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IZEA, Inc. Message Board

  • investora2z investora2z Sep 20, 2013 9:25 AM Flag

    SA article

    The article on the upcoming Twitter IPO on seekingalpha mentions the growing contribution of native advertising to the revenue growth of companies like Facebook and Twitter. The author compares the two companies and mentions that both the companies derive a majority of their revenues from online advertising. One of the driving factors behind both companies' recent valuations is their adoption of native advertising. Native advertising is a rapidly expanding subset of online advertising, and on Facebook, native ads are placed in the news feed. On Twitter, they come in the form of promoted tweets. Several analysts believe that native advertising will fuel future growth in revenues of these two companies. The author mentions that marketplaces like those provided by IZEA are increasingly diverting ad revenue from social media companies. These provide third party marketplaces through which advertisers and social media publishers can transact without the host platform's input. He cautions investors to keep this expected future competition in mind while valuing social media companies. He states that 'In the same way as display ad placement, native ad placement on social media sites will likely be increasingly arranged by a third party in the future. With this in mind, investors looking to place valuations on social media sites such as Facebook and Twitter should do so with the consideration that alternative revenue streams might be required in the medium to long term to sustain growth.' So IZEA is likely to provide competition as advertisers prefer to use social media ad networks to place such ads. To continue the growth, the companies will need to find ways to counter competition from these platforms. Strategies could include acquisition, and also diversification in revenues to make up for the loss. Analysts expect the spending on this form of advertising to reach $160 million by 2014.

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