
advertisers many possible bites at the apple for each user down the road. I
know there are brands that have exactly the same process on Twitter. The
"like" count isn't all that interesting, but any measured conversion from
announcements to "likers" establishes an ROI for Facebook ads.

It's not at all surprising that lots of big companies haven't figured this
out; they're still throwing Google ads at Facebook to see if they'll stick;
the ads don't stick; they drop the ads; the only ads left are from a few
"savvy" brands trying to generate "likes", and from skeezy "hail mary"
inventory that generates so much return from a single scammed conversion that
it's worth posting ads anywhere.

------
huhtenberg
I, as a company owner, would like to pay Twitter, as a news distribution
service, to make my tweets more visible _to my followers_. Stick 'em,
emphasize 'em, repost 'em - I don't care, but do something that would help me
reach these people. They are already targeted. In fact, they have targeted
themselves, voluntarily.

So here's the money, Twitter, take it. Help me help my subscribers get the
information that they have subscribed for. Thank you.

~~~
eps
So you want something like this then?

[http://swapped.tumblr.com/post/22976646861/twitter-is-
doing-...](http://swapped.tumblr.com/post/22976646861/twitter-is-doing-it-
wrong)

~~~
huhtenberg
Yes, _exactly_ that.

~~~
gojomo
I think they'll get around to that. A number of their UI nudges discourage
people from taking a 'completist' view of reading their stream -- no mark-as-
read, no persistent latest-read-indicator, endless encouragements to follow
more than could be read. That plus control of the client would let them offer
some kind of paid pinning as a service.

------
martinshen
We get it... the ad model is broken, a subscription model is, in theory,
always better. It's simpler. Generally, simpler is better. However, I don't
think the app.net experiment will succeed.

I'll be brief:

\- Outside of phones (& WhatsApp), I can't think of a single paid non-business
communication platform.

\- App.net will not have a good one-player or even two-player mode (good
1-player: DropBox, Github, Evernote).

\- All paid services have at least 10x less users than Twitter.

\- If it does succeed, twitter could just copy you.

The biggest problem with Facebook web ads is twofold:

1) They display the same ads on every page (regardless of context)

2) They rely on the advertiser to know their target market. (Most often, the
advertiser doesn't even know)

I'll try to write up something on this later.

[edited for formatting]

~~~
mikegreenspan
If we agree that the ad-supported model is broken, why not try to create an
alternative?

~~~
RobAley
You absolutely should. But it doesn't look like this IS the alternative (at
least the viable one).

That said, no one appears to have any other firm ideas about what the viable
alternative should look like (only what it shouldn't). And as it's your money
and not mine, I say go for it, good luck!

------
tomjen3
This is properly the best example of why hn needs tags. You think you are
going to read an interesting article on food and culture and maybe learn a
valuable lesson, when in reality you get a piece of whyning crap delivered by
a marketeer.

~~~
nrmehta
I agree HN needs tags but still think this was an interesting post. While the
analogy could have been more thoughtfully constructed, I think the topic is
very relevant right now for startup business models (ad-supported versus
paid).

------
dmor
We are building the new social ad unit at Referly - and every word is written
and targeted by humans, not demographic algorithms

~~~
RobAley
The trouble with that approach is that while algoritms aren't great in this
area (at the moment), they are at least trustworthy (in that they'll do what
you tell them). People on the otherhand are often untrustworthy, and their
definition of targeting is often likely to be quite different to yours and
mine. It will be interesting to see how you solve the problem of untrusted
users, my feeling is the ideal solution will end up being a combination of
humans (users and staff) and algorithms. How to make that scale of
Twitter/Facebook will be challenging.

------
gatordan
I can accept bad metaphors and analogies in HN comments; this a technically
focused community and the comments are so far above above most online forums
that nitpicking about literary devices would be ridiculous. But I can't
forgive the hotdog/hamburger/caviar analogy in this full length blog post. It
does not convey his message well and really does the article a disservice.
This writing should have been more thought out considering it is a follow up
to his previous posts on this subject that got quite a bit of attention.

I realize this is somewhat off topic. But as an entrepreneur I feel this is
worth noting because I can't overstate how affective a good metaphor (or good,
well revised writing in general) can be in persuading others. And as a reader
how easily a bad one can turn me off especially when woven throughout your
entire piece.

~~~
arockwell
What's wrong with the metaphor? How would you have described the problem
differently?

I thought it was a really good description of the situation Facebook is in.
People have speculated for years about all of the different ways they could
produce insane revenue/profits (the hot dog -> caviar machine), but their
current revenue (the hot dogs) is very lackluster.

~~~
RobAley
I think the issue is that metaphors work best when they are about real
situations. The idea of a metaphor (usually) is to help a person understand
one situation by mapping their knowledge of another, more familiar, situation
to the first. No one is familiar with the problem of turning hot dogs into
caviar, because no one is trying to do it. If anything, the actual problem is
more familiar to those on HN than the metaphor.

------
Sumaso
From the Authors website linked to by his P.S.

"App.net is building a better way to share your status."

What an immediate turn off! The first thing I think when I read this 'ugh not
another status sharing service'. I think the author needs to rethink how he
pitches his idea...

~~~
mikegreenspan
Thanks for your feedback. We have had an internal conversation about copy in
the header and are currently using Optimizely to test a few variations. We are
definitely open to suggestions :)

~~~
smallblacksun
Before reading the postscript I thought it was an interesting, if not
revolutionary, critique of ad services. Then I read the last line and realized
the whole "article" was _yet another_ ad for app.net. I felt like I had been
tricked into reading a sales pitch, which irritates me and makes me less
likely to join your project.

~~~
mikegreenspan
This blogpost was not intended to be another ad for App.net. Dalton's recent
posts are a byproduct of his firm belief that the ad-supported business model
is unsustainable. In fact, the footer was not originally included in the
article. He decided to include a short sentence connecting his critique of ad
services to our project after receiving feedback from the community.
(<http://twitter.com/johnsheehan/status/227816577607823360>)

------
millan
If I could use an analogy like Dalton does that doesn't make much sense;

Dalton is trying to sell us a better mousetrap, BUT--atleast in the beginning
--he was advertising it as a totally different way to catch the mouse.

The problem is that most people either:

a) aren't bothered by the mouse, or

b) didn't know they should be trying to catch the mouse in the first place.

Substitute 'mouse' and 'mousetrap' with 'Facebook & Twitter's advertising
model.'

------
wmf
_A new “social ad unit” will be created at Facebook or Twitter in the next 12
months that will manage to be far more profitable than current ad units, not
piss off users, and immediately be embraced by advertisers._

I call them "tweets". Seriously, most tweets _are_ ads, so just charge people
to send them. If you have over ~1,000 followers then you are a de facto
marketer and you could pay per tweet per active follower.

~~~
mikegreenspan
Won't that just incentive quantity of tweets rather than quality of tweets?
Where is the value in that service?

~~~
wmf
If you're paying to send tweets, I'd think you'd want to maximize their
quality.

------
mmakunas
_"The advertising units Twitter and Facebook are selling today are “hot dogs”:
poorly targeted, poorly performing."_

Maybe that's true for FB, but apparently Twitter's mobile ads are doing just
fine: <http://on.wsj.com/LxMLwc>

------
debacle
It's a pretty good analogy. FB can't increase the volume of its users all that
much, so it has to drastically increase its ARPU to compensate.

But I (and many others) don't think it can.

------
jwoah12
Something related on a literal level to the article's metaphor- there's a bar
in Midtown Manhattan called Vanderbar that sells a $50 Kobe beef hot dog
topped with caviar.

~~~
mikegreenspan
That has to be the best hotdog in all of Manhattan.

------
johnrob
To make matters worse, social media ad inventory is rapidly moving to phones,
where advertising is even more challenging.

~~~
mikegreenspan
Mobile advertising is only in its infancy. If you think ads are invasive now,
just imagine what life will be like when they move to a screen 1/10th of the
size!

------
latj
I love hot dogs.

~~~
mey
Read this before lunch and hoping that the author was opening an _actual_
restaurant in his postscript.

------
gojomo
It's not just the prospect that FB or Twitter figure out a new wildly-
profitable promotional model themselves, but the prospect that someone else
figures it out, and FB or Twitter's large audience/social-net/technology
defensible asset is still the best way to deploy it.

Compare: Goto.com (Overture) pioneered pay-per-click auctions, and were
already a profitable public company even before Google adopted a similar
model. But only combined with Google's natural-search advantages did that
model become a profit supervolcano.

------
moron
MySpace's problems are due to their user base defecting en masse, I don't
think their ad strategy was really a factor. Could be wrong, though.

------
earl
Another stupid post about fb and their business without mentioning the fb ad
exchange? I'm having trouble understanding how Dalton isn't misinforming his
audience.

Read this for why I think fb has a great future in ads.

<http://news.ycombinator.com/item?id=4279900>

