Comments on: If Facebook Wants to Own the Global Like, They Need to Own Bit.ly

By: Quora

Quora — Fri, 08 Oct 2010 07:06:37 +0000

What makes investors positive on Bit.ly, and are these sentiments validated?…

Charles Hudson wrote a good post about this back in April. You can read the full piece here (http://www.charleshudson.net/if-facebook-wants-to-own-the-global-like-they-need-to-own-bit-ly-2), but the main point is this – if bit.ly becomes the de facto l…

By: chudson

chudson — Thu, 29 Apr 2010 17:31:00 +0000

Okay, I agree that I didn’t properly use network effects in the true sense of the word in this post. There are not increasing returns to incremental users being added to bit.ly’s service. That being said, I do think that they stand a good shot at being the de facto URL shortening service of choice – consumers and publishers alike will use what NYT, GigaOm, TechCrunch, and others use under the theory that if it’s good enough for them it’s probably good enough for the average user. nnAs for the advertising piece, I disagree with you there. Gmail doesn’t monetize well because most communication services monetize poorly from ads – you’re there to send emails, not view ads. I think Facebook wants to be the world’s biggest, deepest behavioral ad network on the Internet. Will the behavioral ads they show rival the revenue opportunity around capturing a user who’s looking for a mortgage? No. Is there a ton of remnant and other non-targeted ad inventory out there where I think Facebook can make a huge dent, especially if they don’t have any real regard for user privacy and fusing what they know from your behavior both on the site and across the web based on things you share and consume? I think so. Facebook’s more likely to unseat AdSense than it is to unseat AdWords. Given that AdSense is an enormous chunk of Google’s revenue, that’s a pretty juicy target to attack.

By: Yann Ngongang

Yann Ngongang — Thu, 29 Apr 2010 15:56:00 +0000

Interesting post, but a couple of arguments need revisiting: 1- that bit.ly has network effects; 2- that data about internet consumption has such huge power. I think both arguments are not correct.nnNetwork effects are created when the user’s value has a direct relationship with the size of the user base (or its square actually). In the case of a link shortening service, I can be the sole user of a service and still get full utility. What you seem to imply is that bit.ly gets brand leverage, in the same way that seeing cool people with an iPhone makes me wanna run and buy one. But it’s no network effect.nnSecondly, the argument about understanding the web assumes that such insight provide leverage in attracting ad dollars. If that were the case, then the largest providers of free email (Goog, Msft, Yhoo), all companies with strong advertising platforms, would have harvested tremendous dollars from such insights. But they have not! Gmail is profitable but only because architected cheaply compared to Hotmail and Yahoo mail. And these guys have thrown all the compute & AI power to all the rich data of email (and shares).nnIn my opinion, maximizing ad revenues is more about catching a user’s buying cycle then understanding her universe of knowledge interest and shares. This would mean that facebook’s vision of upsetting the ad world is doomed, yes. Henry Blodget had a very good argument on Silicon Alley insider.nnThere may be an advantage to bit.ly being 1st to market with the largest audience, but it may have to be some other business mechanism…Not just data mining of link maps.nnY

By: chudson

chudson — Thu, 29 Apr 2010 15:31:33 +0000

Okay, I agree that I didn't properly use network effects in the true sense of the word in this post. There are not increasing returns to incremental users being added to bit.ly's service. That being said, I do think that they stand a good shot at being the de facto URL shortening service of choice – consumers and publishers alike will use what NYT, GigaOm, TechCrunch, and others use under the theory that if it's good enough for them it's probably good enough for the average user.

As for the advertising piece, I disagree with you there. Gmail doesn't monetize well because most communication services monetize poorly from ads – you're there to send emails, not view ads. I think Facebook wants to be the world's biggest, deepest behavioral ad network on the Internet. Will the behavioral ads they show rival the revenue opportunity around capturing a user who's looking for a mortgage? No. Is there a ton of remnant and other non-targeted ad inventory out there where I think Facebook can make a huge dent, especially if they don't have any real regard for user privacy and fusing what they know from your behavior both on the site and across the web based on things you share and consume? I think so. Facebook's more likely to unseat AdSense than it is to unseat AdWords. Given that AdSense is an enormous chunk of Google's revenue, that's a pretty juicy target to attack.

By: Yann Ngongang

Yann Ngongang — Thu, 29 Apr 2010 13:56:51 +0000

Interesting post, but a couple of arguments need revisiting: 1- that bit.ly has network effects; 2- that data about internet consumption has such huge power. I think both arguments are not correct.

Network effects are created when the user's value has a direct relationship with the size of the user base (or its square actually). In the case of a link shortening service, I can be the sole user of a service and still get full utility. What you seem to imply is that bit.ly gets brand leverage, in the same way that seeing cool people with an iPhone makes me wanna run and buy one. But it's no network effect.

Secondly, the argument about understanding the web assumes that such insight provide leverage in attracting ad dollars. If that were the case, then the largest providers of free email (Goog, Msft, Yhoo), all companies with strong advertising platforms, would have harvested tremendous dollars from such insights. But they have not! Gmail is profitable but only because architected cheaply compared to Hotmail and Yahoo mail. And these guys have thrown all the compute & AI power to all the rich data of email (and shares).

In my opinion, maximizing ad revenues is more about catching a user's buying cycle then understanding her universe of knowledge interest and shares. This would mean that facebook's vision of upsetting the ad world is doomed, yes. Henry Blodget had a very good argument on Silicon Alley insider.

There may be an advantage to bit.ly being 1st to market with the largest audience, but it may have to be some other business mechanism...Not just data mining of link maps.

Y

By: peHUB » peHUB First Read

peHUB » peHUB First Read — Thu, 29 Apr 2010 11:38:48 +0000

[...] * Charles Hudson: If Facebook wants to own the global like, it needs to own Bit.ly [...]

By: Hiten Shah

Hiten Shah — Thu, 29 Apr 2010 04:25:50 +0000

You hit it on the nail…well said. Bit.ly has HUGE potential, I just wish the product was more polished from a dashboard, data and analytics perspective.