Monday, April 23, 2012

CTR Half-Lives: NASDAQ's Biggest Unasked Question

With their IPO getting closer and closer, the massive variance in opinions as to Facebook's enterprise value can be seen from Wall Street to Main St. On the buy side, you have grandmothers calling their Silicon Valley grandkids to say they plan to buy shares at the IPO, and sell-side analysts baking four as-of-yet non-existent lines of business into Facebook's current enterprise value.

On the sell side, most discussion forum trolls, direct response advertising guru's and employees at Google, Amazon, eBay, Yahoo and Apple are equally confident Facebook's IPO will crash and burn, relative at least to the presumed $50-100Billion valuation.

Me? I know better than to make a call here, but I will say this: whether or not Facebook lives up to the valuation hype will depend more than anything on their ability to deal with the fact that their standard ads have a click-thru-rate (CTR) half-life of approximately two days. As the below chart from WebTrends shows, Facebook ads' CTR typically halves within 48 hours, due to the simple fact that their targeting system results in largely the same people seeing the same ads.

If Facebook solves the half-life problem, then their massive user base and engagement levels allow for a sustained $50-100B valuation. If not, Facebook's revenue growth will quickly fall to zero and it'll become a mid-tier cash cow.

Solutions to this problem exist...

Saturday, April 07, 2012

Decision 2012: An Online Marketing Scorecard

In a scene from 'O Brother, Where Art Thou?', corrupt Southern politician Pappy O'Daniel shows he understands the power of New Media in electoral campaigns:

In 2012, both Barack Obama and Mitt Romney 'get' online marketing, but a deeper look at the candidates' websites and marketing efforts shows Obama is clearly the better tactician. What follows is a comparison of the campaigns' website and online marketing technology usage, and my own verdict on who wins in each category:

SEM. Paid keywords: 1535 (Obama) vs 208 (Romney) [Per SpyFu] --> Obama wins

SEO. Organic ranking keywords: 1587 (Obama) vs 475 (Romney) [SpyFu] --> Obama wins

Display ads: 83 vs ZERO [MOAT]. It may just be that MOAT's not tracking Romney's ads, but I can't recall seeing any. According to this article, both candidates are making use of retargeting, but Obama destroys Romney based on the MOAT data.

Social. Both use FB Like & Twitter Follow buttons, but only Obama has a Twitter Tweet button, making it more likely he'll get key viral effect from social. --> Obama wins

Tracking. Obama using Chicago-grown tag management solution BrightTag, making his campaign more flexible and better able to understand & optimize against cross-channel attribution. --> Obama wins

Conversion Optimization. Romney appears to be the only one using any sort of A/B or MVT testing solution (Optimizely in Mitt's case, data from BuiltWith). --> Romney wins

Obama uses HTML5; Romney uses Flash. --> Obama wins on mobile.

OVERALL SCORECARD: Obama wins 6, Romney 1

If might equals right, Obama's cleaning Mitt's clock and setting the stage for another four years in the White House.

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