Home > life > Silicon Alley Insider’s POOR, LAME Digg Analysis

Silicon Alley Insider’s POOR, LAME Digg Analysis

I’m usually an SAI fan (and always thought Digg was overhyped for what they’d built), but this “analysis” of Digg’s business is exceedingly shoddy (original: http://www.alleyinsider.com/2008/12/diggs-miserable-business)

Here is a point-by-point rebuttal:

  • Why is Digg’s burn 14 million dollars? Any good Silicon Valley estimate for a 4 year old company will tell you that the average employee costs close to 200k. At 60ish employees (guessing), Digg is mostly burning on salary and G&A with the remainder going to site operations. 22 million users and a decent amount  of data moved around, that shit ain’t free. 
  • The post proves DIDDLY-SQUAT about Microsoft’s ad targeting. AFAI can tell, they took one screenshot of a run-of-site (untargeted ad) and called it out as an “indictment” of Microsoft. Clearly the writer has never sold ads or worked with ad traffickers. I’m not saying MS is awesome but I am saying that the post has ZERO INFORMATION one way or the other. 
  • Out of the 22 million visits via Quantcast, only 11 million are US based. The other 11 million may as well be nonexistent because ad marketplaces in other countries are underdeveloped or nonexistent. Worse, US advertisers frequently limit their ads to run on US traffic only, thereby capping the ad sellthrough for Digg in spite of high traffic. Facebook faces a similar problem in its display ad inventory vis a vis international users. 

So – can someone make some sort of substantive argument?

Update: TC posted a pretty decent take on the issue. Most of Digg’s burn is probably engineers that are working on a self-serve ad product. I for one can believe that this might be interesting (certainly more interesting than Facebook’s sorry excuse for a self-serve ad product).

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Categories: life Tags: , ,
  1. December 20, 2008 at 1:54 pm

    thanks for the insight after silicon alley/businessweek somewhat misinformed analysis///smart remains rare

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