<story><title>Twitter Files For IPO</title><url>http://allthingsd.com/20130912/twitter-files-for-ipo/?mod=atdtweet</url></story><parent_chain><item><author>sheri</author><text>Advertising.&lt;p&gt;Three of the largest, most influential and defining technology companies of our lifetime (Google, Facebook, Twitter) make money pretty much solely through advertising. Is there no other way companies can use this data to generate revenue other than to sell ads?
I don&amp;#x27;t have anything against ads, but I&amp;#x27;m just trying to understand how (if at all) this could change in the near future. What is the future of advertising? Will it continue to remain relevant 10 or 20 years down the line in its current form, allowing so many massive companies to be built on its back?</text></item></parent_chain><comment><author>zanny</author><text>My personal impression is that the rise of advertising has emerged from the collapse of disposable income. In a world where everyone has wealth to spend, it is better to just make more goods people want to buy as efficiently as possible. In a world where everyone is poor, and losing money to capital siphoning through the rich (who do not evenly reinvest this capital into the economy, and expect reliable returns meaning more long term concentration of money), advertising becomes more relevant because you compete over scarce dollars and more so need to motivate purchases through psychological breaking down of a targets resistance to splurge buy something of yours.&lt;p&gt;When actually making more goods doesn&amp;#x27;t make you more money (at least commodity goods, there is a growing market for the absurd luxury goods targeting those that own dividend stocks and have multiple houses and personal chefs) your alternative is to use psychological manipulation to drive the limited dollars towards your goods, even if it means the per-unit cost is higher. You make the gambit - persuade someone to buy, or don&amp;#x27;t sell at all because your product isn&amp;#x27;t really that competitve anymore when you are spending upwards of 30% of your budget on ads.&lt;p&gt;Look no further than the evolution of the video game industry - since it is so new, it also shows this effect strongly, where the biggest titles like the CoD games can see 80% of their budget spent on advertising (cursory google search to get these numbers on the latest title, Black Ops 2, turned up nothing citeable). If you spend $28 million making a game, and $120 - 200 million on ads, your economic model must be fucked.&lt;p&gt;So because you compete for scarce dollars, customers aren&amp;#x27;t coming to you, you need to manipulate customers into spending money they don&amp;#x27;t have. Hence why advertising is so huge, even with 1% click-through rates. All that concentrated wealth getting reinvested has limited alternative options of where to go, so you just try to pry more money out of people through bombardment.</text></comment>
<story><title>Twitter Files For IPO</title><url>http://allthingsd.com/20130912/twitter-files-for-ipo/?mod=atdtweet</url></story><parent_chain><item><author>sheri</author><text>Advertising.&lt;p&gt;Three of the largest, most influential and defining technology companies of our lifetime (Google, Facebook, Twitter) make money pretty much solely through advertising. Is there no other way companies can use this data to generate revenue other than to sell ads?
I don&amp;#x27;t have anything against ads, but I&amp;#x27;m just trying to understand how (if at all) this could change in the near future. What is the future of advertising? Will it continue to remain relevant 10 or 20 years down the line in its current form, allowing so many massive companies to be built on its back?</text></item></parent_chain><comment><author>nashequilibrium</author><text>&amp;quot;Three of the largest, most influential and defining technology companies of our lifetime (Google, Facebook, Twitter) make money pretty much solely through advertising.&amp;quot;&lt;p&gt;lol, a couple weeks ago i got into real deep thought about this and realized the same thing. The question i asked was what spurred this, companies relevant from the eighties and nineties like apple, amazon, microsoft all sell something. Then i realized that it may have been the huge success of google and adwords that spurred this. Since every entrepreneur would use this excuse about how google just focused on product and thought about revenue later, yet implicitly these entrepreneurs already know that they will focus on ad revenue. All the companies making headlines today are or will be ad focused, snapchat, tumblr, vine, frontback, instagram etc.&lt;p&gt;This has also created a situation where users expect a product for free and if you charge someone will make a clone with a slight twist and offer it for free, so developers rather offer it for free and not attempt charging. I find this phenomena mainly with social products but this is what VC&amp;#x27;s and guys like Mike Arrington find exciting. They find enterprise boring because you have to be methodical, know the business and sell! The one thing modern tech can take from wall street is the excitement in sales. I believe snapchat is worth around 800mill if this is the case then we should take TV series model for creating companies because we are in the business of making entertainment shows to last a few seasons.&lt;p&gt;I am very excited when i hear about companies like nest, jawbone, pebble, nike fit, etc!</text></comment>