Explaining Southern California's economy

Super Bowl ads: Great for Los Angeles, but it's still all about TV

The L.A. Times' Meg James has a great piece today about how a kind of advertising-tech axis is developing in Los Angeles, combining our resurgent ad agencies and all the new tech firms that have sprung up on the Westside and that are being called "Silicon Beach." (There was a Silicon Beach of sorts back during the 1990s dotcom boom, so this isn't so much a completely new thing as a reboot.)

Nowhere can this be seen more clearly than in the much-anticipated ads for the Super Bowl. Here's some salient language:

More than 110 million people are expected to watch the Super Bowl on TV, making it the biggest advertising event of the year. The pressure to perform is intense. Broadcaster NBC has charged a record $3.5 million for each 30-second spot. The commercials, which can cost an additional $2 million to make, will be analyzed and replayed as much as the action on the field. More than 20 of the high-profile commercials, including those promoting Hollywood films, were created locally.

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Facebook IPO: It's all about the advertising

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Facebook founder and CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters on October 6, 2010 in Palo Alto, California.

This information is all over the place, but I got it from the Globe and Mail:

Facebook generated about $4.3-billion in revenue last year, according to estimates from the research firm eMarketer, with advertising accounting for nearly 90 per cent of that amount. This year, the company should post revenue of nearly $6-billion, eMarketer forecasts.

And one assumes that 90 percent of that $6 billion will also come from advertising. And when Facebook makes $100 billion, many years after its IPO, 90 percent of that will come from advertising.

Does that sound like putting too many eggs in one basket? Maybe. Except that Google is putting more in one basket. It made $37.9 billion 2011 — and 96 percent of that was advertising!

This week, Facebook is expected to file with the Securities and Exchange Commission, for an IPO later this year. So everyone will finally get a look behind the curtain of how the business is run, financed — and where the revenues really come from. But let's be honest. It's all going to depend on advertising, advertising, advertising. This could be a problem for Facebook's long-term growth and profitability because Facebook might have already signed up just about everyone it can. That's a huge audience — and that audience spends LOTS of time on Facebook — but they're not on Facebook for the same reasons they're on Google.

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How to succeed in business: Get technical?

Mercer 19995

José Goulão/Flickr

A meeting of computer programmers.

On Monday, I posted about a new startup called Codeacademy and whether it makes sense to think of programming as an essential skill, right up there with reading and writing and math. I based the post on thoughts offered by Fred Wilson, a New York-based venture capitalist at Union Square Ventures, at his blog, A VC.

But another USV guy, Andy Weissman, also posted on Codeacademy (at the separate USV blog) and commented on my post (making good use of Disqus, a commenting technology that USV has invested in). 

Yes, it's a bloggy, bloggy world.

Anyway, as if on cue, this story appeared in the New York Times — it's all about how the advertising business is desperate for people with "quantitative" skills:

A talent gap is growing between the skills that many new advertising jobs require and the number of people who have those skills. The dilemma, one familiar to many industries across the country, is particularly acute for jobs that require hard-core quantitative, mathematical and technical skills....The talent pool, advertising technology company executives say, is not a deep one. And those who have the skills are in high demand, often fetching annual salaries that can reach $100,000.

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