Posts Tagged ‘Facebook’
This blog post is based on the one I posted on www.warc.com
Deloitte has produced some great research into the UK TV market to coincide with the Edinburgh International TV Festival.
The study, entitled ‘Perspectives on Television in Words and Numbers’, is full of all sorts of stats about video-on-demand uptake, product placement and other TV goodies. But one statistic in particular caught my eye. Deloitte makes the point that television as an industry remains far far more effective at converting users into revenues. The report, which is based on UK data, states: “It takes 93 days to generate a pound of advertising revenue per Facebook user; this compares to 11 days for an ITV viewer [ITV is the UK’s leading commercial broadcaster]. Social network’s CPMs are estimated at between 30 and 40 pence, far lower than the average for television. YouTube’s CPM has been estimated at 72 pence.”
It’s not exactly comparing apples with apples (a Facebook user is not the equivalent of a TV viewer), but it’s an interesting point. Facebook may be making money, and its revenues may be growing quickly, but it’s still pretty ineffective at turning users into dollars.
A further illustration of this is in the Deloitte endnotes. ITV, a UK-only broadcaster that has had a torrid few years, pulled in £987 million (around $1.5 billion) of revenue in the year to 30 June 2010. Facebook, which has upwards of 500 million users around the world, is forecast to make $1 billion in the more optimistic forecasts.
I was recently asked whether I thought social media revenues were likely to follow the same growth trajectory as search revenues did a few years ago. To recap, here’s a reminder of just how quickly Google grew in the middle years of the last decade.
Despite the forecasts of some tech evangelists, on the current evidence, it would take an almighty shift in advertiser behaviour to push Facebook along the same path. Recent forecasts from eMarketer show solid growth in adspend on social networks over the next two years from $1.4 billion to $2 billion in the US. Good, but it’s no Google! It’s fair to say that Facebook et al are still seeking the ‘killer app’ when it comes to attracting marketing investment; the equivalent to Google’s AdWords.
Of course, it’s worth remembering that Google’s rise was driven as much by SMEs and direct-response advertisers as by big brand advertisers. It created a whole new direct-response channel.
Interestingly, there are social media companies out there already making large sums of money. China’s Tencent, owner of the QQ platform, is one of them – its revenues easily eclipse those of Facebook despite being a single-market operator. Tencent’s growth, however, has owed little to advertising. Online ad revenues make up less than 10% of its turnover. The bulk of its revenue comes from ‘internet value-added services’, mostly online gaming. It makes money, in other words, from its users.
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Back in January, I was asked by a marketing consultant how important I thought digital would be in the upcoming UK general election. He obviously expected me to gush about how important Twitter/Facebook/YouTube would be, and seemed slightly shocked when I suggested that for all the noise around social media, the election could be more traditional than we thought. And a recent lunch with an agency boss working on one of the party’s campaigns confirmed to me that the parties recognise that online engagement can only be the start.
So it was with interest that I read the piece in this week’s Economist that flagged the limitations of social media as a political tool. It makes a number of good points, including the argument that Twitter is good for reaching journalists, but email reaches the actual voters. The upshot is that developments such as myconservatives.com, WebCameron and the left-leaning blogs can have an impact (including galvanising activists), but are, for now, unlikely to win a party an election on their own (though all parties still have to engage in these channels, otherwise they lose share of voice to their rivals).
1. British politics is not US politics. The Obama campaign in 2008 made everyone aware of the political implications of social media. But the UK political environment is very different. We have become more presidential, but we do not elect presidents; we elect parties. We do not have the intense build-up of primaries – party leaders are decided by their parties, and are not chosen as part of the campaign build-up. That means political discourse between parties and the general public is generally less focused on a single point in time (an election) and more focused on general points-scoring. Elections can be called any time within a five-year parliament by the prime minister, so the campaigns are shorter, sharper and often more tactical.
2. Even for Obama, social media was only the start. The Obama social media drive served to establish him as a candidate and gave him considerable resources to mount a challenge. It did not on its own win him the election. TV, print, radio, outdoor and email (the 21st century equivalent of shoe leather) were all major parts of his campaign. This blend of digital evangelising and old-school politicking was developed in the primaries and continued into the main election campaign.
3. Social media is great at knocking things, but it’s far harder to build political enthusiasm. The parties have shown pretty deft use of some social sites to respond instantly to their rivals’ moves and to discredit them. John Prescott has proved an ace Twitterer, and Labour’s activists have been pretty effective at mocking the Tories’ campaigns via spoof posters. Any slip by the parties, once magnified by the echo chamber of Twitter et al, could damage their reputation; but success can be far harder to shout about and publicise, especially given the levels of cynicism there already are around politicians. The TV debates featuring the three party leaders will be fascinating – we’ll see how the successes and failure on the night are reflected in cyberspace.
4. It’s easier to build enthusiasm around single issues than complex political messages. The Facebook campaign behind Rage Against the Machine at Christmas showed how single issues (such as ‘don’t let Simon Cowell be Christmas number one’) can thrive within social media. Arguably, Obama’s ‘Change’ message gained momentum like a single issue and only later had to concern itself with actual policies. In the US, of course, the campaign is focused on the president. British political parties remain strange coalitions of interests, and presenting them like a single issue is far harder. You might buy into David Cameron, for example, but still have your doubts about Nicholas Winterton. A British general election puts them both up for the vote simultaneously. It’s interesting that Cameron has attempted a ‘Change’ message without being able to build it into a cause the way Obama did. He’s not personally as engaging, and he’s held back by his party.
That said, Labour has shown signs of using a single-issue approach – for example, its recently launched campaign to save Sure Start children’s centres from spending cuts.
5. The election will be won in key marginals. Social media campaigns have been causing some interesting headlines at a national level, but actually British governments are made and broken in a relatively small number of marginal seats. And a vote in these seats goes not just to a national party, but to a local politician. That means local issues and local personalities can come into play, factors that are below the national radar but need actual on-the-ground campaigning to address.
6. Old people vote more. Fact. Purely on an age basis, the more likely you are to use social media, the less likely you are to vote. And for the reasons already stated, there’s no sign of a sudden rush of young voters into the polling stations a la Obama.
Overall, this election promises to be the most fascinating since 1997, and the marketing tactics at its heart have become far more sophisticated. The rise of social media has made the national-level PR battle far more interesting, but the eventual incumbent of Downing Street will have to use more old-fashioned tactics as well.
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So Facebook looks like it’s finally going to set up an office in Asia. And about time too.
As I’ve written before, last year was the year of Facebook in Asia (Southeast Asia particularly). It managed to dislodge former leader Friendster to become the leading social network in several Southeast Asian markets, with user numbers jumping 78% across Asia between January and September.
The interesting thing is that it managed to do this with no Asian presence. It has no office in the region that I’m aware of, and has outsourced its ad sales to companies such as Pixel Media and iHub.
That looks set to change. Facebook has commissioned a research company to look into how Facebook is perceived in Asia’s media-buying community and to advise on its best market-entry strategy. They’re speaking to the great and the good of Asia’s media community. I know this because they’ve approached me to give them some input too (though I’m not really great or good). One of their competitors I spoke to has heard that Facebook is currently debating between Hong Kong and Singapore for their regional hub.
The questions they’re asking make it clear that their priority is boosting their Asian ad sales. (Interestingly, the questions cover the basics of the media landscape in SEA, suggesting that the Facebook team still know relatively little about the markets they’ve conquered.)
Unless you’re employed by Friendster, it’s good news that Facebook is doing this. There’s been so much buzz about it in Southeast Asia over the past year, and the site needs to have its own people on the ground evangelising on its behalf. Another powerful voice for online can only help the industry as a whole.
It seems to me that there are two big challenges ahead though:
1) Facebook often seems to be handled as a PR tool. The way social media has been sold has been ‘get involved with the conversation’. That means branded pages, comments etc – which advertisers can do without paying Facebook any money. It needs to show marketers it can work as a Yahoo-style display platform too. Hopefully that means we’ll see some user numbers.
2) The low level of online spend in Southeast Asia and HK. With online spend still hovering around 5% of total budgets in the markets Facebook will be focusing on, the site shouldn’t expect to make big money in a hurry. Just like the rest of the industry, it needs to educate clients first of all. It wouldn’t surprise me to see Facebook joining IAB Singapore.
All in all, this is something to follow. Watch this space.
Interesting news today out of Facebook, which has revealed its mobile user base has jumped to an astonishing 100 million. This marks huge growth – it was only in September that the company had 65 million users, and eight months before that (ie a year ago) it had just 20 million.
Unfortunately, the stats don’t break down where in the world these new users are, but I’d lay money on a good proportion of the extra 80 million mobile users it has added being in Asia. 2009 was a phenomenal year for FB in Southeast Asia. At the beginning of the year it trailed longtime leader Friendster in most markets there, by the end it was leading in most markets.
Facebook’s user base jumped 78 per cent across Asia between January to September, according to comScore data. See this chart (thanks to Turner’s Ben Grubbs, who presented this at a conference in Ho Chi Minh City in November; I’m interpreting the figures with a 000 at the end):
So Facebook added upward of 35 million users in Asia last year. Without even trying. The company doesn’t even have an office in Asia as far as I’m aware.
And in many of those markets what spurred Facebook ahead of Friendster was the strength of its mobile offer.
Smartphones have propelled Facebook Mobile in the West. Smartphone penetration is still pretty low (though growing) in Asia, but for many the mobile remains the first point of access to the internet. For a company as volume-focused as Facebook, a good mobile offer has been key to adding users in that part of the world.