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Posts Tagged ‘emarketer’

Article from SFGate.

“Many of today’s hot startups are banking on mobile ad dollars to make their business work, but it’s an incredibly small market that’s only likely to support a handful of breakaway winners.

The constraint was underscored late last week, when Pandora Media’s CEO told Bloomberg that the online radio service can’t find enough marketers to fill all the ad slots created by its many mobile users.

Pandora boasts around 35 million dedicated users, who do 60 percent of their listening over smart phones and tablets. The obvious question is: If the 11-year-old Oakland company can’t find enough marketers to make use of its ad inventory, who can?

Other popular companies like Foursquare, Instagram, Twitter and Flipboard are mostly or exclusively free mobile apps that will mostly or exclusively depend on advertising.

So just how much is there to go around?

Research firm eMarketer estimates that mobile advertising will reach only $1.1 billion this year. By way of comparison, Google reported $9 billion in revenue last quarter alone, almost entirely derived from the broader online advertising market.

Will more money move to mobile and will some of these companies emerge as big winners? Sure.

Shifting ad dollars

But new media don’t create new marketing dollars, they just draw them from somewhere else. Advertisers are famously reluctant to shift money from something that’s been proven to work, to an area that’s untested.

The truth is, it’s still unclear to many what ad types and formats will be most effective on small mobile devices – general brand builders, discounts as you walk by a restaurant, ads for other apps?

The one thing that does seem clear is that mobile users are incredibly touchy about ads, resenting anything that appropriates the limited real estate of their screen, arrives as a text that counts against their allotment or interrupts what they’re doing. So marketers are rightfully treading carefully.

Jack Gold, a technology analyst with J. Gold Associates, says mobile advertising is a promising sector that, for now, is just that: promising.

The other thing to keep in mind is that, whether it’s TV or tablets, the biggest outlets with the best return on ad dollars grab the lion’s share of marketing. Everyone else is left fighting for the scraps.

Gold said the phenomenon unfolding now is strikingly similar to the late 1990s, as hordes of companies marched onto the Internet, confident they could garner the traffic (back then they called it eyeballs) necessary to build businesses on ads alone. History demonstrated in brutal fashion that the vast majority could not.

“It’s almost certain that you’re going to see another shakeout,” Gold said. “That always happens. Always.”

Read more here.

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As Facebook secured some investments earlier this year, and invested it towards international growth, the latest news spark renewed IPO rumors.

Of course, no one knows, but the hiring of a CFO from a larger corporation is nothing you do unless you have greater plans. First and foremost, it costs you a bunch of money, secondly, the demands this person has on you by his experience will force the structure needed upon you.

The biggest challenge remains though – to create profitability.

Here is a quoted article from BusinessWeek.

“In April, when Facebook announced the departure of Chief Financial Officer Gideon Yu, the social network said it would look for a replacement “with public company experience.” Facebook found what it was seeking in David Ebersman, a 15-year veteran of biotech pioneer Genentech (DNA).

“David [Ebersman] worked at one of the most innovative and respected [companies] in the world, so he brings a lot to the table when it comes to our efforts to build a lasting, important company,” Facebook spokesman Larry Yu says of the appointment, announced on June 29.

Ebersman’s appointment keeps alive speculation over whether and how soon the world’s biggest social network is headed for an initial public share sale. “We have no plans to go public,” says spokesman Larry Yu. Facebook CEO Mark Zuckerberg was quoted in May saying an IPO remains “a few years out.”

Ebersman, 38, served as Genentech’s CFO for the four years leading up to its $46.8 billion sale to drug giant Roche Holding (ROG) in May. In Facebook’s press release, CEO Mark Zuckerberg noted that under Ebersman, Genentech’s revenue tripled. Zuckerberg envisions high growth for his company as well, saying sales will rise 70% this year. (eMarketer has projected that Facebook’s revenue will grow 20% this year, to $300 million.)”

Read the full article here.

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