American Consequences - January 2018

The Obvious American Giant... At the time, WhatsApp had 400 million users. Today, it has more than a billion mobile users, second only to Facebook’s 1.8 billion users. (Facebook’s other messaging app, Messenger, is the third-largest social networking app in the world). But WhatsApp isn’t contributing any revenue yet. It’s still growing... along with its potential.

During the heyday of Madison Avenue, in the 1950s and 1960s, legendary ad man David Ogilvy taught young copywriters to write long advertisements. When asked who would read a page-long advertisement, written in small print, Ogilvy would reply, “Everyone.” In fact, he’d say he could write an entire 250-page book that he guaranteed virtually everyone in America would be willing to read. “What do you think the title of the book would be?” he’d ask. Silence would follow. Then, Ogilvy would give away the only real secret to advertising: “All About You.” Facebook is a living, breathing book. And it’s all about you, the user. That makes it endlessly fascinating for virtually everyone. In the software world, the “stickiness” of an application is basically how likely you are to come back to it. Facebook is the ultimate “sticky” app. And for some users, this can be all-consuming. The value that Facebook has created is the best example yet of the “network effect” created by the Internet. Facebook is free. So are Instagram and WhatsApp. Instead, it’s the advertisers that pay to have access to the data about Facebook users. And they’ve been spending more and more every year to selectively target Facebook’s users. That’s how Facebook capitalizes on Metcalfe’s Law – the network effect – the more users, the more valuable their data are to advertisers.

Pundits hate this lag. We don’t know why. It’s the exact same strategy Zuckerberg used with Facebook ... He’s never in a hurry to monetize. A dozen years ago, Facebook had 500,000 accounts... Since then, Facebook has added roughly 1.7 billion unique monthly users... more than 1 billion of whom are daily users. In fact, the average Facebook user spends 20 minutes on this application PER DAY. And that’s growing... Using Facebook has a cumulative effect because the service stores your social memories. Ultimately, that’s what photographs do – freeze a moment. Now, Facebook stores a decade of moments. Editors note: Subscribers to Stansberry’s Investment Advisory are up nearly 60% since Porter Stansberry and his research team recommended buying shares of Facebook about a year ago – nearly triple the S&P 500 broad-market index return. If you’d like to take control of your investing and get recommendations each month about the best stocks to buy, learn more about joining the Investment Advisory by clicking here .

56 January 2018

Made with FlippingBook - professional solution for displaying marketing and sales documents online