Marketing | Social Media University, Global (SMUG)

IBM: You Won’t Recognize the Ad Industry in 2012

IBM has issued a report that crystallizes and formalizes through survey research what many of us have understood intuitively. It’s called “The end of advertising as we know it.” Duncan Riley pointed it out on TechCrunch late last week, and I’ve just finished reading both the report (get the PDFs of the Executive Summary and the full report here) and the accompanying press release. As the release says:

Traditional advertising players risk major revenue declines as budgets shift rapidly to new, interactive formats, which are expected to grow at nearly five times that of traditional advertising. To survive in this new reality, broadcasters must change their mass audience mind-set to cater to niche consumer segments, and distributors need to deliver targeted, interactive advertising for a range of multimedia devices. Advertising agencies must experiment creatively, become brokers of consumer insights, and guide allocation of advertising dollars amid exploding choices. All players must adapt to a world where advertising inventory is increasingly bought and sold in open exchanges vs. traditional channels.

In a previous post I wrote about PR measurement and blogging, and how because of their ability to give lots of numbers, social media can be over-valued relative to news editorial coverage. Even though I’m a huge social media supporter, I still believe that for most businesses the value of mainstream media news coverage is currently much greater than that of online “buzz.” Social media have engagement value, too, and businesses should be getting involved. But editorial coverage still has huge value.

I believe technology and social trends are much bigger threats to traditional advertising than they are to public relations. I will get into reasons for that in a future post.

But as the IBM report indicates, these next five years will be tumultuous for everyone who has been involved in the “one to many” mass media industry that has pushed messages at consumers for the last 50 years. IBM sums it up best by saying: “The next 5 years will hold more change for the advertising industry than the previous 50 did.”

The IBM report, and its four scenarios of how drastic these changes will be, is well worth reading and pondering for anyone interested in marketing and advertising. I’m betting that the “Ad Marketplace” scenario will best describe the picture in 2012.

Technorati: IBM, Advertising, social media, marketing, PR, public relations

Facebook Fan Page: Free Yellow Pages Ad?

With this week’s announcement of its fan Pages and Social Ads, along with its Beacon program, Facebook has made business use a much more integral part of its service. This is the way it has to be, even though some users are grumbling about the commercialization.

I had originally seen the Pages program as, in essence, a free electronic Yellow Pages ad for businesses and organizations. But then when I published a Fan Page and did a search, it didn’t come up among the results.

When I did a search for the Coca Cola fan page, though, the Coke fan pages did show up:

And when you click the “Page” section of results, you see this:

Whereas when I search for the page I created, no Pages are listed in the results:

Can anyone tell me why Pages don’t show up in search results? Do the Coca Cola pages show up because Coke is an advertiser? If that’s the reason, as I suspect, at what level do you have to be advertising for your Page to be part of the search results?

Technorati: Facebook, Business, Advertising, Yellow Pages, Coke, Coca Cola, marketing, search

Facebook Ads Already More Relevant

The big news today was Facebook‘s announcement of its new advertising network, and the ability for brands to have pages. MySpace also has announced a major advertising initiative.

Jeremiah Owyang has done a great job of summarizing what’s new on both of these platforms. When the Facebook system, especially the new Pages for businesses, launches later tonight, I’m sure I will have some more thoughts to add. I’m a hands-on and visual learner, so I will look forward to experimenting tomorrow and beyond.

From what I’ve seen so far, though, I think this will be huge. Steve Rubel cautions against drinking the Web 2.0 Kool Aid (and offers his own tips for detox), but I think he’s overstating the contrarian case. He says only advertisers can save Web 2.0, and he’s right, as the MySpace and Facebook offerings indicate.

But maybe being halfway between Silicon Valley and Madison Avenue, I’m not as fully experiencing the euphoria Steve senses. I agree there will be a lot of the Web 2.0 and social networking startups that will flop. But some will succeed.

A good chunk of the money that is currently being spent on mass media advertising (primarily TV) will be going elsewhere. See what Jeff Jarvis has to say about Dell’s new approach to marketing. I may be wrong, but I believe it’s something like $67 billion a year. As mainstream media audiences continue to shrink, advertisers will want to put their money where consumers’ attention is. It won’t be enough to support every “me-too” networking site, but those that can provide value for advertisers have a great opportunity.

I’ve been experimenting lately with the pay-per-click Facebook Flyers, and have seen some interesting results. But Flyers are soooo October. Things are changing so rapidly in this social networking advertising field that it will take a serious effort to keep pace, at least if you want to be among the leaders.

With that said, I just wanted to call attention to how the ads I’m experiencing in Facebook are already becoming more targeted and relevant, even before the new system launches. Among my Facebook Flyers experiments was an ad I placed for the Your Voice, New Vision listening tour on behalf of the Mayo Clinic Health Policy Center. We had a trailer in Harvard Square today in Cambridge, Mass. getting the patient perspective on health reform, so we used Facebook Flyers to promote the event.

So it was interesting that as I was in Facebook today, one of the flyers that was served to me was from Harvard Business Review. Facebook apparently saw Harvard mentioned in my flyer, and therefore targeted a Harvard-related ad to me.

Likewise, I got the flyer promoting Stevie Wonder concert tickets shown at the top of this post, undoubtedly because Stevie is in my musical preferences. And when I clicked, I came to this site.

The really happy ending for the advertiser would have been if I’d have continued through to buy tickets. I didn’t. But at least the ad I saw was more interesting and relevant to me, a happily married father of six, than some of the others I’ve gotten. Like this one:

Which all makes me think that if Facebook plays this right, it could actually enhance the user experience with advertising by targeting ads to people’s interests. If I see more of Stevie and less of thirtyplussingles, I will like Facebook even more.
The Social Ads element may also be quite powerful by adding friend validation to the mix. There’s danger of overstepping and becoming too ad-dominated, but so far Facebook has been judicious in extending advertising. I think Zuckerberg and the gang will likely do this well, too.

Technorati: Facebook, advertising, marketing, Dell, Jeremiah Owyang, Jeff Jarvis, Harvard, Health Policy, Stevie Wonder

Facebook vs. Google: Ads and Applications

The news this week in the Facebook vs. Google battle for social networking supremacy has been all about applications or widgets. Next week will likely be about advertising. Here’s a review of the week that was and a look forward to what Facebook likely will be announcing to begin its competition on Google’s online advertising turf.

Applications

Don Dodge has a level-headed analysis of Facebook vs. the OpenSocial platform. Facebook may well decide to incorporate Google’s OpenSocial, but developers aren’t going to abandon the Facebook platform. Certainly having MySpace as one of the OpenSocial sites gives it critical mass, but with 50 million Facebook users, the developers will continue to program for it as well as OpenSocial. It really is about the community, and Facebook has that.

Jeremiah Owyang likewise has a good post on what OpenSocial means, as does his colleague Charlene Li. As she says, developers will deploy for Facebook first, before OpenSocial. Her post was written before MySpace joined the OpenSocial junta, but I still think Facebook has the momentum and critical mass of developers. If it takes a few days to produce two versions of an application, one for Facebook and another for OpenSocial, I think it’s likely developers will do both.

Ads

Next week, Facebook is slated to make some big announcements about how its Social Ad network will be implemented. Techcrunch gave a preview last Tuesday, and has updated it with more detailed information, based on some leaked documents, on what Facebook will announce this Tuesday. Search-based advertising with Google is obviously a huge business, but Facebook’s ability to target demographically (particularly as it now will be gathering more opt-in information about user purchases) and to place ads on other sites (not just within Facebook) will give it an opportunity to deliver relevant advertising.

It’s like my recent Netflix experience: I rate movies I’ve seen, and Netflix suggests others I may enjoy. I’m now getting recommendations based on movies I’ve rated, and many of those are ones I’ve already seen. As I continue to rate those, Netflix further refines the recommendations. I see the new Facebook ad program working similarly, but with suggestions coming from my friends, too. Some people are concerned about privacy implications, but users can either opt out or choose to opt in on a purchase-by-purchase basis.

By the way, I have a Facebook Flyers experiment running, testing some different flyers on the pay-per-click Flyers Pro model. So far I’ve spent the princely sum of about $6.5o for about 18,000 impressions. Given that the Flyers Basic program costs $10 for 5,000 impressions and isn’t targeted as well, the PPC program is a better deal. If you don’t get the clicks, you don’t pay. I will be interested to see if the click-throughs lead to people taking the next step.

This week Facebook was on defense as Google (teaming with MySpace) took a run at the Facebook’s platform supremacy; next week Facebook returns the favor with its enhanced ad platform (and if rumors are correct, also will take on MySpace with a new music offering.)

Technorati: Advertising, Online, Facebook, Google, OpenSocial, Applications, Widgets, Social Networking, Flyers, PPC, Netflix

Facebook > WSJ + Chicago Tribune + LA Times + Chicago Cubs + YouTube

So you still don’t think Facebook is a big deal? Today’s Wall Street Journal reports that Microsoft (MSFT) has agreed to purchase a 1.6 percent stake in Facebook for $240 million. That pegs the overall value of Facebook at $15 billion.

In the real estate world, when setting a market price for a house my friends Ben Martin (or at least the people in his Virginia Association of Realtors) and Daniel Rothamel look at what they call “comparables.” They ask, “What price have similar houses in the neighborhood brought recently?” Let’s look at the comparables for Facebook. In roughly the last year:

Rupert Murdoch’s Newscorp paid $5 billion for the venerable Wall Street Journal
Sam Zell bought the Chicago Tribune (which owns the Chicago Cubs and had earlier purchased the Los Angeles Times), for $8 billion
Google (GOOG) gobbled YouTube for $1.65 billion
Avista Capital acquired the Minneapolis-St. Paul Star Tribune (and a few blocks of prime downtown real estate) for $530 million.

Add them all together, and they’re barely equal to the valuation Microsoft placed on Facebook.

Which just shows that for Facebook there really aren’t any comparables. Why?

Facebook has 85 percent of college students in its network, and a similar percentage of recent graduates. At a conference I attended earlier this year, I heard that David’s Bridal has found that people spend more money in the five years after they get married than they do in any five-year period. Facebook has the ability to help advertisers reach these people in their golden spending years. If, as David Walker said about Medicare, “Demographics are destiny,” Facebook’s future is bright indeed.
Facebook’s growth in other demographics is similarly astonishing. In adding 200,000 new users per day, Facebook ran out of college students to bring in a long time ago. The great majority of the growth this year has been in older adults and internationally. Shel Israel said yesterday that in Israel, where the primary language is Hebrew, Facebook now has nearly 100,000 users, which is up 33 percent in the last 9 days.
Facebook users don’t (mostly) just sign up for an account and forget it. Over half of its users visit the site at least once a day, and the average time spent on Facebook is 20 minutes per day.

I will confess that when it was reported last year that Mark Zuckerberg had turned down $1 billion or more for Facebook, I thought he would regret it.

That was before I actually tried Facebook. If you haven’t tried it, you should. Shel Israel says it’s the most beneficial professional networking tool he has ever used. My other friend Shel, Shel Holtz, and his partner (in the podcasting sense) Neville Hobson, in their For Immediate Release podcast for PR professionals, talk about Facebook in every program. They’ve joked that they have a rule that they have to mention Facebook at least once in each of their twice-weekly podcasts, but the reality is Facebook is that important.

Steve Ballmer obviously thinks so. And if you’re in sales, marketing, PR or have any need for professional networking, so should you.

Lest Shel Israel take me to task for that last line, I want to emphasize that you need to understand Facebook and social networking, and not see it as just another channel to force-feed your marketing messages to a captive audience. They (we) are not an audience. We’re creating content, too. Markets are conversations, and that involves both speaking and listening.

Microsoft is betting big that Facebook is where a lot of those conversations will be happening.

Technorati: Facebook, Google, Microsoft, MSFT, GOOG, Wall Street Journal, Chicago Tribune, Los Angeles Times, Star Tribune, Newscorp, Rupert Murdoch, Yahoo, FIR, For Immediate Release, Shel Israel, Shel Holtz, Neville Hobson, Steve Ballmer.