no_free_lunch Posted April 20, 2017 Share Posted April 20, 2017 Gloorysk I don't own FB and won't touch it at these prices. However, the one thing your methodology might be lacking is that FB can probably change the amount of advertising that is done due to the targeted nature of their advertising platform. I think that there are many small vendors who would advertise on FB and simply wouldn't advertise via more traditional avenues. Now some of these would have already converted into the advertising pool via google search ads or some other tech but I don't think iti s done. Facebook's ability to target specific users based on geography or demographics should continue to grow the net advertising base. All that being said I will wait for a substantial pullback as I already have enough blue sky thinking going on with my TSLA investment. Link to comment Share on other sites More sharing options...
glorysk87 Posted April 20, 2017 Share Posted April 20, 2017 Gloorysk I don't own FB and won't touch it at these prices. However, the one thing your methodology might be lacking is that FB can probably change the amount of advertising that is done due to the targeted nature of their advertising platform. I think that there are many small vendors who would advertise on FB and simply wouldn't advertise via more traditional avenues. Now some of these would have already converted into the advertising pool via google search ads or some other tech but I don't think iti s done. Facebook's ability to target specific users based on geography or demographics should continue to grow the net advertising base. All that being said I will wait for a substantial pullback as I already have enough blue sky thinking going on with my TSLA investment. Yea agree with you - the point I think you're missing is that FB is no where close to being 10% of the total ad market. So my valuation at $140 leaves plenty of room for them to capture additional customers (like the small vendors you list). So yes, I agree they should continue to grow their advertising base. But I'm being very generous in how much I think that will be able to grow. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted April 20, 2017 Share Posted April 20, 2017 Hey all: I am not active on the Facebook. I found that a lot of people that I had lost contact with (high school friends) simply had no interest in maintaining contact beyond looking that first time at your Facebook page. One & done. I also found a small percentage of contacts were blasting out dozens of "shares' per day over nothing. This started to flood my inbox. The above two are annoying...but the thing that did me in was the HOT women wanting to be friends! I fell for it the first time...but what is some hottie in Washington state that I've never heard of and have no connection to wanting to be friends on Facebook? To harvest my personal data of course! Then there are the scammers....and on & on. It got to the point where I would guess more than 1/2 of friend requests were harvesters & scammers. No thanks. I still have a linked in profile...and now I am getting friend requests from people that I have absolutely no idea who they are, and can not figure out any link to them. Of course, this happens form time to time...but now it is starting to really crank up. Call me old fashioned, but I really do not like Facebook, Linkedin & other networks. In my experience they are overwhelmed with fake accounts, scammers, harvesters & weirdos. No thanks... Link to comment Share on other sites More sharing options...
giofranchi Posted April 20, 2017 Share Posted April 20, 2017 This is my experience: the business I own and manage has always been a local business, but I have often thought that its services could be of great interest for architects and engineers working in other nations as well. To advertise them in those nations though would have been an effort both incredibly costly and time consuming. Therefore, I have never tried to expand my business outside Italy. Now thanks to FB that’s exactly what I am trying to do, and already with some tangible results. Obviously the jury is still out: this experiment could still fail in a miserable way… Anyway, just think about the possibilities that FB has opened up for me, and probably for many other small business owners around the world! I am willing to spend much more than I have ever spent in marketing to test those possibilities. Cheers, Gio Link to comment Share on other sites More sharing options...
John Hjorth Posted April 20, 2017 Share Posted April 20, 2017 This is my experience: the business I own and manage has always been a local business, but I have often thought that its services could be of great interest for architects and engineers working in other nations as well. To advertise them in those nations though would have been an effort both incredibly costly and time consuming. Therefore, I have never tried to expand my business outside Italy. Now thanks to FB that’s exactly what I am trying to do, and already with some tangible results. Obviously the jury is still out: this experiment could still fail in a miserable way… Anyway, just think about the possibilities that FB has opened up for me, and probably for many other small business owners around the world! I am willing to spend much more than I have ever spent in marketing to test those possibilities. Cheers, Gio Very interesting endeavour, Gio. I really hope you will keep us all updated on your experience of professional use of FB this way going forward. Link to comment Share on other sites More sharing options...
no_free_lunch Posted April 20, 2017 Share Posted April 20, 2017 Gloorysk I don't own FB and won't touch it at these prices. However, the one thing your methodology might be lacking is that FB can probably change the amount of advertising that is done due to the targeted nature of their advertising platform. I think that there are many small vendors who would advertise on FB and simply wouldn't advertise via more traditional avenues. Now some of these would have already converted into the advertising pool via google search ads or some other tech but I don't think iti s done. Facebook's ability to target specific users based on geography or demographics should continue to grow the net advertising base. All that being said I will wait for a substantial pullback as I already have enough blue sky thinking going on with my TSLA investment. Yea agree with you - the point I think you're missing is that FB is no where close to being 10% of the total ad market. So my valuation at $140 leaves plenty of room for them to capture additional customers (like the small vendors you list). So yes, I agree they should continue to grow their advertising base. But I'm being very generous in how much I think that will be able to grow. I don't think I am missing that. The reason why I am not invested is they still need to do quite some growing to justify their share price. All I am saying is that if we use some measure of the current global ad spend as their limit to growth I think it will understate that limit. Link to comment Share on other sites More sharing options...
Spekulatius Posted April 20, 2017 Share Posted April 20, 2017 Biggest risk is that someone develops a better mousetrap out of nowhere. Since such a business is asset light and mostly supported by network effects, it's hard to do, but once a competing business gains traction, it could grow very quickly, since you can rent out the server capacity as needed. Network effect are hard to overcome, but again, if the user would allow an alternative software to tap into their FB user contacts, a user could reestablish his own network very quickly. I think the question with FB is not how long it is going to grow, but about the longevity of it's dominance. In the past, large business, once they gained scale where dominating based on a mix of physical presence, brand, technology, scale, distribution etc. Now, a lot of these factors above are not issues any more in this asset light world. Just as FB grew quickly, a competitor can potentially grow just as quickly and dislodge them. I guess the same could be said for AMZN and GOOG. And that’s why I keep each of them a small position (3.5% AMZN, 3.5% FB, and 5.5% GOOG). Taken as a whole they are a meaningful part of my portfolio, but I guess the risk all three will be dislodged by new competitors is small (at least for the foreseeable future). Cheers, Gio AMZN would be hard to dislodge, imo. First, this is not a virtual company, since they run a substantial distribution infrastructure. Then they are willing to forgo profits seemingly indefinitely? Who would, much less could dislodge them ? There is only Walmart who can match the infrastructure and maybe beat them on price, said if they get sloppy. Link to comment Share on other sites More sharing options...
awindenberger Posted April 21, 2017 Share Posted April 21, 2017 This is my experience: the business I own and manage has always been a local business, but I have often thought that its services could be of great interest for architects and engineers working in other nations as well. To advertise them in those nations though would have been an effort both incredibly costly and time consuming. Therefore, I have never tried to expand my business outside Italy. Now thanks to FB that’s exactly what I am trying to do, and already with some tangible results. Obviously the jury is still out: this experiment could still fail in a miserable way… Anyway, just think about the possibilities that FB has opened up for me, and probably for many other small business owners around the world! I am willing to spend much more than I have ever spent in marketing to test those possibilities. Cheers, Gio Given my day job as an online marketer, I completely agree with Gio, there is no better way to target the people that will be most likely to be interested in your product than Facebook. They still seem priced for perfection right now though. Very interesting endavour, Gio. I really hope you will keep us all updated on your experience of professional use of FB this way going forward. Link to comment Share on other sites More sharing options...
giofranchi Posted April 21, 2017 Share Posted April 21, 2017 Very interesting endavour, Gio. I really hope you will keep us all updated on your experience of professional use of FB this way going forward. Thank you, John! The following quote from Larry Page summerizes quite well how I feel about this endeavour: And I will surely keep you updated on how it is going. Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted April 21, 2017 Share Posted April 21, 2017 AMZN would be hard to dislodge, imo. First, this is not a virtual company, since they run a substantial distribution infrastructure. Then they are willing to forgo profits seemingly indefinitely? Who would, much less could dislodge them ? There is only Walmart who can match the infrastructure and maybe beat them on price, said if they get sloppy. All very true. On the other hand AMZN already has a formidable competitor on a global scale: Alibaba of course. And I guess it could be said the same reasons that make AMZN difficult to dislodge in the west also make BABA difficult to dislodge in the east. Instead, at least for now, there is nothing that even gets close to FB's 1,892 million active users, which keep increasing at the pace of 10 per second! Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted April 21, 2017 Share Posted April 21, 2017 Given my day job as an online marketer, I completely agree with Gio, there is no better way to target the people that will be most likely to be interested in your product than Facebook. They still seem priced for perfection right now though. As I have said, it is extremely difficult imo to get right how fast and how long FB could keep growing. Who really knows? Maybe, also FB will develope other businesses besides its core advertising business, like GOOG and AMZN are doing... Who says FB will remain only an advertising company? It surely has the wherewithal to expand in other areas as well. If you cannot predict how fast and how long FB could keep growing, its FV must remain very uncertain. Maybe you are right, and the market is too optimistic right now... or maybe the market is ignoring future opportunities... given this uncertainty, FB remains a small position for me. Cheers, Gio Link to comment Share on other sites More sharing options...
ScottHall Posted April 21, 2017 Share Posted April 21, 2017 Welcome to the right side of history, Gio. Link to comment Share on other sites More sharing options...
giofranchi Posted April 21, 2017 Share Posted April 21, 2017 Welcome to the right side of history, Gio. As you have told me: "Good if I am right, and I can afford it if I am wrong". Cheers, Gio Link to comment Share on other sites More sharing options...
Liberty Posted April 21, 2017 Share Posted April 21, 2017 Ajc, you're still acting petulant because I disagreed with you the other day? Grow up. You must be quite a miserable person to be driven to flailing anger by mild push-back online. I'm sure it's by having no judgement, no independent thinking, and no balls that I retired at 34 starting from zero while never having what most here would consider a high-paying job... Anyway, I hope things turn around for you and you can someday let go of all this pointless anger. It's not good for you and those around you. Cheers! Link to comment Share on other sites More sharing options...
Liberty Posted April 21, 2017 Share Posted April 21, 2017 Further discussion of Facebook on the latest episode of Exponent: http://exponent.fm/episode-111-lamentation-not-condemnation/ Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted April 21, 2017 Share Posted April 21, 2017 I ran a $20 ad on FB for my Wife's "small business" and the result quite frankly doesn't make sense to express in percentage terms. From then on they increased the cost of engagements but it is still far and away the best bang for buck. A $200 campaign brings in $2-3K "reoccurring" monthly revenue -for some reason if I spend more than that per month the marginal return becomes bad quickly. But up to $200 per month and I get a fairly sticky $2-3K increase in top line month over month. We pretty much eat the share of everyone who isn't advertising on FB (a lot of niches, and or older mom and pop businesses don't run ads at all on Facebook and just maintain a default page out of obligation). Link to comment Share on other sites More sharing options...
giofranchi Posted April 21, 2017 Share Posted April 21, 2017 We pretty much eat the share of everyone who isn't advertising on FB (a lot of niches, and or older mom and pop businesses don't run ads at all on Facebook and just maintain a default page out of obligation). +1 Cheers, Gio Link to comment Share on other sites More sharing options...
Aurelius Posted May 4, 2017 Share Posted May 4, 2017 I never really considered Facebook as an investment. Neither have I looked at it or try to understand it. I’ve heard people say it’s expensive. On balance most people actually can’t live without being part of “the Facebook family” in one shape or another. We all know this. And the numbers reveal this truth*: 1,284 DAU 1,936 MAU *Whatsapp and Instagram are not included. Facebook is the third most visited site after Google and Youtube. In addition to Facebook there’s Instagram, Whatsapp and Messenger. All very popular services. It’s a monopoly and so far it keeps getting more relevant in our lives. A cursory view tells me it requires little capital to run. Has no debt. Plenty of excess cash. Earns high ROIC. Their management has a great reputation. Facebook just grew revenue 51%. EPS grew 73%. The Global advertising market is roughly 600-650B growing at 4.4% per year. Digital advertising naturally is growing a lot faster than that. Both TAM and FB numbers suggest that there’s room for further growth. After netting out cash, Facebook is selling for just under 21 times next year earnings. Value in plain sight? Link to comment Share on other sites More sharing options...
LongTermView Posted May 25, 2017 Share Posted May 25, 2017 I'm long FB and I'm thinking about going to the annual meeting a week from today. Is anyone going to be around? Does anyone have a question I should ask management? Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 5, 2017 Share Posted July 5, 2017 Did you get anything out of the annual meeting? Link to comment Share on other sites More sharing options...
LongTermView Posted July 5, 2017 Share Posted July 5, 2017 Did you get anything out of the annual meeting? Yes, it was nice seeing Mark think on his feet in person, I have a lot of confidence in him. Also, they partially answered my question about revenue per user by geography. Link to comment Share on other sites More sharing options...
DW Posted July 5, 2017 Share Posted July 5, 2017 I ran a $20 ad on FB for my Wife's "small business" and the result quite frankly doesn't make sense to express in percentage terms. From then on they increased the cost of engagements but it is still far and away the best bang for buck. A $200 campaign brings in $2-3K "reoccurring" monthly revenue -for some reason if I spend more than that per month the marginal return becomes bad quickly. But up to $200 per month and I get a fairly sticky $2-3K increase in top line month over month. We pretty much eat the share of everyone who isn't advertising on FB (a lot of niches, and or older mom and pop businesses don't run ads at all on Facebook and just maintain a default page out of obligation). Wow! Spending $200 on advertising to bring in $2-3K of recurring revenue. That's awesome. Congrats! I have had mixed results running FB ads, but I'm not selling a product, my wife and I have a recipe/"food porn" website. We have used FB to drive traffic to the site with mixed results. Link to comment Share on other sites More sharing options...
Guest roark33 Posted July 5, 2017 Share Posted July 5, 2017 I ran a $20 ad on FB for my Wife's "small business" and the result quite frankly doesn't make sense to express in percentage terms. From then on they increased the cost of engagements but it is still far and away the best bang for buck. A $200 campaign brings in $2-3K "reoccurring" monthly revenue -for some reason if I spend more than that per month the marginal return becomes bad quickly. But up to $200 per month and I get a fairly sticky $2-3K increase in top line month over month. We pretty much eat the share of everyone who isn't advertising on FB (a lot of niches, and or older mom and pop businesses don't run ads at all on Facebook and just maintain a default page out of obligation). What does her small business do/sell? Thanks. Link to comment Share on other sites More sharing options...
Liberty Posted July 18, 2017 Share Posted July 18, 2017 China seems to have disabled Whatsapp, the last major FB property that was active there: https://www.nytimes.com/2017/07/18/technology/whatsapp-facebook-china-internet.html Link to comment Share on other sites More sharing options...
vegaseller Posted August 1, 2017 Share Posted August 1, 2017 http://www.barrons.com/articles/facebook-slips-pivotal-says-sell-p-g-ad-spend-cuts-worrisome-says-pivotal-1501506978 Anyone worried we are seeing a near term top here on CPG spend on digital ads? Link to comment Share on other sites More sharing options...
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