Why I bought stock in Facebook
Before we talk about Facebook, it is worth taking a brief moment to define an advertisement:
An advertisement is content related to a brand that helps pay for professionally created content delivered via various media.
The TV spot helps pay for 30 Rock. The full-page ad helps pay for the editorial content.
The ads help pay for the cost of creating the content. Terry O’Reilly calls is the contract with the consumer – you watch/read/listen to this, and we’ll continue to deliver professionally created content.
This deal breaks down with the internet. A website can be an ad, but it doesn’t underwrite anything. This is an ad, but it doesn’t underwrite the connection to the internet, or the delivery of content. The content on that page helps people – but in a different way.
Facebook doesn’t have any professionally created content
If the model is advertising interrupts and helps pay for professionally created content, Twitter, Facebook, YouTube and LinkedIn already are upsetting the apple cart because the content created on those platforms is done by the masses for the masses.
Consider that for a moment. The world of advertising was predicated on the notion that some people created content, and the masses consumed it. Create content the masses want to consume, and the masses will draw advertisers.
More advertising helped give content creators more money (think Seinfeld, Cheers and Friends – where some actors were paid a million dollars an episode).
But that’s all changed. Facebook doesn’t pay any of the 900 million content creators. So when you read stories about how the Facebook IPO is like the first internet bubble, those people are missing an important detail.
People are creating content. (People like to share).
On my employer’s network, in one week on our network, a terabyte of just Facebook text-based status updates and comments was created.
That is a lot of content. It is the reason why Facebook is so ‘sticky’ with eyeballs. It is the reason people scroll through their status updates in the morning.
This is different. And yes, while Facebook needs a business model, it doesn’t need one like the New York Times.
It is different. GM left the platform precisely because it doesn’t understand how to use a platform that is so different. As people figure it out, Facebook will evolve to let marketers take advantage of it. I’m not just saying that because I think it, I’m saying it because I’m using it.
- Wall Street got the Facebook IPO it deserved (gigaom.com)
- Facebook’s IPO: A View From The West (web2.sys-con.com)
- Beverly Macy: Facebook IPO: Sizzle vs. Fizzle (huffingtonpost.com)
- Facebook Bankers Secretly Cut Facebook’s Revenue Estimates In Middle Of IPO Roadshow (finance.yahoo.com)
- Marketers and media missing the point with facebook (IPO) (newmediaandmarketing.com)