Jan 06

The Web vs. Economics

Posted in: Personal
Written by: Grim

I found this little nugget in an article written by Owen Thomas over at Valleywag.

It seems that LiveJournal might be going the way of the carrier pigeon.  Their parent company, Sup, a Moscow-based company, has laid off 20 of LJ’s 28 employees with no warning or severance and blamed it all on a “downturn in the economy”.

The article goes on to talk about other social networking sites that may be going out of business in the near future, but I’d like to take a look at a larger concept.

How do websites justify the ridiculous amounts of money that they “earn”?

Advertising?  Seriously, do you know anyone who has ever clicked an ad banner?  I have a hard time finding someone who doesn’t have ad blocking software integrated with their browser.  I don’t blame web companies for cashing in on this phenomenon.   If someone offered me a million bucks per year to put ads all over my website, I’d do it too.  What I’m wondering is why companies pay incredible sums of money to advertise on the web or on TV.  Ad revenue is the driving force behind things like

I understand advertising.  I understand the business need to get your name out to the public in order to increase interest in your product.  However, the dollar amounts here are far beyond the point of getting any kind of reasonable return on investment.

Citigroup paid 400 million dollars for naming rights at the New York Mets’ new stadium. Wait a minute.  Do you mean the same Citigroup that recently took billions of dollars in bailout money from the Federal government?  The same folks who are begging for dollars from Uncle Sugar are spending 400 million bucks to name a baseball stadium?  (the same baseball stadium that was paid for by taxpayer dollars?)  The same Citigroup that paid millions to have their name attached to the annual Rose Bowl game?

I have a special message for all of you Madison Avenue types out there.  We don’t watch 99% of the commercials that you throw out there.  Thanks to the two greatest inventions of all time, the TiVO and the remote control, we either fast forward through commercials when we are watching a recorded show, or flip channels to something else while commercials are running on live TV.  You’re paying millions of dollars for ad time that viewers spend going to the restroom, making a sandwich, walking the dog, changing the channel, or outright fast-forwarding past.  Web advertisers?  If your ad is seen by a million users (and that is a seriously optimistic case, given ad blocking software), let’s say that you get a click-through rate of 1% (according to this article, the actual click-through rate was 0.5% back in 1998)  That leaves us with 10,000 people who clicked your ad.  Of that, let’s say that 10% of those users actually buy your widget. (The number in the article is 12%)  That’s 1,000 sales or a 0.1% rate of success for your advertising.

So, using that number as our basis, let’s look at a Super Bowl ad.   Last year, the Super Bowl was viewed by a record audience of 97.5 million people.  If we use the figure of 3 million dollars for airtime and tack on another couple of million for other costs (actors, filming, ad exec salary, etc) we have a nice round figure of 5 million dollars.  0.1% of 97.5 million is 97,500 people who purchased your good or service because of your Super Bowl ad.  Let’s round that up to an even 100,000 people.  5 million dollars for 100,000 sales comes out to 50 bucks per “widget”.   Do you know anyone who would pay 50 bucks for a case of Budweiser?  Pepsi?  Tostitos?  Pizza Hut?

Pets dot-freakin-com?

If I were an advertiser, I would focus my efforts on being “easy-to-find”.  I’d make focus on an online presence and make sure that if someone searched the web for “widgets” that my company would be one of the first one’s found.  To that end, I can understand how Google makes a ton of money.  Search engines are ideal for advertising because people are looking for you.  Paying a ton of money to expose your company to an indifferent (at best) audience is not a good investment.

Oh, and for the record, I still have no freakin’ clue what insight.com is or why they have their own bowl game, and I have absolutely no desire to find out.

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Oct 04

Obligatory Sox Post

Posted in: Sports
Written by: Grim

For those of you who know me, this is no shock.  For everyone else, here is a little obligatory biographical information.

I am a proud member of Red Sox Nation.

For me, the experience is a little personal.  After all, I’m not from Boston, had never been there until 3 years ago, and never even seen the Red Sox in person until my fanhood had been established.  Considering the fact that I live in Atlanta, which has a baseball team of it’s own last time I checked, there doesn’t appear to be a reason that I should be such a fan, right?

Not quite…

Back in 1996, I was a Braves season ticket holder.  I *liked* Boston but I wasn’t a die hard fan.  So there I am with tickets to the World Series against the Yankees.  I was fortunate enough to be at the clinching game 6 of the previous year’s World Series against the Indians, and was looking forward to game 4 when the Braves might be able to do it again against the Yankees.  It didn’t bother me that the Yanks took game 3 in Atlanta thus making it impossible for me to be part of another series clinching win.  But in game 4, I developed my first honest-to-god hatred in professional sports thanks to Jim-fucking-Leyritz.  The Spank-mes went on to win the Series that year, and started a run almost as good as the Braves’ streak of 14 straight post-season appearances. (sarcasm alert… 4 World Series vs 1 for the Braves… I don’t care how many times in a row you get a shot at it, you gotta win once in a while.)

So how does this make me a Sox fan?

Well, naturally, the Braves had fewer opportunities to exact revenge on the Spankees so I turned to their fiercest rivals, the Boston Red Sox.  I rooted for the Sox on general principle because they were the arch-enemy of the team I hated the most.  But I was not yet a hardcore Sox fan…

One day I was perusing some baseball trivia, and noticed that Roger Maris, of the Yankees, hit his record-breaking 61st home run against the Red Sox.   It was just another trivial indignity that the Yankees inflicted on their long-standing rivals, and not much of a big deal… Until I noticed the name of the pitcher that gave up the record breaking home run.

Surely the name is just a coincidence.  I mean, not every “Smith” is a close relative, right?  So I call my dad and ask “Hey pop, do you know anyone named Tracy Stallard from Coeburn Virginia?”  Dad responds “Well, I know that our entire family is from Coeburn, so at the very least he’s probably your cousin.”  A few digs worth of research later, and sure enough, Tracy is family.  In my most irrational, “only-a-sports-fan” method of justification, the Yankees made some history at my family’s expense!  They must pay!

By this time, I was following the Braves and the Sox with equal intensity.  The hometown team I had grown up watching and the team that was most likely to make the Yankees’ lives a living hell if anyone could do it.  What eventually caused my complete change from Braves fan to Red Sox fan was watching the Sox play.  Watching the fans who were tuned in to every pitch.  Talking to fans who remembered the starting outfielders from the 1978 team ( Lynn, Rice, and Dewey Evans.  Yaz split time with 1B) Compare and contrast with my fellow Braves season ticket holders, who were more likely than not to show up in the 4th inning and leave after the 7th while chatting on their cell phones the entire time.  Being a Sox fan was just more FUN than being a Braves fan.  Granted the Sox still had their share of misery to deal with.  2003 and Aaron-fucking-Boone was yet another Yankee-forged trauma to the psyche of every Red Sox fan, but at least you knew that next year you’d have another crack at those bastard Yankees.  Who were the Braves ever passionate about from a rivalry standpoint?  The Mets?  The Phillies?  The Marlins?  The Twins? (I gotta admit… 1991 still stings a bit)

So when 2004 hit and the Sox finally broke The Curse, I was just as happy as I was that night in October 1995 when I saw the Braves win their only World Series.  I was a little understated about it because I knew that there were a lot of bandwagoneers out there, and I’m not a big fan of the bandwagon types.  Over the last 4 years, it has been almost too easy to be a Sox fan, but dammit, I have a Yankee-hating pedigree that I’ll put up against anyone.  Bill Buckner didn’t scar my psyche, but I’ve seen my share of Sox heartbreaking moments.  In other words, I’ve earned it.  Maybe not as much as the guy who grew up at Fenway watching Ted Williams, but you can’t help who you want to cheer for.  You just follow your heart.

I’m not going to make any predictions about the Sox in this post-season.  I won’t jinx the Sox like that, but you gotta admit that any team down 0-2 to the Sox with Beckett on the mound for game three is facing some pretty long odds.
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