It is the rare exception that people do not use social media and many of us are on more than one app. There are many wonderful reasons to be on social media including to be social. After you have used it, the reality is it still exists is to sell advertising. The marketing dollars of companies are in search to find a willing buyer who actually spend money and they use social media for that purpose.

At the start of the internet age the focus was on clicks and a company called AOL sent millions of dics for people to download and they did. The prevailing sentiment was this is great and the people which ran Time Warner thought they had bought a bargain in AOL. The merger did not go well for lots of reasons, but people found out rather quickly just because there were viewers, it does not translate in buyers of consumer goods.

The internet evolved and a company called Google after inventing the best search engine invented ad words to take advantage of print dollars moving to the internet.

The next breakthrough was Facebook, connecting people but still using a similar model taking ad dollars from print. Facebook.is very good at it and has one of the best analytics departments in the industry.

Technology continues to evolve with the introduction of the smartphones and soon people were doing different things with their phones besides using it to phone someone. In a book called How to Turn Down a billion dollars – The Snapchat story by Billy Gallagher, published by St. Martin’s Press, New York, 2018, the story of the rise of the video sharing company.

For the social media, how to evaluate it has always been an issue. The CEO of Snapchat Evan Spiegel talked to an expert in the name of Anthony Noto, for a while a co-head of Goldman Sach’s Global Tech, Media and Telecom Investment Division and an expert in how Wall Street valued social media companies. Mr. Noto explained Facebook ad impressions had declined year over year but were offset by revenue per impression increasing. The reason was the shift from desktops to smartphones.

Mr. Noto explained that although ad impressions were declining, mobile ads were earning more than desktop ads. This was primarily due to higher prices per click (the amount an advertiser pays when a user taps on an ad) or higher clickthrough rates (the rate at which users actually tap on the said ad). This was a crucial difference because the issue is whether advertisers were spending in a manner that was likely to continue and be long term or were they merely trying a new ad format and then abandoning it? In the 2014, mobile was potentially a bigger market and Snapchat was only a mobile app. The other issue was Snapchat was an addicting, high frequency app, which potentially advertisers would love to be a part of.

It is said the big guys have the advantage and besides greater access to credit, they can have greater advantage to data. For example, in 2013, Facebook bought Onavo. It creates a log of user’s actions on Facebook servers. Facebook product information teams examine the data for example how frequently and how long are people using specific apps. Apple and Google do the same thing because they own iOS and Android.

From Onavo’s data, Facebook saw that What’s App was installed on 99% of the phones in Spain.this helps explain one of the reason Facebbok bought What’s App.

In 2014, everyone was comparing themselves to China because of very few landlines, people had cell phones. However WeChat was the most popular and people did everything on one app. IN North America people were using iOS and A ndroid or Apple and Google.

in 2016, brand advertising was estimated to be a $578 billion business. For an app that concentrated on young people and was additive to the app staying for long period of times, brand advertising was interested.The downside is Snapchat was seen as fun and a lightweight to spend time. Snapchat came up with Stories and Live. People doing their own videos and posting it.

Linking to dividend paying stocks, every company needs to make money and every investor has to know how the money is made. Sometimes the answer is simple, sometimes it is more complex and everything in-between. As an investor you have to also understand how Wall Street values the company and that way you can decide to hold the company or look for alternatives. If you decide to hold, when you examine the company, then when the company tells you how it is doing every quarter, you will be able to say how long will that continue? Perhaps the answer is a lifetime, then you do not have to do anything. Bringing the company to simple, allows you flexibility to do something or nothing.

There are more questions than answers, till the next time – to raising questions.