advertising

The Rise of Facebook Advertising

By Mark Evans in Social Media 3 Comments Tags: , ,

When you think of online advertising, Facebook may not be top of mind but a new report from eMarketer estimates Facebook had advertising revenue of $1.86-billion in 2010, an 86% increase from 2009.

As much as I have my reservations about Facebook’s approach to privacy, there is no doubt it is becoming a more interesting advertising platform, particularly for smaller companies with limited budgets. In the past few months, I have been encouraging a growing number of clients to consider Facebook ahead of AdWords and other advertising opportunities. My interest in Facebook is driven by the following:

1. It’s inexpensive. For now, Facebook’s advertising model is volume-based. For the clients I have put on Facebook, the pay-per-click rate has been less than a $1.
2. Even if someone doesn’t click on an ad, the use of good creative means it can still register and make an impression on people. In some respects, it’s like billboard advertising; you can do anything with a billboard but it does make an impression. One client attracted 1,200 click-throughs on their ad but it was delivered more than two million times.
3. Facebook advertising is targeted, which means ads can be delivered based on specific demographics, interests and locations. Facebook’s doggedness to get more data from its users is driven by the fact advertising like the ability to target consumers.
4. Starting a campaign is quick and easy. It can literally be done in minutes, and you can cap your daily budget and pay by credit card.

All of these variables make Facebook an interesting proposition for many consumer-facing companies looking to reach out to consumers in a cost-effective way. By being able to filter through Facebook’s more than 600 million users around the world, companies can offer advertising that has a better chance of being seen and clicked on.

The downside to advertising on Facebook is many people don’t see Facebook as an advertising medium. It’s a place to communicate with friends and family, which means many ads are completely ignored.

The upside for advertisers is the ambivalence about advertising on Facebook means it’s pretty cheap to run a campaign. I’m sure Facebook would like to increase its prices but if that happens, Facebook lose some of its appeal for small advertisers looking for a way to embrace online marketing.

What Agency Should Own Social Media?

By Mark Evans in Social Media 11 Comments Tags: , , , ,

As social media becomes a more integral part of many company’s operations, there’s a battle being waged behind the scenes pitting public relations, digital and advertising agencies against each.

The prize they’re pursuing is the mandate to help companies create strategic and tactical social media plans and campaigns. The winner gets to play a key role, while the losers will be forced to play minor supporting roles. This battle is particularly interesting because for decades the three agencies happily co-existed within their own orbs. There was was cross-over but, in reality, there was little competition.

Social media, however, has changed the landscape. Rather than the three agencies having a gentile lunch, they have suddenly found themselves in the middle of a mixed martial arts contest for the big chunk of the social media pie.

The question is which agency is best suited to lead social media?

Is it PR agencies who know how to tell stories but, traditionally, have not done created or developed Web sites, widgets or applications? Is it ad agencies that put together great creative ideas for campaigns but have little experience with having conversations with consumers? Or it digital agencies, who can build great widgets but aren’t story tellers?

What makes the battle increasingly intriguing is how each kind of agency is beefing up their capabilities to transform themselves from one-trick ponies. PR agencies are adding creative and digital talent through hiring or acquisitions. Ad agencies are getting stronger when it comes to social media strategy and tactics, while digital agencies are building out their strategic and tactical operations.

At the same time, a growing number of companies are looking for one-stop social media shopping or, at least, they want one agency to take the lead, and then manage the other agencies in the ecosystem. By and large, companies are not looking to have multiple players at the table.

My take is that PR agencies are probably the best-suited to take the lead role in many situations. This is based on the beilef that PR agencies are story tellers, which is a crucial part of making social media thrive. Regardless of the service or platform being used, compelling stories have to be at the heart of any social media program.

PR agencies also have lots of experience in building relationships and communities. They are experienced in outreach and providing strategic and tactical counsel while listening and monitoring conversations happening about clients and the markets their clients operate in. And PR agencies have creative capabilities that involve putting together events, promotions and communications campaigns.

For many companies, having a PR agency take the social media lead makes a lot of sense, particularly if the PR agency has digital capabilities in-hour or through a trusted network of suppliers. It provides one-stop shopping.

This isn’t to suggest there aren’t advertising and digital agencies doing great work within social media, or that they won’t be picked to lead social media programs. But at the end of the day, PR agencies seem a more natural choice.

For more perspective on the roles that different agencies are playing within the social media landscape, check out this AdAge column.

Disclosure: I have a strategic relationship to provide social media strategic services to Media Profile, a PR agency.

Twitter Ads Won’t Work

By Mark Evans in Advertising/Marketing, Social Media 9 Comments Tags: , , ,

With some time to think about Twitter’s foray into the world of advertising, I’ve come to the conclusion that, at best, it’s going to be a modest success.

It may generate enough revenue to support Twitter’s operations but likely nowhere near the money needed to justify $150-million of venture capital.

This “thesis” is based on the belief that companies using Twitter are already advertising, and they’re being successful because consumers don’t see it as advertising – nor do they find it intrusive.

Take Starbucks, for example, which has signed on as one of Twitter’s initial ad partners. With a significant Twitter footprint, Starbucks is effectively leveraging Twitter to do sales and marketing. The 844, 647 people who follow Starbucks have opted-in to receive “advertisements”. The same goes for people who follow Dell’s @delloutlet, which has 1.56 million followers.

The difference between having an active, marketing-focused Twitter account that consumers find interesting, valuable and engaging, and advertising on Twitter is enormous. As wide is the gap between seeing Starbucks tweet about a new coffee promotion, and Starbucks insert a promotional tweet into your stream. The marketing efforts are one thing, advertising is another thing altogether.

Let’s me clear, Twitter will generate advertising revenue but it will be nowhere as successful as what Google has done because the relationship that people have with their Twitter streams is a lot more personal than seeing a sponsored box beside a search query.

Many companies realize that being active on Twitter and being a good citizen of the TwitterSphere is a lot more effective and less expensive than being an advertiser. If companies without a foothold on Twitter, advertising may offer  a short-cut but it won’t be as effective without a strong Twitter presence.

For more, here’s an article in the Washington Post’s Big Money, which points to Facebook’s struggles in attracting advertising as an illustration of “how hard it is to advertise against a social network”.

Enabling a Rush of Innovation…and Revenue

By Mark Evans in Social Media 2 Comments Tags: , , ,

Big news from Twitter: it has officially launched its “Firehose” API in which third-parties can have 100% access to Twitter’s data. Twitter proclaims the announcement as something “Enabling a Rush of Innovation” but you could easily argue it is “Enabling a Rush of Revenue” as Twitter will start to charge for different API packages.

Much like the recent announcement that Twitter will start placing advertising within search results, the concept of charging for access to its API is a no-brainer from a business perspective. It’s something that I have argued in the past that Twitter should have been actively considering given the value that the API provides to third-party services looking to use the API to build businesses.

As GigaOm’s Liz Gannes points out, the big question now is now much Twitter will charge for its API. It makes sense that smaller users will likely pay nothing or a modest amount, while high-volume API users (Tweetdeck, Seesmic, Scoopler??) will pay significant amounts.

Twitter said there are seven companies now using Firehose – Ellerdale, Collecta, Kosmix, Scoopler, twazzup, CrowdEye, and Chainn Search. Twitter did not talk about pricing structures said “these companies range from funded startups to part-time, one-person operations so we came up with a fair way to license access that scales with their business”.

What we’re finally seeing from Twitter is the foundations for a business plan that will generate enough revenue to justify the venture capital that it has attracted. Generating revenue from advertising and its API is something that Twitter could have introduced months ago but, for whatever reason, it decided to wait until early-2010 to do it.

Maybe the time is finally right, or maybe Twitter’s investors have put the hammer down, and make it clear that it was time for Twitter to quickly evolve from a popular project into a viable business.

Can A Social Media Agency Be Relevant?

By Mark Evans in Social Media 1 Comment Tags: , , , ,

At the meshmarketing conference last October, one of the panels was how social media was tearing down the silos between advertising, public relations and digital agencies. Instead of operating in their own realms with little overlap, these different agencies are increasingly finding themselves in direct competition due to social media.

PR agencies, for example, now need to offer social media service, as well as digital content to create campaigns. Advertising agencies need to offer digital to complement their creative efforts, while digital agencies have to provide social media consulting to complement their development work. As a result, we are starting to seeing acquisitions and internal expansion to deal with the growing demands of clients who want one-stop shopping.

In the wake of this activity, it’s interesting to see the creation of Powered, a new 70-person social media agency that was created by combining three different agencies: Crayon, Drillteam Marketing and StepChange Group.

According to AdAge, Powered was created to “compete with digital agencies, public relations shops and an emerging crop of specialists to occupy the lead role in helping brands deal with social media.”

So, the obvious question is whether a “one-trick” pony agency such as Powered can effectively compete with PR, digital and advertising agencies that are driving towards offering a broader portfolio of services, including social media.

My sense is that for a social media agency to be viable, it obviously needs to offer excellent strategic and tactical services. That said, there will be pressure to expand into other areas such as digital to serve clients who don’t want to deal with one agency for consulting and then another agency to create the digital collateral needed to support their social media campaigns.

If Powered becomes successful and establishes itself as a social media powerhouse, it would not be at all surprising to see it snapped up by a digital, advertising or PR agency looking to quickly expand its capabilities – something that would no doubt please Powered’s investor, Austin Ventures.

The Emergence of Twitvertising

By Mark Evans in Advertising/Marketing, Social Media 4 Comments Tags: , , ,

Here’s the thing about Twitter: it has huge potential to become a lucrative advertising platform – something that Twitter has continually resisted, although its resolve may be weakening (or disappearing) based on recent comments by COO Dick Costelo.

There’s a great story in today’s New York Times about how advertising networks such as ad.ly and Ted (Pay Per Post) Murphy’s Izea are doing gangbusters by getting popular Twitter users such as John Chow to insert affiliate links into their Twitter feeds. Chow made $3,000 in October by simply posting these kind of links.

While Twitter has taken the stance that advertising would ruin the experience, the fact is relevant and contextual advertising could be a massive business. So while Twitter sits on the sidelines (until, apparently, next year), a growing number of entrepreneurs are moving into the Twitvertising market with no qualms or concerns about sullying the ecosystem.

You have to wonder what Twitter thinks of all this activity given it’s still scrambling to create a business model to justify more than $100-million in venture capital. As Google has illustrated, relevant advertising works: consumers like it because it meets their needs and interests, while advertisers like it because its targeted and measurable.

While there be huge concerns about spam, the great thing for Twitter users is they can quickly unfollow anyone who they believe is spamming them or sending them too many affiliate links. And if the advertising networks are smart, they will lean towards disclosure so that Twitter users receive some warning about the existence of ads.

As Twitter evolves, there’s no doubt advertising is going to be a growing part of the mix. Before it explodes, Twitter would be wise to lay out the ground rules of what’s acceptable. This isn’t suggest that these rules will be respected but at least Twitter will have made an effort to control the beast before it escapes out of the cage.

Would you be open to ads on Twitter? If so, how much advertising would you see as acceptable?

More: Robert Scoble has some thoughts about the emergence of Twitvertising, including his decision to sign up for ad.ly. I suspect the number of ad.ly members will be see strong growth over the next little while.

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