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Individual investor with a Top down approach. I don't believe in diversification. Spreading your chips across the table is senseless to me, when based on good old economic fundamentals only certain areas of the market are poised to benefit in certain stages of the economic cycle.
  • Facebook Potentially Wasting Advertiser Dollars 0 comments
    Jul 31, 2012 9:29 PM | about stocks: FB, GOOG

    What do advertisers want to spend their money on?

    Advertisers want targeted advertising. What is targeted advertising?Targeted advertising is advertisements users will find to be relevant based on the users interests. Facebook (NASDAQ:FB) displays ads at to users that the advertiser selects based on demographics such as location, age, and selected keywords for topics. Here is an example of how a Facebook advertisement is utilized.

    Example: XYZ pest control company, runs a Facebook advertisement for free home inspections. It gets displayed to users 18+ years old, located within 15 miles of Orlando Florida, using keywords pest control. The ad will potentially get displayed to users who have commented on posts about pest control, liked pest control companies, someone who has liked black widow spiders, anything bug related essentially.

    For the arguments sake, lets take a look at how Google (NASDAQ:GOOG) advertisements are utilized.

    Example: XYZ pest control company, runs a Google advertisement for free home inspections. The advertisement gets displayed to users who are actively searching the web, expressing a current and relevant interest for pest control and any related searches, located within 15 miles of Orlando Florida. Now let us take a look at where advertiser dollars are potentially wasted by Facebook advertisement delivery system.

    Here is where the potential waste of advertising dollars happens. A user posts on his timeline that he has a bug problem in his house, then multiple other users comment on his post "Sorry to hear about your bug problem." or something similar. A user that comments on another users post "Sorry to hear about your bug problem.", doesn't necessarily have an interest in pest control or find it to be relevant to their lives. When Facebook displays the pest control advertisement to the users commenting "Sorry to hear about your bug problem.", advertising dollars are potentially being wasted.

    This is why Google advertising model is superior to Facebook. It is hard enough as an advertiser to grab a users attention on Google, where a relevant ad is being displayed to the users based on a search topic the user is currently interested in. In contrast Facebook is social networking. It is even harder to grab a users attention that is "socializing", with an advertisement that the user has not directly expressed any interest in. Until Facebook can implement an advertisement delivery system to increase an advertisements relevance based on the users interest, Facebook can't deliver the same "bang for buck" that Google can.

    In the long this could contribute to advertisers spending their money elsewhere. This just yet another hurdle for Facebook.

    Disclosure: I am short FB.

    Additional disclosure: more articles and stock trading ideas can be found on my personal blog www.stocktradingidea.com

    Stocks: FB, GOOG
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