Yahoo CEO Asks, “Facebook, what’s their revenue?”–Er, About $1 Billion Carol
Yahoo celebrated its 15 year anniversary yesterday and Yahoo CEO Carol Bartz decided that it would be the perfect time to take a swipe Facebook.
When asked why Yahoo wasn’t as hot as Facebook, she replied: "Facebook? What’s their revenue?"
Oh no she didn’t!
Well, as if on cue, Inside Facebook comes up with some compelling calculations that suggest Facebook will hit $1.1 billion 2010.
First, their calculations for 2009–keep in mind these are simply guestimates.
Then, estimating revenues for ads, partnerships, virtual goods, and such, they come up with their 2010 prediction:
A wide variety of sources we spoke to expect Facebook to pass $1 billion in revenue this year, possibly reaching $1.1 billion. This is significant growth, but likely still the start of the hockey stick.
And boy, it is some hockey stick!
The company will, in our view, gradually chip away at brand advertising spending on other big web sites, including Yahoo and MySpace. The optimistic case for Facebook, in terms of its brand advertising revenue, is that will get most of this advertising and bring in up to $20 billion per year, eventually.
$20 billion a year in revenue? That’s a big number, maybe one that will even get Bartz’s attention. 
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IAC Q4 Earnings: Search Growth 3% But Takes $1 Billion Loss On Ask.com
IAC, the parent company of Ask.com, reported their fourth quarter earnings today and overall, it was a good quarter of revenue for IAC, being up 5% year-over-year in revenue. On the income side of the balance sheet, IAC was up 47% from Q4 of 2008 to Q4 2009. Search, which includes Ask.com, was [...]
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Google Display Ad Business Poised for $1 B in 2010
Well, since Google’s Super Bowl ad has signaled that it is in trouble by sending some kind of message that there is fear in the air (c’mon people relax it’s not the big deal you may think it is), what does a company that is obviously reeling on its heels look to do? Find other ways to make money of course.
Now I do not believe that Google is reeling at all. I don’t think that their Super Bowl ad is evidence of anything other than the fact that they could use an already created and packaged message to reach a large audience when their competition wasn’t. Nothing more and nothing less. Do you really think that the cost of that ad is of any consequence to Google’s bottom line? I suspect they figured they could smoke the crappy ads for chips and beer with a simple message and create buzz worth more than $ 3 mil. Mission accomplished.
Google does, however, need to figure out other ways to generate cash and display seems to be the next big thing. Business Week reports
Google CEO Eric Schmidt hinted in July that display advertising would probably be the next of his company’s businesses to generate $1 billion in sales. Analysts say 2010 is the year he’ll deliver on that prediction.
Display ads are likely to contribute a little more than $1 billion, or about 4% of Google’s (GOOG) total sales this year—an increase of as much 40% over last year—say analysts, including Doug Anmuth at Barclays Capital. That marks an important threshold for Mountain View (Calif.)-based Google, which makes most of its sales from ads placed alongside search results and which has been criticized for not getting more revenue from other businesses. Demand for display ads, which include marketing messages in videos and banner ads adorning Web pages, may rise faster this year than for search-related ads, according to eMarketer.
About $700 million of that number should come from YouTube while the remaining will come out of the DoubleClick operations that are gaining momentum. There seems to be a new surge in display ad money that is coming over to the web from TV advertisers. I guess they hadn’t heard about the effectiveness concerns regarding the ads but hey if you have blown a lot on TV ads already it shows you don’t pay real close attention to things 
. Google has rolled out its Google Insight offering, though, to help understand everything
Google is trying to help advertisers better measure the effectiveness of display ads. “One of the challenges we put to ourselves was: ‘What are the ways a brand advertiser would look to measure [ad impact]?’,” Neal Mohan, the executive in charge of Google’s display business says. The result: Campaign Insights, a tool developed over a year by dozens of Google engineering teams around the world before it was released in December.
Hair-care company Regis was one of the first to test Campaign Insights. It ran banner ads for Hair Club For Men across hundreds of Google’s partner sites while Campaign Insights tracked the number of people who had seen the ads and then performed related Web searches. “Display [advertising] drives searches and Web site visits,” says Luke Hubbard, vice-president of Beverly Hills (Calif.)-based Integrated Media Solutions, the ad agency that coordinated the campaign for Regis. “We knew that effect was there before, but now we are able to quantify it.” Impressed by the results, Regis increased spending on display ads for the brand in 2010, and Integrated Media Solutions has signed up seven other clients eager to tap the analytics.
Ahh, analytics. You mean the ability to actually track whether what you are doing is truly working or not? Those crazy kids over in Mountain View think they should provide something that measures the effectiveness of display ads and now they are going to try to sell more because of their innovation. Wow.
Is Google serious about this? Apparently serious enough to actually have real Google employees venture out and talk to live human beings. In other words they are recognizing that this type of sale requires service and not automation. I had to chuckle a little at this last quote regarding the idea of Google employees venturing out and soiling their good name with the general population.
To succeed in display, Google has also had to hone its ability to market products through a people-friendly sales force. In search, Google has tended to rely more on the technical effectiveness of its products, analysts say. “Advertising is a lot of hand-holding and schmoozing,” says analyst Greg Sterling. “Historically, Google has not been good on managing the people side.”
That’s changing, says Amy Curtis-McIntyre, senior vice-president of brand communications for hotel chain Hyatt. She says Google has begun regularly sending sales reps to her Chicago offices. “When they develop new search tools or new advertising tools, they bring them to us and present them in a usable way,” says Curtis-McIntyre.
Now, when Google understands that people also like to be visited when there isn’t something to sell then we can say that they get it. You know…..the R word. No, not Revenue! They get that one real good! It’s the other R word……Relationship. When they understand relationships then they will have something.
Enterprise SEM: Q&A With Zappos’ Darrin Shamo
Zappos.com, the online retailer with legendary customer service, has been on a meteoric rise during the last few years. After achieving revenues of over $1 billion in 2008, Zappos was acquired by one of the biggest players on the web in late 2009: Amazon.com. Behind Zappos’s amazing customer service and great brand, lies a sophisticated [...]
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Tiger Woods Crashing a $1 Billion Reputation With His Silence?
In the absence of an official statement, your stakeholders will fill the void with rumor and speculation.
I’ve preached that enough times, you’d think that even Tiger Woods would have heard about it.
Apparently not:
Which is leading to this:
With rumors like that, you’d think that Woods would be grabbing the nearest TV camera and setting the record straight. Now, you might argue that Woods deserves his privacy–just like any other individual. The problem is, Tiger Woods is not just a person, he’s a $1 billion brand.
Yes, a brand.
Look, I’m not denying his right to privacy, but if he wants to continue being the face of Nike, Buick, Accenture, and such, he needs to come forward pretty soon and put the gossipers in their place.
Assuming that he can.
Who knows why Woods is keeping quiet. He does naturally appear to be less extravagant than most sports stars–more reserved–but he still needs to explain how he managed to drive into tree without any apparent mitigating circumstances. He owes his fans, the media, and his sponsors an explanation.
Yes, he does!
They invested their time, their money, their emotional commitment to Woods. He sold them a brand and now he’s not living up to it. Just like any other “product” its customers deserve to know why it’s not “working” the way it has for the past decade or more.
Cold? Sure! And Woods can continue to hold onto his privacy if he so chooses–as Bobby Brown would say, that’s his “perogative!” But, at some point he needs to decide what’s more important, Tiger Woods the person, or Tiger Woods the brand.
Because Tiger Woods the brand is in a lot of trouble at this point.
YouTube Now Serving 1 Billion Spam Videos Per Day!
Congratulations YouTube!
The video site is celebrating over 1 billion views per day and the 3 year anniversary of being acquired by Google with…some nasty spam videos.
No, this just in. YouTube is celebrating with a new logo. The spam is something it doesn’t actually have any control over–and that’s going to be a big problem.
RWW is reporting an uptick in spammy videos posted to YouTube:
Researchers at Kaspersky Lab have recorded a mass mailing of spam emails containing a link to a video advertisement on YouTube. Although in the past, spammers have have attempted to lure people into clicking links by claiming the link would display a YouTube video, this is the first case in which the link actually did. In this particular incident, the video in question is a Russian ad promoting industrial real estate.
As Sarah Perez points out, will YouTube take any action to remove these videos. After all, the "spam" is the mass emails being sent out, while the videos themselves seem to not violate any YouTube policies. Hmm, where have we seen this before? Oh yeah, Blogspot hosted blogs.
Whether Google decides to take any action to prevent YouTube being a pawn in the game of email spam, is yet to be seen. Whether it can actually prevent it anyway, is another question. In the meantime, YouTube will happily accept the poor schmucks that were fooled into watching a spammy YouTube video–after all, that all contributes to the 1 billion views, baby! 
Google Paid $1 Billion Too Much for YouTube? What Will It Pay for Twitter?
The big news this morning is a CNET report quoting Google CEO Eric Schmidt’s admission that he paid around $1 billion too much for YouTube.
Here’s an extract from Schmidt’s deposition in the ongoing Viacom suit:
Schmidt: I believe YouTube was worth somewhere around $600 million to $700 million.
(Viacom Attorney) Baskin: And you communicated that to the board?
Schmidt: I did.
Baskin: What methodology did you use to come up with that number?
Schmidt: My judgment.
Baskin: Was it based on cash flow analysis? Comparable companies? What were you using as the basis for your judgment?
Schmidt: It’s just my judgment. I’ve been doing this a long time.
Baskin: So you orally communicated to your board during the course of the board meeting that you thought a more correct valuation for YouTube was $600 million to $700 million; is that what you said, sir?
Schmidt: Again, to help you along, I believe that they were worth $600 million to $700 million.
Baskin: And am I correct that you were asking your board to approve an acquisition price of $1.65 billion; correct?
Schmidt: I did.
Baskin: I’m not very good at math, but I think that would be $1 billion or so more than you thought the company was, in fact, worth.
Schmidt: That is correct.
Is anyone really shocked by this? Did the jaw of any Pilgrim not drop when the purchase price was originally revealed? I mean, Google paid $1.65 billion for a company that had no discernable revenue. It paid that price based Schmidt’s "judgment."
It paid based on hype.
Which leads us to Twitter. And you thought you’d get to read at least one post without mention of Twitter. 
You see, Twitter is the modern-day YouTube. It has all the hype and none of the revenues. If you removed hype from the math, Twitter is worth a couple hundred million. Throw hype and momentum back into the mix and Twitter is easily worth more than what Google paid for YouTube.
All Twitter needs to do is create a rumor that one of the big tech companies–Microsoft for example–is sniffing around. That’s what caused Schmidt to abandon logic:
And they had indicated to us that they would be sold, and we believed that there would be a competing offer–because of who Google was–paying much more than they were worth.
Sometimes you buy a company based on what it would be worth if your biggest rival got its hands on it. To Google, that was worth the extra $1 billion. Now we just need to see how badly someone wants to get their hands on Twitter!
How Many Ads Make $1 Billion?
Now that Twitter has been able to convince some pretty wealthy folks that their little ol’ 140 character deal is worth in the range of $1 billion it’s time to get down to brass tacks. What does that mean? Since people now have this huge number in their head there will be continued and likely more vocal calls for Twitter to at least reveal some plan to generate revenue worthy of that valuation number. Hey, it’s the Internet though so maybe not!
AdAge is pretty convinced that this is something that needs to be addressed sooner than later.
With the funding, Silicon Valley and the venture community are once again setting their sites on the marketing budgets of American business to support another free “cloud” web service, in this case 140-word bursts of text. Indeed, they’re counting on the exponential growth of advertising revenue in a flat market for a company that — while certainly useful to marketers — has yet to earn its first dollar.
“I think they can build some kind of ad business, but the more relevant question is can they build an ad business worth a billion plus dollars,” said Warren Lee, VC at Canaan Partners. “That would require tremendous volumes of impressions and reasonable conversions. Lots of execution will be needed. Not impossible but unlikely.”
So we have a detractor here. Well, not completely but certainly not thinking that advertising alone will get Twitter from Point A to $1 billion. The trouble is tow fold. First, Biz and the boys have no plans to make any advertising model moves in 2009. As a result there will be more and more time for people to figure out how to use the service for free and then there could be some resistance to having to pay for anything related to Twitter. Twitter is establishing a bit of a mindset that may be harder to break than people think. (Check out Andy Beal’s thoughts on this via BlogTalkRadio).
So what’s next? AdAge’s take is
Mr. Stone said that ads won’t come before 2010 and Twitter’s early-stage venture backers have told Ad Age the ad business, narrowly defined, isn’t that interesting to them. On its site, Twitter touts marketing success stories from Pepsi, Jetblue and Dell, which consist of the brands using the service to connect with fans.
The cash could allow Twitter to make some acquisitions; perhaps one of the URL shorteners like Bit.ly, one or more of the Twitter applications, or one of the many, many firms now making dashboards to manage Twitter for corporate clients.
With a valuation of $1 billion, Twitter’s investors believe one or more of the following outcomes are likely: an IPO or an acquisition at a healthy price.
So can they do it, Pilgrims? If they can do it how will they do it? Put on your Twitter business model cap yet again and tell the world exactly what these folks have hit or miss regarding the future of the world in 140 character chunks.
A Mega Acquisition & a Paid Subscription Model Coming from Google?
Whenever you listen to Google CEO Eric Schmidt, you have to either;
a) pay attention to what he doesn’t say, or
b) read between the lines of what he does say
Let’s break down a couple of interesting statements the search chief told Reuters.
First up, what are Google’s plans for future acquisitions?
“My estimate would be one-a-month acquisitions and these are largely in lieu of hiring,” he said. “There may be larger acquisitions, but they really are unpredictable.”
Translation?
You can bet we’ll hear about an acquisition in the $100 million range–similar to this one–very soon. In addition, you can bank on Google being in talks to buy a company with a price tag in excess of $1 billion. When he says there “may” be larger acquisitions, but they are “unpredictable” it basically means that Google is in advanced talks and just needs to agree on terms. He can’t just come out and say, “yeah we’re in the process of doing a huge deal,” because if it failed to materialize, Wall Street would start panicking that the company had lost its mojo.
OK, let’s turn to another interesting statement from Schmidt. This time regarding paid subscriptions for publishers:
“We are clearly going to see paid content models emerge, perhaps Google will be one of the companies that offers subscription services, we have thought about it some,” Schmidt said.
Translation?
Guaranteed! In fact, I wouldn’t be at all surprised if Google is already testing a model that allows publishers to charge access for their content, with Google handling the entire process. Heck, many publishers are already content to hand over the keys to Google, so they’d be delighted if it can figure out how to get readers to pay a subscription.
So, to recap. Expect the announcement of a major acquisition by the end of the year and a new subscription revenue model by the end of next year.
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A Billion Reasons for Twitter to be Happy
So it looks like Twitter has entered some rarefied air for sure. According to ReadWriteWeb and TechCrunch the micro-blogging juggernaut is moving into an exclusive club by securing a new round of funding ($50 million) based on a valuation of $1 billion (yup, it’s a b). No doubt, this will begin to stir the supporters and detractors alike. Unless we have ridiculously short memories or just think that this time will be different one has to wonder how a company that no one can figure out revenue wise can be valued at that much.
While I am not an analyst I did think about staying at a Holiday Inn Express over the past year so I qualify for jumping into the fray, right? Let’s hear what the RWW folks had to say first though.
While it’s unlikely that Twitter CEO Evan Williams was wearing a Dr. Evil costume when he delivered the news, he had the pleasure of announcing his company’s $1 billion dollar valuation today at an all hands meeting. According to TechCrunch, the company has raised a $50 million dollar funding round and the money will be in the bank shortly. Given the fact that Twitter turned down an offer to be purchased by Facebook earlier in the year, it appears the two are about to tango.
So of course, this conversation wouldn’t be nearly as much fun without bringing Facebook into the mix. Facebook is starting to look almost like IBM compared to Twitter. What with actual revenue generation plans and actually having the audacity to be cash flow positive one begins to wonder if Facebook is going to actually merit its own valuation. As we mentioned yesterday, Master of the Universe, Mark Zuckerberg, has something to say in the Facebook blog.
We’re also succeeding at building Facebook in a sustainable way. Earlier this year, we said we expected to be cash flow positive sometime in 2010, and I’m pleased to share that we achieved this milestone last quarter. This is important to us because it sets Facebook up to be a strong independent service for the long term.
So is Twitter in for the long term? They certainly still have the buzz going and now there appears to be a a real Facebook faceoff looming for the foreseeable future.
In the past, ReadWriteWeb has looked at Twitter’s platform potential. The service has already been used to create meme trackers, emergency alert services, news feeds and brand monitoring tools. As the infrastructure and search have improved, Twitter has become the go-to site for real time media. But can the company make a Facebook-like leap?
Facebook has added Twitter like features so why not? So what’s your take? I bet there at least a billion opinions on this one.
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