Comment by aresant | Hacker News Reader

Comment by aresant | Hacker News Reader

I think the missing #4 "What's Changed" in this article is that the consumer web is NOT monetizing as quickly as expected.

If you look at Fred's UVC portfolio for "Consumer Web" I would hazard that their three largest are Twitter, Tumblr, & FourSquare.

Each of these companies is currently making massive pushes to "monetize" their consumer web bases:

For example: FourSquare is only @ $2m/yr & hires first VP of Revenue (1), Tumblr hires new head of global ad sales & Fred Wilson defends rev model (2), Twitter infuriates developers, pushes new ad units (3)

That story is playing out all over the consumer web right now, including at Facebook.

Pulling from a GigaOM article "Wilson thinks sites should follow Twitter’s lead and ensure ad content is the form of an atomic unit that mimics the native content – a tweet on Twitter, a video on YouTube and so on."

Each of the portfolio companies he's involved in are embracing that model.

But as an observer it seems that while the inclusion of "atomic" ad units is certainly a good solution, they're not going to fetch anywhere close to the price of Google's search inventory - eg the Holy Grail of monetization - so there's got to be less excitement as VCs watch these #s unfold.

(1) http://www.businessinsider.com/foursquares-revenues-valuatio...

(2) http://gigaom.com/2012/11/07/is-tumblr-the-new-geocities-vc-...

(3) http://www.telegraph.co.uk/technology/twitter/9481987/Twitte...

i think you are right that the social web will not monetize as well as search.

btw - foursquare's VP Revenue hire was its first, not a new one.

Edited, thanks for the note -

Of course not - with search ads the consumers and the advertisers interests are aligned. The ads add value.

With social the ads are always a distraction. At best its serendipitous.

Its the difference between selling vegetables at a farmers market vs a roadside stand. No matter how pretty the stand it will never beat the market full of customers who came there to buy.

Not sure about that. A social network can collect a huge amount of information about a user and in the future with better algorithms offer very valuable ads. Helping the user to keep up with fashion, tech, etc.

To keep your analogy, Facebook to Google may be like TV advertisement to a local market.

read up on the datawarehouse trend 10 yrs ago, you have to remain a viable company in order to take advantage of that stuff. turns out it's expensive and time-consuming to create value from generally-unstructured historical data even if you have an identity (or even just a demographic) attached to it.

Facebook has money and time. Plus a few hundred of the very best engineers in the valley, that joined pre-IPO.

These are engineering problems that are capital-h Hard, well beyond the level of graph theory they're using now.

You can take any complex web site or app and say it has functions beyond some math theory. But just hacking around is often enough for a good enough solution.

Why do you think FB, Amazon, or whoever don't have better recommendation/targeting algorithms than they have now if the solution was "just hacking around enough?" Not enough "enough?"

CPC on Facebook is fairly strong, the issue is CTR. Facebook is having to show an ad many more times to get a click.

From an ecommerce perspective I the difference in effectiveness is massive. I have found it very hard to really generate a lot of spending intent across the ads, retargeting, sponsored stories and offers. Whereas a good Adwords campaign across a large product inventory pretty much prints money and annoys users a lot less.

Facebook has shown a good way forward as far as getting inventory prices up. They recently opened up their native ad units to outside ad companies (like mine) that have relationships with advertisers to drive demand.

Tumblr, Twitter, Foursquare, they are building in-house sales teams but will eventually follow Facebook's lead and open up some piece of their inventory to outside demand. That's how they get the price of that inventory up.

Native ad units (retargeted ad bar) =/= atomic ad unit (promoted in-feed posts).

Maybe sponsored stories could work like spot ec2 instances. Ask what the most is you will pay for story impressions and then balance that against the volume of sponsored stories people are seeing in their feeds.

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