The Impending Ad War

A few weeks ago I attended Github’s CodeConf in San Francisco.  While there, I got to meet quite a few really accomplished technologists (hackers) and discuss a variety of projects, processes, programming methods and more.  One of the most interesting moments for me came over lunch while talking to the CTO of a very well known blog which clocks in over 5 million unique visitors a month.  Like most sites of its type, it receives almost 100% of its revenue from ads.  According to him, one of the largest (new) challenges they were facing was that advertisers are beginning to buy ads targeting the blog’s fans from Facebook, not the blog itself.  In other words, to get at the blog’s users, advertisers were paying Facebook less money to directly market to the blog’s fans on Facebook.The more I think about it, the more I think this is a major problem for almost every ad supported site out there, and it could be the pitch that Facebook is using to bolster its insane valuations.  Right now, there are probably no less than a dozen Googlers being kept up at night worrying over this very problem, not to mention the admen at hundreds of highly trafficked blogs and other internet properties.  After all, if I can immediately pitch my competing product to your customers without paying you a dime, I’ve got a huge advantage, you’ve got a huge problem, and Facebook has an unbelievably great strategic position.Maybe you’re reading this and thinking “yeah that’s old news” and it probably is to many, but having never worked at an ad supported organization, I’d certainly never thought about it before.  I’ve also never heard it articulated online, and I’m wondering how many organizations even realize this is happening.  Note there is a two-fold risk here: ad supported properties risk losing ad revenue to Facebook, and they risk exposing their customers to competition.  If you’re an advertiser, you’d much rather know that you’re reaching out to all 10,000 fans of Blog X with the stats to show you who clicked, etc., vs. an anonymous 100,000 impressions.  Note that even if a Blog chose not to have a Facebook page to attempt to combat this kind of thing, Facebook can still harvest those users who “like” the Blog in their profile.Before, I used to think that the benefits of a Facebook presence for an organization outweighed the downsides, but now I’m not so sure, particularly for ad-supported businesses.  It’ll be interesting to see how this plays out.

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