(TL note: nareshov's diary)

On big-money acquisitions and ads

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In the past few months, we’ve heard of Zynga acquire DrawSomething, and more recently, Facebook acquiring Instagram for huge sums of money. Both Zynga and Facebook might be doing it for the user base acquisition. Or they might simply be doing it to "nip it in the bud."

What attracts these huge businesses to the userbase? Sales in terms of ads? Probably. It’s still mind-boggling to think that the circle of folks I’ve known over the past 6 years (who have all been using those ad-blocking plugins on browsers and have probably clicked ads only by accident) are the minority. Most people are constantly being lied to (through marketing) over radios, televisions, and billboards (Sao Paulo is an exception) out in the streets while they’re stuck in traffic.

What differentiates these from the internet is that they lack ad-filters. And yet, internet-based businesses that serve ads make it big.

Sidebar: It should be noticeable by now how tech stocks have been underwritten in the past few years (with entities like certain powerful investment banks out there).

So, what we have today is a huge internet userbase made by businesses that offer questionably silly services that are later turned into yet another ad market. Why? Because a lot of people still click ads.

The NYTimes maybe operating for over a 100 years and may be valued well under a billion. Many may not even know what the Tesla corp does. Big dreaming tech companies are getting rarer by the day.

Written by Naresh

April 10, 2012 at 12:39 pm

Posted in Worldly Matters

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