Facebook outage costs Facebook, Inc $60m in ad revenue

Earlier this week, Facebook, WhatsApp and Instagram went down for a combined six hours, costing the platform over $60 million dollars in advertising revenue. The sites went down on Monday Oct 4th at noon Eastern time, and were largely restored at 7pm on the same day.

Fortune and Snopes were able to calculate the $60m loss by looking at annual revenues and calculating hour by hour and minute by minute rates.  Facebooks earns about $220k in ad revenue per minute.

What isn't clear yet is whether this advertising spend was diverted in any way during the outage. Did demand for Google Ads spike during the outage, resulting in higher clearing prices for keyword searches, or was this revenue loss simply unspent and returned to advertising budgets to be spent later? It would be interesting to review keyword prices during the outage, to see whether there was any impact.

The drop in revenue was however very small in comparison to the drop in Facebook's share price. A day later, Facebook's share price is 3% lower, representing an almost $7b drop in valuation - showing the company's sensitivity to anything that might risk it's access to advertising revenue.

The outage comes at a terrible time for Facebook, given a whistleblower is currently testifying to Congress that Facebook is aware of the effects of its algorithms on young people and that misinformation is spreading across its platform, but is not acting on it because of the negative effects it may have on its income streams.

From 66 billion dollars revenue in 2014 to 0?

After last session, I wanted to write about the future of Search. Google revenue last year reached 66 billion US dollars and its advertising revenue is still growing in double-digit (11% YoY change from Q2 2014 to Q2 2015).
However, what if the era of Google was coming to an end?
Indeed, we all know SIRI, as an intelligent virtual personal assistant and knowledge navigator. SIRI uses a natural language user interface to answer questions, make recommendations and perform actions. So far, what is the link with the end of Google current revenue model you would tell me? Well, what most people don't know, is how it works. SIRI delegates requests to a set of Web services. The software then adapts to the user's individual language usage and individual searches (preferences) with continuing use, and returns that are individualized.
What does it mean? It means that how Google would make advertisers pay if no human being has to make a search and would therefore click on an ad?
Well, you could also argue that SIRI is very basic, its limitations are more than apparent and does not work and that the future I envisage is Azimov's science fiction. Let's not be that sure. Many startups around the world actually work on the next version of SIRI. One of the most promising AI under the radar is called Viv. Developed by SIRI's inventors, Viv is THE new AI. It is able to learn from the world to improve upon its capabilities. A funny example is when you ask Viv "What's the status of JetBlue 133?". A second later, Viv returns with an answer: "Late again, what else is new?". To achieve this simple this result, Viv went to an airline database called FlightStats.com and got the estimated arrival time and records that show JetBlue 133 is on time just 62% of the time".
To learn more from Viv's CEO and its vision how Viv could impact advertising, see the sources.

Sources:
http://www.esquire.com/lifestyle/a34630/viv-artificial-intelligence-0515/
http://www.wired.com/2014/08/viv/
http://techcrunch.com/2015/02/20/viv-built-by-siris-creators-scores-12-5-million-for-an-ai-technology-that-can-teach-itself/#.bvc2oi:37fs
http://techcrunch.com/2015/03/06/the-future-of-voice-activated-ai-sounds-awesome/
https://investor.google.com/earnings/2015/Q2_google_earnings.html
http://www.statista.com/statistics/266206/googles-annual-global-revenue/

E-tailers are pushing brands out of search

One would expect that you'd find leading brands to be at the top of search results. However, with Google's Product Listing Ads and Knowledge Graph in place, the landscape has become crowded. Major retailers are buying up brand terms, pushing actual brands further and further down the search results. According to L2's Digital Index, retailers account for 54% of paid results for UK Personal Care brands. Only 4% of brands do not have paid search results.


Google is the main player in search advertising and because of it, they charge pretty steep rates. Brands typically have smaller marketing budgets compared to these major e-tailers. They can also be less familiar with digital marketing, thus making it even more difficult to navigate and optimize their ranking.

The good news is that popular brands tend to appear first in organic search results. Brand sites rank first for 79% of Personal Care brands of organic search results. E-tailers make up 87% of first page organic search.