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Don Marti uses the same set of Facebook earning numbers to demonstrate that print newspapers make roughly four times as much money in advertising as Facebook does in the United States.Print advertising generates these enviable, if shrinking, numbers despite capturing only about 14 minutes a day of Americans’ attention.Investor storytime is when someone pays you to tell them how rich they’ll get when you finally put ads on your site.
Web startups could contract their revenue growth to an ad network and focus on building an audience.
If revenues were insufficient to cover the costs of providing the content or service, it didn't matter—what mattered was audience growth, as a site with tens of millions of loyal users would surely find a way to generate revenue.
Last quarter, Facebook reported that it had 1.32 billion users, collected $2.91 billion in revenue and made a profit of $791 million, for a profit margin of 27 percent.
Facebook is clearly doing a great job making money from ads. That’s a fascinating figure, because Facebook reports that users spend 40 minutes per day on the site, or roughly Facebook, generating content that the company profits from without getting compensated.
This “print dollars, digital dimes” problem is an apparent paradox: Why are targeted digital ads worth an order of magnitude less than untargeted print ads, in terms of “attention minutes”?
Marti argues that advertising in a public place, like a newspapers, builds brands in a way that private, targeted ads can’t.
The key part of investor storytime is persuading investors that your ads will be worth more than everyone else’s ads.
That’s because most online ads aren’t worth very much.
As a rule, the ads that are worth the most money are those that appear when you’re ready to make a purchase—the ads that appear on Google when you’re searching for a new car or for someone to repair your roof can be sold for dollars per click because advertisers know you’re already interested in the services they are offering and that you’re likely to make an expensive purchase.
But most online advertising doesn’t follow your interest; it competes for your attention.