Kiss and tell: Making Money Advertising

With this story fresh in my mind, somehow, randomly surfing, I ended up at the following site:

http://palinemail.msnbc.msn.com/index.html

Please bear with me…

Not knowing exactly what I was looking at, I observed that while this APPEARED to be a site sponsored by some independent communications/litigation research organization, Crivella West (but somehow I can't help thinking "Cruella deVille" — is it just me?) it is actually hosted on the MSNB site.

Well, it's a partnership between MSNBC, Mother Jones, Pro Publica and these guys. But something didn't add up. Why the Crivella banner on an MSNBC IP address, since they have their own separate host? That's pretty unusual.

So I went to the main CW site — off the MSNBC main host — and it was login protected. The "About" link didn't say much, so I clicked on "Public Collections" to see what all they put online for the general public …

… and that led back to the MSNBC page — the inner part of the URL being "palinemail".

Funny, an organization claiming a broad mandate to study the use of language in public discourse, support the storage of information in formats that facilitate "litigation" activities — one having such an incestuous internet relationship with MSNBC that it apparently matters not which site hosts their web pages — maintains a web page whose name suggests a vast array of multifaceted information on these subjects … and it is just a dump of Palin emails.

Not only that, the URL itself constitutes an admission that "Public Collections" actually only means "resources with which to try to smear Sarah Palin".

Apparently the pretense embarrassed someone at CW enough that, farther down the page, is another repository of public communications from the GW Bush White House. Fair enough, but this means, of course, that the category "GW Bush communications" is effectively, according to their online catalogue, a subcategory of "Palin Emails". Bizarre … well, not really, it's pretty transparent, actually!

And an interesting cataloguing absurdity for an organization that makes the following claim about itself:

"Recognizing the insufficiencies of many production discovery agreements and the dearth of any real pragmatic suggestions, Crivella West developed the industry’s first Production Format Standard. The Crivella West Production Format Standard contains recommendations relating to the form and format of Electronically Stored Information (“ESI”) and Physically Stored Information (“PSI”)."

I'll give the person creating this page a bit more credit for realising how stupid this appears, as they appeared to try to rectify the jarring addition of the Bush stuff with a (slightly backhanded) glowing recommendation of it:

"These documents serve as an excellent first person case study of 21st century political influence and decision making."

Love it! Now, perhaps the GWB collection is indeed an excellent example (of proper communication within a serious administration). The same could be said of the Palin emails. What would lead these guys, however, to make such a potentially supportive (or, at worst, ambiguous) statement about the president they clearly despise, or to place it on the page in such a way as to suggest that Palin's emails ALSO provide an excellent example.

I wonder when they plan the logical next subdirectory of the "Palin Email" collection, namely President Obama's communications that will surely leave yet another "excellent first person case study of 21st century political influence and decision making". I eagerly anticipate that. Or how about his communications from his term as Senator? I'm sure he and his chum Blago had some interesting conversations.

… and I wonder what led them to decide that a governor of little Alaska would provide such a great example for those wishing to understand the inner workings of 21st century American governance that her works define the central organizing principle of their governance communications archive? When, I wonder, are they planning to publish the communications of recent governors from the OTHER 49 states?

I wonder if they realise that all their efforts help — rather than hurt — the legacies of these hard-working leaders by publicly establishing the integrity of their work? I also wonder if there is Soros money in this project? If so, then to borrow a phrase, I have met the enemy … and he is clueless.

Twitter is raising money at a $7 billion valuation.

Cue the bubble-bubble talk. Cue the Twitter-doesn't-have-a-business-model talk.

Please.

We estimate that Twitter is doing around $100 million in revenues through its emerging ad business, and selling access to its firehose.

"So freaking what?" we hear the naysayers say. "A $7 billion valuation on $100 million in revenues is insane!"

Really?

Look at it this way: in 2001, Google earned $7 million in profits on $86 million in revenue.

Anyone who had invested in Google at a $7 billion valuation in 2001 would have been called the world's biggest moron. (Especially considering the fact that an actual bubble had recently popped.) A 1000X profit multiple!

And anyone who had invested in Google at a $7 billion valuation in 2001 would also have tripled her money in three years, when Google went public in 2004 at a valuation above $20 billion. (And if she'd held on to her stake, made a 20X return over 7 years.)

Of course, not every company making $7 million in profits is worth billions. But every once in a while, a few of them are. And it's investors' job to invest in several of those that might look like the next Google, be mercilessly mocked by the armchair quarterbacks, and have enough winners out of the lot that they can laugh all the way to the bank.

Here's what Twitter has in common with 2001-era Google:

A simple, beautiful product that users love and that's growing like wildfire

A professional CEO and a visionary, involved co-founder.

Twitter also has network effects that Google doesn't have, but these aren't as important as most people think.

But that's not the thing that makes Google and Twitter worth billions, as opposed to hundreds of millions.

The thing that makes you worth billions is a revenue-generating product with huge momentum.

It doesn't matter the absolute numbers of your revenue, whether it's $100 million or $10 billion or $10 million. What matters is the slope of the curve. Whether customers can't get enough of your product, as was the case with Google when they launched search advertising and couldn't believe just how many people were buying.

(The reason the absolute value of the numbers don't matter, by the way, is that the value of an asset is the net present value of its future cash flows. In an early stage business, growth rates are more important to estimate future cash flows.)

From 2001 to 2004, Google's revenue grew from $86 million to $1.5 billion. That's staggering.

Is Twitter going to achieve similarly stunning revenue (and profit) growth?

Nobody knows, but stranger things have happened.

If we had to guess, we'd say Twitter insiders, including Google board member John Doerr, see Twitter's revenue growth and it makes them think Twitter could grow revenue that fast.

We wouldn't be surprised if it did.

Don't Miss: The Next Twitter Trend (We Hope): #Twintros

Kiss and tell

Friday, July 29, 2011

Making Money Advertising

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