Archive for the ‘advertising revenue’ tag
We thought that the Internet would bring with it a whole wave of new media disruption. We were unprepared for just how massive the disruption has been.
You needn’t look any farther than this one staggering statistic to understand the change that has been afoot in the past short while: Google‘s advertising revenue is larger than that of the entire print industry’s revenue. In the past short while, we have seen the rise in new ways for advertisers to connect with consumers like never before. You can’t throw a marketer down a flight of stairs these days without hearing the terms, real-time bidding, big data, retargeting and native advertising tumbling off of their tongues. It has become so pervasive that it’s beginning to make social media, mobile marketing and plain-old digital advertising seem somewhat antiquated. With this, we’re seeing an increasing amount of media budgets shifting from traditional channels to digital advertising. So, where do you, the business leader, place those ad dollars? Do you spend them with the latest and greatest shiny object? Do you stick to your traditional guns? Do you sprinkle it around in the hopes of hitting the jackpot on the advertising table of roulette?
It is time to create a media model that transcends these divergent ways that consumers are connecting brands.
What if we tossed away the terms we have used to date? What if we forgot all about traditional media, social media, mobile marketing, banner ads, QR codes and more and simplified the media creation process by simply asking if the media is active or passive? Passive media is any form of media where the consumer can’t physically do anything with it, except for consume it (newspaper, television, radio, etc…). Active media is any form of media where the consumer can physically engage with it (Facebook, Twitter, Google, etc…). But there’s a hook to this (there is always a hook, isn’t there?). We can’t just look at one aspect of the experience to see whether it is active or passive, we have to look at all four quadrants to find true equilibrium that will drive success.
Quadrant #1: The Consumer. When is the consumer active or passive with the media channel? Do all consumers want to tweet, share, chat and create when they are engrossed in a TV show late in the evening, or are they most comfortable sitting back and watching the drama unfold? We live in a world where television broadcasters are pushing at a feverish pace to make what was a very passive media channel (sitting back and watching) into an active one (adding widgets, encouraging tweeting and more). Understanding how the consumer best connects to the media is core to understanding what type of advertising they will best engage with. So yes, you can tell TV show viewers to follow along on Facebook, but how many of them simply want to watch the TV show and go to bed?
Quadrant #2: The Media. How do you think Google – as a search engine – would be performing if the sole form of revenue was driven by banner advertising on the search results and not the contextually relevant format of AdWords? In fact, banner advertising is a very simplistic and non-active type of media. Online publishers replicated the print model by creating these little boxes that resided on web pages that had content on them back in the mid-nineties. The model was simplistic: "we have content on a web page, why not put an ad next to it like we do with magazines and newspaper?" While banner advertising still generates billions of dollars in media advertising, the truth is that it is a very passive advertising format that was simply copy and pasted over to the a very active new media (the Web). We could talk about how "interactive" these banner ads are (or were promised to be), but the analytics don’t lie: banner ads couldn’t perform any worse. Over 99% of banner ads fail to generate any kind of click. They are passive forms of media that are pasted into very active digital channels.
Quadrant #3: The Channel. Are you the same person on Google as you are on Facebook as you are when you are reading this post on Harvard Business Review? Digital consumers are not only different, but are both passive and active in the digital platform depending on which channels they are using. When you are doing a search on Google, you have a very different intent and mindset than when you’re on Facebook and connecting to friends or catching up with acquaintances. It becomes abundantly clear that you’re also in a dramatically different media mindset as you read these words than when you’re creating a board on Pinterest. Understanding how these channels operate and which types of advertising matches the consumer’s intent is critical to building a successful advertising campaign.
Quadrant #4: The Platform. Is the platform an active or passive one? Think about digital books as a medium. Do readers really want links, embedded video, extended audio interviews, sharing capabilities and more? Will they, intuitively, turn what has traditionally been a very passive medium into an active one, simply because book publishers feel they are competing for attention with everyone from YouTube to Twitter? As we watch the "smartening" of the television, it will be interesting to see just how many viewers truly deep dive into the myriad of new ways that television is hoping the viewers will. Most newer televisions are Internet enabled, but what is the true number of households that actually connect their TV sets to the Internet and engage with channels like Netflix and beyond? According to eMarketer, nearly one quarter of US households now have a TV connected to the Internet, so we’re about to find out just how active this typically passive platform can become.
It’s not a zero sum game when it comes to active and passive media.
As with all things, understanding the quadrants and then matching your marketing to best meet the needs of the consumer will be paramount for success. That being said, it is not a zero sum game, and the ways that consumers engage with different forms of media is not an absolute. While some will claim that Twitter is useless unless you’re constantly tweeting and retweeting, there is a large user base that is simply interested in following celebrities (these people are very passive in an active channel). And, for every person who watches The Voice while building up a hearty Doritos stain on their jammies, there is a ever-growing segment that will tweet, share, chat and follow every move that that Team Usher makes (these people are very active in a passive channel). So, instead of worrying about social media marketing, mobile marketing and more, why not sit back as ask yourself these questions: when are our consumers active or passive with our brand? Is our advertising active when they’re active and passive when they’re passive? Are the channels that we’re advertising on active when the consumers are active or passive when they are passive and more? And, lastly, is the platform – in and of itself – a predominantly active or passive one? From there, you can truly start to better understand what a proper advertising mix can look like and you will also be better at defining which opportunities could potentially work against the others that are woefully flawed.
Active media. Passive media. Active consumers. Passive consumers. The world of media continues to change.
The above posting is my twice-monthly column for the Harvard Business Review. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original version online here:
Myles Recny looked in the face of Twitter yesterday and said, “You should shut my company down.” Now, the social network is in talks with Recny about the app he claimed was “better than Twitter Ads.”
“Twitter reached out to me, as has the ad team at one of the other big social networks, and we’re trying to work something out,” Recny said today, in an interview with VentureBeat.
His app, Followgen, uses Twitter’s application programming interface to automate “favoriting” people’s tweets. A company signs up with Followgen and decides on a target market. The app finds relevant Twitters users and favorites some of their tweets. If all works according to plan, the person will be pleased at having a tweet favorited and then, in turn, follow the company’s Twitter profile.
Recny considers this a form of advertising. Instead of serving impressions, he’s serving favorites that convert into follows. And that’s why he wrote that Twitter should shut him down: His app may violate Twitter’s terms of service.
However, he believes that if he had legitimate access to Twitter’s special advertising API, he could make money for both companies.
“It’s been kind of an emotional roller coaster. I’ve been having uncertainty whether what I was doing was white hat or black hat in regards to Twitter’s Terms of Service,” said Recny.
Twitter has a habit of shutting companies like his down, particularly when they encroach on its business model. Instead of waiting for the inevitable, Recny explained to me that he tried to contact Twitter first by applying for the special API two months ago. He then reached out through friends who knew Twitter big wigs. Both attempts failed.
Only after he wrote the blog post yesterday did the social network get in touch with Recny.
“We both know how the dev ecosystem feels about Twitter right now, and it’s not a positive sentiment, is it?” said Recny. “People feel that their API access can be turned off for any reason. People feel like there’s no trustworthy channel in which to get in contact with Twitter.”
He says Followgen customers can expect one of three outcomes:
- Twitter will yank Followgen’s API access and he will have to shut down the company.
- Twitter will yank Followgen’s “favoriting” business, but give Recny its Ads API access to build something that will be mutually beneficial.
- Twitter and Followgen will figure out a revenue sharing partnership and keep both the favoriting product and a new Ads API-supported product on the market.
That last one, even Recny admits, is highly unlikely. But Recny is not without options. Twitter and the mysterious second social network could be interested in him as an employee on their ads teams.
We asked Recny if Facebook was the second social network to get in touch with him. He replied, “Would no comment be a comment?”
He leaves the experience having learned about the struggles of not only working with Twitter, but working with yourself. He says he would not recommend the solo-founder route, and would find a co-founder next time around. Or, at least, a co-working space with people he enjoys.
Facebook is a license to print money.
As far as social media goes and the growth of online social networking, it’s hard not to have Facebook be the first thing that comes to mind when you think of new media, at this point. The company claims well over a billion active users. They generated close to $4.5 billion in advertising in 2012, and while many were tough on the company in their post IPO performance due to a lack of mobile agility, the company has made some leaps and bound in the past short while to rectify the course in a post Web-browser world and changed that perspective around. In fact, mobile ad spending could rise to $7.29 billion in 2013 (according to eMarketer) and while Google is set to take home more than half of that, Facebook will account for close to thirty percent as well.
There is a bigger picture.
Take a step back and look at what companies like Facebook and Google have created. They are not just tools and services, but a centralized community in a decentralized geography of users who are deeply connected to one another on a global level. When you tag mobile on to that, it’s not hard to imagine a world that doesn’t require telephone services or even text messaging as we have known them to date. Why wouldn’t those who are connected via social media, also communicate instantly and more directly through those channels? There is a profound reason why Facebook and Google offer email, messaging, video conferencing and chat services as part of their suite. Once one company has their users so deeply connected (and yes, this is about much more than Facebook’s massive acquisition of Instagram), it becomes increasingly difficult for a user to leave (look no further than the slower adoption and acceptance of Google + in a Facebook world). As you continue to take this bird’s eye view of these massive channels (and how deeply connected people are ingrained in them), you begin to realize that Google and Facebook are, essentially, Internets unto themselves. While many lauded the Web’s arrival as a new place that would disintermediate the mass media companies, and a place where anyone can become a publisher, we went from four major network television stations, to a handful of online giants that control the bulk of online traffic. Right now, these companies see media solutions (advertising, marketing and communications opportunities) as the easiest – and most obvious – way to generate income… much like the traditional media channels that came before them.
What if the true value, revenue and potential of companies like Facebook and Google went beyond the revenue that they generate from advertising?
It’s easy for a company that attracts a lot of eyeballs to become snowblind by the money that brands and media agencies are throwing at them. Ultimately, the economics of advertising is somewhat simplistic: advertising generates the most revenue in a scarcity model. We have no printing press on the Web, and video content doesn’t have to be consumed during prime time on Thursday. In fact, even your typical one thousand word article can be chopped up into multiple Web pages to serve up as many display banner ads as the publisher wants. With so many places to publish content online and so much user generated content, it’s not hard to see a digital advertising world that offers more inventory than there is a market for (an abundance model). Before dismissing that notion as hyperbole, think about how many users complain about Facebook’s advertising and how non-relevant/contextual the ads often are. If a brand was willing to buy that highly targeted and coveted space, we all know that Facebook is willing to sell it. What this means is that there could be other revenue models worth exploring, and one of them could be the creation of a currency.
It’s not easy to make money.
Bitcoin is a peer-to-peer universal, digital currency platform that has been getting a tremendous amount of attention is the past few months. This virtual money holds no physical presence (it’s all zeroes and ones) and is both used to pay for goods and services as well as being traded (much like any other commodity) in the online sphere. In the past short while, it has been gaining in both popularity and value. Currently, the value of one Bitcoin is over one hundred dollars and, to add some perspective to this, in early March there were trading below $35 and as of this past January, they were trading at under $15. Last week, GigaOm published a very comprehensive article about Bitcoin titled, Yes, you should care about Bitcoin, and here’s why, that explained the currency as such: "Bitcoin is to state-issued currencies – often referred to as fiat money – as P2P file-sharing is to traditional broadcast media. There is no centralized source for it that can be controlled or moderated or regulated. It is difficult if not impossible to track from the outside… It is important to understand that, while fiat money is issued and controlled by governments and their laws, Bitcoin is generated and controlled by algorithm. While governments can always print more money according to their needs, there will only ever be just under 21 million Bitcoins (right now there are around 11 million), because that’s how the algorithm works." Beyond the logistical, technical and security issues that are happening in parallel with Bitcoin’s meteoric rise, it is abundantly clear that this is a first generation digital currency experimentation and that we can expect our world to see a lot more of this. What if Facebook, Google and others took on the business of borderless digital currency? Think about the current race for digital wallets and decentralized online banking opportunities. What if the real business of Facebook or Google was to become the next-generation of Bitcoin? Facebook Credits already exist (remember Linden dollars in Second Life?). Currently credits in online platforms are still centralized and controlled, but what if Facebook gave their billion-plus community their own currency system and then extended it outward – one that wasn’t or couldn’t be affected by local governments, markets and the like? What if one dollar for me was the same monetary value as one dollar for (in whatever country you’re living in)? Clearly, there are many economic and legal hurdles that these companies are going to have to solve and jump through to create their own legally recognized currency, but Bitcoin is pointing to a fascinating new world where banks and our money – as we have known it to date – is about to become even more digitized and globalized. It’s something all of us need to be watching much more closely, because it makes perfect sense.
If Facebook is a massive global community, why wouldn’t that community have a shared currency for exchange?
Facebook is making a big effort to diversify its revenue generation into areas like payments around gaming and other services, but today the game is still ads-ads-ads, and it’s growing. In its Q2 earnings which have just come out, Facebook reported advertising revenue of $992 million. That works out to 84% of its total quarterly revenues of $1.18 billion.
Looking back to Facebook’s S-1 filing from before the IPO, that’s actually an increase as a percentage of revenues from last quarter, when ads made up 82% of revenues.
The company has gradually been working down its proportion of revenue from ads. Facebook said in that filing that in 2009, 2010, and 2011 and the first quarter of 2011 and 2012, advertising accounted for 98%, 95%, 85%, 87%, and 82%, respectively, of its revenue.
But it may be that the growth of new formats like Sponsored Stories, both on desktop and mobile versions (latter pictured here) have bumped that up again. A recent report from TGB noted that in face Facebook’s CPMs are up by some 58% this quarter compared to last year, because of these new, more engaged (or some might say in your face) formats.
On the other hand, the rise in ad proportion could be down to the decline in payments revenues. Zynga’s results yesterday were a pointer that these could be in some trouble. Facebook says that payments and other fees generated revenues of $192 million.
Ads, nevertheless, are not outpacing over revenue growth at the social network. Facebook noted were up by 28% on the same quarter last year. Revenues overall have grown by 32%.
Facebook noted in its earnings report that it has “independent ROI data” from more than 60 ad campaigns on the platform, which show that 70% of campaigns resulted in a return on ad spend of 3 times or better, and 49% of campaigns showed a return on ad spend of 5 times or better.
Back in July of 2011 hundreds of YouTube partners were reportedly making over $100,000 per year. Thursday during the YouTube Keynote at VidCon Tom Picket, Global Head of content Operations & YouTube Next, reported for the first time that there are now “thousands of channels making more than six figures a year from YouTube advertising revenue alone.”
New Career Opportunities Daily: The best jobs in media.
Facebook and Google are competitors in their social networks, but now Facebook is seemingly jumping further into Google’s advertising territory. External ads from the social network are appearing on Zynga.com — the first of their kind outside Facebook’s own domain.
“People may now see ads and sponsored stories from Facebook on Zynga.com,” said Facebook in a statement to VentureBeat. “We don’t share any information about people or advertisers with Zynga and advertisers do not have any new targeting criteria.”
The advertising appears once you’ve logged into Zynga.com with your Facebook account. It is otherwise unavailable. The advertisement I found appeared in the lower right hand corner, under my list of friends online. The ad showed my friends who “liked” that brand, and had a “sponsored” tag with the Facebook ‘F’ next to it. Zynga and Facebook have an advertising revenue share set up.
Facebook did disclose an agreement between the two companies after Zynga filed an amendment to its S-1 filing in 2011. Facebook told Inside Facebook that it had promised to help Zynga with external advertising in the future. At that point in time the social network didn’t reveal timing for the new advertising. The appearance on Zynga.com does, however, make it seem like the possibility of a home-grown Facebook ad network is near, if not obviously possible.
Advertising is Facebook’s lifeblood and the ability to expand beyond walls and news feeds is a huge opportunity to take revenue away from Google. Google runs its own advertising programs, such as AdSense and AdWords specifically for advertising on its search engine. There are also rumors that Facebook may expand beyond competing with Google in the social and advertising industries, but also in search.
An image posted by Mark Zuckerberg (see right) soon after the company announced its intentions to go public stirred these theories. The picture showed Zuck’s laptop with Facebook pulled up. At the top of the screen was a long, thin, white bar that greatly resembled a revamped search field. Altimeter Group analyst Rebecca Leib told Venture Beat at the time that she thought a Facebook search product could “have not only very tangible advertising benefits for Facebook, but also make Facebook a more compelling place for users.”
While no such search has yet been revealed, it’s safe to assume that Facebook will be competing with Google more deeply in the near future.
hat tip Inside Facebook
The addition of Chinese search engine Baidu to iOS later this year will give Apple a cut of advertising revenue from the popular website.
We are all well aware of Facebook’s looming concerns with its abilities to capitalize on the fact that almost half of its user base is more mobile than not. The problem that Facebook faces is that there is precious little real estate that can be used for ads in the social presentation of the service. No ads means no money, which means no stock jump, which means no future. Well, no future is a bit dramatic but you get the point.
Twitter, on the other hand, is reaping rewards in the mobile space mainly because it is built to handle the needs of both mobile users and advertisers. Reuters reports
Twitter has generated more advertising revenue from its mobile platform than from its website on many days in the last quarter, CEO Dick Costolo said Wednesday, highlighting Twitter’s progress in squeezing ad dollars out of the growing number of smartphone and tablet users worldwide.
Costolo was speaking at a conference in San Francisco and he took the chance to point out the competitive advantage that Twitter holds over its larger, more public and rather clumsy brethren, Facebook.
“We’re borne of mobile,” Costolo said in response to a moderator’s question about the difference between Facebook and Twitter. “We have an ad platform that already is inherently suited to mobile, even though we launched our platform on the Web and only started running ads on mobile recently.”
Hey, strike while the iron is hot, right? Facebook is working hard every day to keep the wolves at bay following the IPO to end all IPO’s ( and in the social space it may have actually done that since it has not done so well). Everyone is wondering just what Facebook will do to get over their mobile hurdle and right now the answers are few and far between. Twitter on the other hand can simply insert a relatively unobtrusive ad in a users stream and everyone is happy. The user gets their same experience with minimal intrusion and the advertiser is inserted directly in the path of the target. There are no display ads to be ignored. Ad blindness by users will be more difficult to develop. There are a lot of advantages for Twitter in the platform that is arguably the future of the online world.
As a marketer, how are you preparing for the near complete mobilization of the Internet space? Are you planning for which platforms will have the ability to deliver ROI in the mobile space? Do you think Twitter see rapid growth in total users as more people get aggravated with Facebook’s mobile shenanigans? Will that help shape your decisions?
So many questions. If you feel like you have an answer, sound off in the comments.
The IAB released global mobile ad revenue estimates for 2011, building on its earlier release of US mobile ad revenue data. The IAB says that total mobile ad revenues, on a global basis, were $5.3 billion last year. One of the most striking things about the report is how much paid-search dominates…
Please visit Search Engine Land for the full article.
Regular Springwise readers may recall Out of Office Ad, the effort we covered last summer that lets users monetize their out of office email autoreplies. Operating on a similar premise, New Zealand-based Donate Your Desktop gives PC users a way to donate their desktop background to charity.
Users of Donate Your Desktop simply download an application for Windows or Mac and then select the charity they’d like to benefit. Each day, the company then renews their desktop wallpaper with a fresh design sponsored by an advertiser. It also donates a full 75 percent of the associated advertising revenue to the user’s chosen charity. The Auckland company explains: “Donating your desktop may seem like a small deed, but it has the potential to make a huge difference if we all get behind it. There are over a billion computer users across the world that could be helping those in need. Our vision is to turn your collective efforts into large ongoing donations to our partner charities.”
Currently, Donate Your Desktop is available for use only by New Zealand consumers, but the company aims to expand. One to partner with toward that end?
Spotted by: Grant Wilson