As required in its IPO filing, Facebook has released its ad revenue, for 2009-2011. Ads brought in $3.2 billion in 2011, a year-over-year (YOY) growth of 69% from $1.9 billion in 2010, leading Business Insider’s Jim Edwards to declare, “Wow. This is a massive ad sales business.”
In terms of volume, there was a 42% increase in the number of ads delivered in 2011, and, an 18% increase in the price of ads.
In its prospectus, Facebook described its value to advertisers: “Advertisers can engage with more than 800 million monthly active users (MAUs) on Facebook or subsets of our users based on information they have chosen to share with us such as their age, location, gender, or interests. We offer advertisers a unique combination of reach, relevance, social context, and engagement to enhance the value of their ads.” In terms of growth, Facebook claims those 845 million MAUs as of December 31, 2011, is a YOY increase of 39% as compared 2010. Facebook went on to describe how it creates value for advertisers, with—
- Relevance, as ”Advertisers can specify [user subsets by] demographic factors and specific interests that they have chosen to share with us on Facebook or by using the Like button around the web.”
- Social Context, which highlights a user’s friends’ connections with a particular brand or business (e.g., that a friend Liked a product or checked in at a restaurant). We believe that users find marketing messages more engaging when they include social context."
- Engagement, as the shift to the more social web “creates new opportunities for businesses to engage with interested customers. Any brand or business can create a Facebook Page to stimulate an ongoing dialog with our users.”
The Economist summed it up this way in a poll: “It collects huge amounts of data about its 800m plus users, can serve up creepily well-targeted ads.”
But does it work?
Advertisers use Likes as a kind of social media “Nielsen rating,” but the ratings can be disappointing. In terms of engagement, only slightly more than 1% of Facebook users who “Like” brands like Procter & Gamble or Coca-Cola actually engage with the brands, according to research. And engagement can include reposting a clever ad from YouTube—good for branding, but without measurable sales.
Earlier this month, TBG Digital (TBG) in its Global Facebook Advertising Report observed “considerable savings” were possible in cost-per-clicks (CPCs), up 45%, for advertisers on Facebook. But, those advertisers must keep the clicker within Facebook: directing a visitor away from Facebook and onto the advertiser’s own website drives up the CPC.
So the ad revenue is impressive, as are the claims. But as an effective ad platform, Facebook still defies analysis. Likely it will have to come up with more solid figures for its annual investor calls.
Twitter “100% Focused on Advertising” Says CEO
Twitter CEO Dick Costolo said yesterday that while the company is tempted to pursue e-commerce and brand-sentiment analytics, it is focused near-term on its ad products, reports Ad Age.
Costolo was speaking at All Things D's media conference on Monday night. As tempting as it is to produce a slew of related products, Costolo said the company does not need to add more components to its business. Rather, “We just need to scale it up" he said, referring to the ad business. He went on to describe the company’s strategy of increasing the number of advertisers, and expansion into geographic markets.
At present, Twitter offers a streamlined ad inventory, which has most of that functionality. The portfolio includes:
- Promoted tweets that appear in search results, and in target geographies
- Promoted trends, currently in beta, placing advertisers alongside discussion strings
- Promoted accounts, which appear at a premium in Twitter’s “Who To Follow” suggestions
- Enhanced profile pages, visible without logging into Twitter; in use by just a few invited companies (like Coca-Cola and Virgin Atlantic, depicted below), but reportedly available to all brands as of February 1
- And Advertiser Analytics, three dashboards depicting campaign metrics like total impressions, retweets, replies and follows.
Costolo ducked the question about the Enhanced Profile price—is it truly $25,000? But with prompting by a reporter/interviewer, Costolo described the price as seeming “Perfectly reasonable.” Enhanced profiles enable rich background graphics, embedded video and guided promotions, versus the simple 140-word "micro-blogs" available at no cost.
Upfront Digital: Sundance on YouTube | Jeep Crashes Funeral | H&M’s Facebook Furor
- Twitter will launch its enhanced brand ads on February 1, according to Business Insider. The Facebook-like functionality has been available to a few select brands, including Coca-Cola, but now will be generally available—at a pricetag of $25,000.
- ESPN and Jeep caught heat from Digiday, which named the network and automaker in its Bad Ad of the Week.”ESPN covered the memorial service of former Penn State head football Joe Paterno. A rich-media ad for Jeep had a Jeep Wrangler “crash through” the computer screen, as well as Paterno’s casket, which sat dead center.
- The Sundance Film Festival and YouTube have cut a deal to rent out Sundance titles, reports Streaming Media. Most Sundance titles will rent for $2.99 to $3.99 for a 48-hour rental--$1 or more cheaper than from Comcast. The Sundance Film Festival wrapped over the weekend.
- Consumer-goods maker Procter & Gamble will “throw caution to the digital wind,” reports AdExchanger. Chairman and CEO Bob McDonald in an earnings conference call said the company would eliminate 1,600 non-manufacturing jobs, and invest heavily in its digital marketing. "In the digital space, with things like Facebook and Google and others, we find that return on investment of the advertising when properly designed, when the big idea is there, can be much more efficient."
- Angry consumers used Facebook to storm the gates of clothing retailer H&M last week. They accused the company of lifting a designer’s ad idea, reports Adweek. The company has begun marketing goods with the simple tagline “You look nice today,” with a red heart shape. Atlanta artist Tori LaConsay created the tagline—complete with red heart—for a sign in her neighborhood, in 2008. She was unpaid for the sign. Supporters have since deluged H&M’s Facebook site with hate messages. H&M at first attempted to dismiss the similarities as a “coincidence,” but is now seeking a resolution with LaConsay.
TV Leads as Political News Source, Newspapers Lag
When asked where Americans get their political news, fully 44% of Americans responded “Television,” reports Poll Position. Only one segment—adults 30-44—responded “From the Internet.” In that 30-44 segment, 35% chose the Internet, 32% said television was their source for most political news, 18% said somewhere else (e.g., radio, magazines), and 14% picked newspapers.
The overall results are grim for newspapers, at only 16% among all surveyed. 2011 was a tough year for newspapers, with ad revenues a mere $24 billion in comparison to the record high of $49.4 billion in 2005.
Poll Position surveyed 1,113 registered voters nationwide, and claims a margin of error of ±3%.
ANA Survey: Mobile, Social Media Key to Growth in Integrated Marketing
Marketers can better justify their Google, Android and Facebook ad spends. The Association of National Advertisers (ANA) has revealed its findings that integrated marketing communications (IMC) programs are on the rise; and that mobile marketing and social media are especially significant in those communications.
ANA surveyed a cross-panel of its membership on integrated marketing, a topic it studied in 2003, 2006 and 2008. Of those sruveyed, more than half are currently developing and executing IMC programs, aimed at creating a unified message to all stakeholders (including consumers, employees, retailers, stockholders, etc.) and across all media. Since 2006, the percent of marketers developing and executing integrated marketing programs for all brands/products/services has steadily grown:
- 2011: 51%
- 2008: 33%
- 2006: 19%
Also true, 42% rated the effectiveness of IMC as excellent or very good, up from 25% in 2008.ANA attributes that perceived effectievness to the greater availability and use of newer media platforms, such as mobile platforms, which enable better targeting and enhanced metrics.
The period 2008 to 2011 saw a significant leap in the percentage of marketers rating mobile marketing and social media as "important" or "very important" to their efforts. Because of their relative insignificance at the time, neither mobile marketing nor social media were measured in the 2003 or 2006 studies.
Finally, 74% measured IMC success by sales growth, and 61% by brand tracking (e.g., awareness, usage, purchase intent).
Google Display Ads Reach $5 Billion, Double from 2010
Google CEO Larry Page in a Thursday analyst call reported that its display ad business has doubled since 2010. Display ads include network and YouTube ads, which has reached a $5 billion per year business. The ramification according to AdAge is that Google is becoming less dependent on search advertising alone.
Google went on to report that its DoubleClick ad exchange had reached year-over-year (YOY) 130% growth, driven in part by its precise category targeting (e.g., hybrid car buyers and adventure travelers). Brand advertisers are flocking to YouTube’s TrueView format, which emulates the pay-per-click model of AdWords AdSense. Three of those brand advertisers are Ford, GM and L’Oreal.
Bloomberg BusinessWeek observes that Google’s expansion into new markets and onto mobile devices, where it charges less per click, contributed to an 8% drop in its average pay-per-click.
Beauty Marketing Going Social, but Not Abandoning Traditional Advertising—Yet
Beauty product makers are clinging to traditional advertising venues: consider the ubiquitous Cover Girl and “Maybe It’s Maybelline” TV spots, and the still-thick ad-heavy Glamour, Vogue and Cosmopolitan.Still, marketers are hedging their bets with social and mobile campaigns, aimed at “going viral” and creating customer engagement, reports global market research consultancy Kline & Company.
During the 2011 holiday season, marketers ramped up viral campaigns to attract consumers, chiefly those looking for the best deals on personal care products. They turned to social and mobile media for discounts and promotions, and Kline believes “marketers are finding that mobile couponing offers significant advantages over paper-based forerunners in delivering higher redemption rates and encouraging impulse purchases.”
While broadcast and print media ads and coupons remained strong, marketers reported feeling “threatened” by new technologies that enable potential customers to screen out TV ads. For print advertising, they reported feeling constrained by inflexible publication dates and comparatively high costs. They enjoy the real-time adaptability and keyword-based targeting available in mobile and social media. Also, the relatively young and trend-setting demographic natural to those media. Still, those marketers and advertisers feel underserved by the metrics available from those media, and how they stack up against print and television. Kline has devised and a proprietary 5-point metric which it believes rates marketing methods on how critical each is for a given brand.
The study, Beauty Marketing 2011: U.S. Promotional Activities and Strategies Assessment, finds advertisers establishing presences in venues including Facebook, YouTube and the localized Foursquare, where they believe they can accurately target a given demographic. The marketers are tapping into the emerging potential of the still-in-infancy “Facebook commerce” (f-commerce) and “mobile commerce” (m-commerce), and treat these media as sales channels versus brand-awareness opportunities. They are also using those media to engage with enhanced loyalty programs and new sampling methods.
Clear Channel Rebrands, Dumps “Radio” From Masthead
Clear Channel Radio has announced that it has changed its name, effective immediately, to Clear Channel Media and Entertainment. This says the company will “better reflect the evolution of its business.”
The core of Clear Channel’s business will remain its more 85O+ radio stations. But, the company delivers content across numerous platforms, including broadcast stations, online, via iHeartRadio and other websites, HD digital radio channels, satellite, smartphones and iPads, among other platforms. Clear Channel CEO Media and Entertainment CEO John Hogan said “Radio is both our history and the foundation upon which we will grow our company moving forward. That will not change,” but the company is committed to serving “our increasingly diverse audiences and local communities with the best content…wherever they expect it.” Given the breadth of platforms, Hogan believes the company provides advertisers with “multi-platform marketing opportunities that reach, activate and engage target audiences like no one else.”
The company in September hosted what it claims is the biggest live concert event in radio history, being the two-day iHeartRadio Music Festival. The concert celebrated the launch of the New iHeartRadio, which “reinvented the digital radio experience” with access to 800+ live broadcast and digital-only radio stations, along with user-created custom stations and social media integration.
Media Measurement an Illusion, Says Ad Research Foundation CEO
“What does it mean that Coke has 36 million Facebook followers?” blogged Advertising Research Foundation CEO Bob Barocci on the AdAge site. Barocci described the oft-heard complaint that digital metrics are hard to quantify; but he called the simpler days of ad metrics a myth. Twenty years ago, “a brand looked bigger to the consumer if you were in two media.” A company then might enjoy a good score on 24-hour aided recall, but even then, major advertisers were reluctant to trace market share gains to that recall. “No cause and effect then…as now.”
Now the CMO is tasked with dividing ad spend among far more numerous platforms, and dealing with their complexities. The global research director of Kraft Foods described the dilemma to brand advertisers as this: which five of 100 or more touch points that influence consumers should he buy? Mobile phones promise more exposures, but are also driving discounting; should a CMO thus avoid the burgeoning platform? In social media, is recall more or less valuable than likability? “With all the data we have these days, I think we should be finding answers to some of these questions,” wrote Barocci, “But we're not.”
Barocci credits Google with putting significant resources toward analytics, with initiatives like its Advertising Format Impact project to measure the impact of multiple video formats on multiple platforms. Barocci described the Foundation’s multisponsor Arrowhead Project, with a mission to answer the question “What ideas do people get from digital/social media when making a purchase?” The project focuses upon three test categories which vary in length of the consumer purchase process; consumer packaged goods, which are short-term; smart phones, being mid-term; and automobiles, a long-term decision. ARF will present its findings at its March Re:think conference.
Research: Brand Ads Will Outpace Direct Response Online in 2012
Digiday has released some compelling research about online ad spend budgets in 2012. According to a survey of 450 digital marketing and media professionals, brand advertising will overtake direct response online for the first time. Among their findings:
- 64% of marketers will increase their online brand ad budgets in 2012;
- 22% will increase spending by more than 20 percent;
- 60% of marketers are allocating money away from direct response to brand advertising;
- 69% of brand marketers will increase their spends in mobile advertising, 63% in social, and 57% in video.
As Forbes sees it, online ad channels like Facebook, YouTube and mobile phones have paved the way for online advertising to be “A much more mainstream activity for brand advertisers for which TV remains far and away the medium of choice.”According to the survey, marketers expect the same metrics online as they get offline, and then a few more. Of those metrics, 80% value brand lift; 57% expect sales increase; 31% expect increased interaction rates, and 29% expect higher click-throughs and shares and reposts.
“Prepare for greater scrutiny,” Digiday warns media sellers. “Only 6% of brands and 16% of agencies surveyed said they “strongly believe” media sellers’ claims that they can reach the custom or niche audiences that brands seek.”
Forbes adds the caveat that the report was sponsored by ad technology company Vizu; but sees the report as another indication of online ads going mainstream.