Facebook users bring in 10 times less cash than traditional media users

February 8th, 2012

An excellent article in Guardian’s Monday Note caught my attention earlier this week, titled ‘Facebook’s strange economics‘

The piece, written by Frédéric Filloux compared Facebook’s valuation 3 years ago, with its valuation now and pulled up some interesting data on its profit and value per user, then compared this to other social and traditional media.

The article set the scene with a snapshot of a Marc Andreessen interview, from February 2009, who was the creator of Netscape and a Facebook board member. At that time, the social network had 175 million users and Microsoft had just made an investment setting Facebook’s valuation at $15bn.

Andreessen was quoted on the vision for Facebook, saying: “6 billion people on the planet. Probably 3 billion of them with modern electricity and maybe telephones. So maybe the total addressable market today is 3 billion people. 175 million to 3 billion is a big challenge. A big opportunity.”

I’m sure there were a few raised eyebrows in 2009, but perhaps his statement is a little more believable today, although there are other issues such as strong competition in key markets, the member opportunity is indeed there.

Fast forward to last year (2011) when Andreessen was quoted commenting on Facebook’s funding ($1.3bn as of January 2011). Andreessen said the whole amount was actually a shrewd investment as it translated into an acquisition cost of “one or two dollars per user” ($1.53), which sounded perfectly acceptable to him.

As Filloux mentions in the article, if you look at Facebook’s pre-iPO filing: Marc Andreessen was right both in 2009 and in 2011.

So why the title of ‘Facebook’s strange economics?‘ Well, this is where it gets interesting.

As Filloux points out, last year, each of the 845 million active members on Facebook brought in $4.39 in revenue and $1.18 in net income. He also pointed out that based on the $3.9bn in cash and marketable securities on Facebook’s balance sheet, each of these users actually generated a cash input of $1.53 dollars.

The article then suggests the expected market value for each user after the IPO, which is based on the $100bn valuation, comes out at a value of $118 per user.

Filloux then goes on to compare this to other social networks and more traditional media.

Looking at LinkedIn, which is obviously more specialised than Facebook, and has about 145 million users, it has a $7.7bn market cap and a value of $57 per user. However, LinkedIn makes $3.5 in revenue and $0.78 in profit.

The New York Times, until recently the most read online newspaper in the world, is a less straight forward case, as Filloux notes, simply because the company has numerous websites that deal with domestic and global users as well as traditional readers of multiple hardcopy titles.

Filloux suggested a figure of 50 million people worldwide who are in regular contact with one of NYT’s titles. Based on today’s $1.14bn market cap, this yields a valuation of $23 per NYT customer, five times less than Facebook.

However, there is a large anomaly because in 2011, each NYT customer brought $46 in revenue, almost 10 times more than Facebook. As for the profit ($56m for the NYT), each customer brought in a little more than a dollar.

Looking at traditional media company Gannett, Filloux noted it makes between $50 and $80 per year in revenue per customer, and, depending on the way you estimate it, the market values that customer at about $50.

This means Facebook or LinkedIn are flying high while traditional media are struggling; when Facebook achieves a 47% profit margin, Gannett or News Corp are in the 10% range.

This in no surprise in terms of the way social media are over taking traditional media, but the value per user is much lower. 10 times lower in fact, but the market values these users up to five times more.

Bringing this in to context, Facebook looks set to offer shares a multiple of 100 times its earning and 25 times its revenue. Apple is worth 13 times its earnings and Google 20 times. These kinds of figures do not tend to stand the test of time very well when the market matures, so beware of the Facebook Bubble as Filloux puts it.

The article offers real clarity on what has been one of the most dramatic valuations since the dotcom boom. Facebook’s success is undeniable and its meteoric rise to success/power is there for all to see, but surely the valuation is generous to a fault. Or too generous not to fault.

I have no doubt Facebook’s IPO will be a massive success, and the future of the organisation is bright, but why do we need to make a success story into a super success with falsely inflated valuations, when the real story is still pretty damn impressive?

Posted in Blog, Digital communications, Digital media, Journalism, Liberate Media news, Trends and research, Useful resources | 3 Comments »

read more

A Day-off after the Super Bowl?

February 7th, 2012

The Super Bowl has run its course for another year, but Coke Zero has come up with a cheeky little campaign asking to make the day after Super Bowl Sunday an American public holiday, calling it ‘Magnificent Monday’.

The reason behind this is clear, they say 7million people call in sick after the big event and another 4 million show up late to work.

Coca Cola is asking the Twitterverse to submit ideas and show your support using the hashtag #magmonday let’s just hope it doesn’t get hijacked like some other high profile brand campaigns recently!

Good luck Coke Zero, we are fully behind you.

Posted in Blog, Content, Digital communications, Trends and research | No Comments »

read more

BMW Interactive Projection campaign

February 1st, 2012

We do love a good interactive campaign here on the Liberate Media blog, none more so than the BMW Interactive Video Projections campaign by iLogic from Johannesburg, South Africa.

The campaign:

To Promote the BMW 1 Series in South Africa.

The Idea:

An interactive racing game was beamed on to buildings and scaffolding. Assistants on the ground helped participants enter their Facebook details via a Galaxy Pad (steering wheel) in order to compete. Facebook was integrated by posting the user’s interaction to the BMW 1 Series fan page, as well as the racer’s personal profile.

The Result:

A Facebook post congratulated the user on engaging with the BMW interactive projection and listed the activation’s location. There were 810 campaign Facebook posts.

The video:

Posted in Blog, Content, Digital communications, Trends and research | 1 Comment »

read more

A Google a day puzzle

January 17th, 2012

If you haven’t seen this before a Google a day is a great way to stimulate your brain first thing in the morning! It is basically a puzzle you have to solve via Google search, and there is a new puzzle every day to answer.

To make sure you cannot cheat, Google uses Deja Google – “A wormhole inspired time machine that enables you to solve today’s puzzle spoiler free by searching the Internet as it existed before A Google a Day launched“.

Today’s question is:

Who was the first American president known to have sworn his oath of office on a book other than the Bible?

To help you enhance your search understanding, use Google Inside Search, which is a Google site with the latest search features, tips and tricks.

If you’re really into a Google a day, there is a Chrome app available here, or I would also suggest you try out pokki, which is a desktop platform allowing you to install various apps to it, including one for ‘a Google a day’.

Posted in Blog, Education, Trends and research, Useful resources | No Comments »

read more

Google changes the rules and upsets Twitter, among others

January 12th, 2012

Earlier this week Google announced a number of changes, which apply to the U.S. only at this stage, and are designed to accelerate personal search, and move towards social search.

The three changes fall under the following categories:

First: Personal results, aimed at helping you to find more relevant to…well…you.
Second: Profiles in search, meaning you can more easily identify people you’re close to or want to follow.
Third: People and pages, which focuses on helping you to find profiles and Google+ pages related to memes or topics of interest.

The additions offer more meaningful ways to connect with people around you, straight from the search results.

This all sounds well and good, and personalising and or customising results to be more relevant can only be more positive, can’t it?

Many commentators such as the Guardian and BBC have picked up on the other side effect of these changes which is to make Google+ much more relevant. For example, when you search for information, particularly about individuals, results from the social network will be prominently displayed on the first page of results, assuming you are a member.

That makes Google+ a much more attractive social network, as users will see fewer results from outside it when they search for information.

As you might expect, Twitter has offered its opinion on the issue, as it has perhaps the most to lose. Twitter’s lead lawyer, Alex Macgillivray, called it a “bad day for the internet“, and suggested - as a former Google employee - that there would have been dissent internally “at search being warped this way“.

Twitter later made a formal statement: “For years, people have relied on Google to deliver the most relevant results any time they wanted to find something on the internet.

“As we’ve seen time and time again, news breaks first on Twitter, as a result, Twitter accounts and tweets are often the most relevant results. We’re concerned that as a result of Google’s changes, finding this information will be much harder for everyone. We think that’s bad for people, publishers, news organisations and Twitter users.”

Others have also criticised the change, Danny Sullivan of Search Engine Land commented: “Search engines are supposed to send you away to the best information, even if they don’t have their own in stock. Google has previously been excellent at providing links to the most suitable information.

“Today’s change is one of the few times where I’m thinking ‘What the hell are you doing, Google?’”

Getting to the heart of the matter, Google was always going to find a way to move its social network, which is so far behind the game, to the front. Its best strategy to achieve this is to link its social network more closely to its search engine, which is after all the most popular in the U.S and Europe. But is that fair?

Google’s decision to favour Google+ posts which would not rank highly by its normal criteria (defined by the number of “authoritative” pages on the web linking to it) could suggest that it is favouring its own product in order to grow it more quickly. That in turn could breach antitrust (or competition) laws.

Twitter and Facebook content does not generally appear in Google search results because neither site provides Google with unlimited access to their content.

Twitter formerly had an agreement in which Google paid for access to index its database directly, but Twitter chose not to renew the agreement, according to a statement placed on Google+ by an official Google account, which said it was “a bit surprised by Twitter’s comments” because “they chose not to renew their agreement with us last summer“.

Although these changes are likely to head to Europe eventually, the Guardian piece suggests Google may have to think twice about introducing the changes over here because it has a greater share of search in European countries, meaning a ruling on it affecting the market is more likely, and also if the changes extend to results on Android phones, then it may face more urgent calls for an antitrust investigation.

This wouldn’t be the first time that there has been a call for Google to be investigated on such grounds, but if these changes do come to Europe as expected, we could be on the verge of a few interesting legal actions.

Posted in Blog, Blogging, Content, Digital communications, Digital media, Emerging technology, PR, Social media, Social networking, Trends and research, Useful resources | No Comments »

read more

Do you own your social profile?

January 5th, 2012

Recently the issue of social profile ownership has come to the fore with the very public case
of Noah Kravitz, a blogger based in California who is being sued by his former employer, PhoneDog,  which is seeking damages because he failed to relinquish his Twitter account when he left the company to work for a rival.

This probably sounds ridiculous, but we have already experienced a similar case in the UK as far back as 2008, when a recruitment consultant working for Hays,  Mark Ions, was ordered to give the rights to his LinkedIn account to his former employer. The court ruled that information of a confidential nature was collected during his work and that the company deserved to have full access to his account. Conversely, last year the BBC’s chief political correspondent Laura Kuenssberg moved from the BBC to ITV and took her Twitter account, which had 58,000 followers with her. The BBC did not seek legal ownership of her account, although there was discussion of the issue elsewhere.

You may think this is a crazy conversation considering the social profiles were in the individual’s name, but the employers have a good argument if the profiles were used solely, or at least for the majority of time, for work purposes, contain work-based contacts and in effect represent the individual’s record of work-based conversations.

That’s not to say I agree with the ruling, far from it, but we need to be aware of the slow moving legal response to fast moving technologies. In other words, the law doesn’t move as quickly as social media, so expect rulings to be based on the most sensible work-based comparison, which generally would have remained the property of the employer after the employee left, e.g. customer files and or contact books. That being said, one would hope that in most cases our social profiles represent a mixture of personal and work-based discussion, so we should not see ownership battles ongoing between employers and employees, and of course this issue could have been avoided if relevant social media guidelines were in place.

It would be interesting to see the outcome of a similar case in a PR, digital or social agency, and how that might affect future norms between employers and employees across the sector. However, so far it seems common sense has prevailed, or perhaps policy has won the day.

In the current PhoneDog case, the company has said that it is taking the action because it had invested in growing the number of followers that Mr Kravitz had on Twitter and the account was its property, alleging that those followers are, in effect, a customer list and PhoneDog’s property. The company wants Kravitz to pay $340,000: $2.50 per follower per month for 18 months.

PhoneDog was quoted in the New York Times saying: “We intend to aggressively protect our customer lists and confidential information, intellectual property, trademark and brands.”

Jon Rettinger, President, TechnoBuffalo (Noah’s current employer) responded with the following statement: “I have remained silent on the issue, privately supporting Noah, hoping that this issue would be resolved. However, further reflection and consultation has made me realize the time for silence is over. TechnoBuffalo is a news outlet, and this situation quite clearly has become news. We stand firmly behind Noah, disagree with the frivolous suit PhoneDog has filed, and hope swift justice will be served. This equates to school yard bullying, and should be met with disgust by the world. We stand behind our employees as we would family. Noah has the full support of the Herd. I urge you all to speak up!”

A hearing in the case, PhoneDog LLC v. Kravitz, is scheduled for January 26 in San Francisco and I expect some interesting responses from organisations across the world, in terms of tightening up policies, whatever the outcome.

Posted in Blog, Blogging, Content, Digital communications, Industry events, Social media, Social networking, Trends and research | No Comments »

read more

YouGov 2012 consumer technology predictions

December 20th, 2011

YouGov has announced its 2012 predictions for UK consumers’ consumption and behaviour around Smart TV, smartphones, Facebook, digital newspapers and digital radio. The findings originate from a multi-country study, carried out in November 2011 with almost 13,000 respondents.

The headline statistics include:
o 15% of UK consumers say they will own a Smart TV within the next 12 months
o 86% of smartphone users ignore advertising on mobiles
o 60% of UK online population now use Facebook more than once a day
o 24% of tablet users access the web whilst in bed
o Just over one in five (22%) of 18-24 year olds have listened to the Radio via a portable radio set (including DAB)

As you can see, surprisingly only 15% of UK consumers said that they expect to purchase a connected, or ‘Smart’, TV within the next 12 months. However, that figure may not tell the whole story as people are already connecting their TV to the web via external devices, including games consoles such as the Xbox 360 and PS3, along with ‘plug in’ boxes such as Boxee.

The biggest driver for adoption of Smart TV is the availability of content, as YouGov reports 36% of UK respondents aged 18-24 said that they would make a connected TV purchase if they could watch their favourite TV content on-demand.

Dan Brilot, media consulting director at YouGov, said: “Smart content producers must continue to develop their services to make it increasingly easier for people to watch what they want, when they want, wherever they want.”

Moving onto smartphones, 40% of people own smartphones in the UK, increasing to 68% within the next upgrade cycle. However, YouGov say 86% of smartphone users ignore advertising on mobiles, meaning engagement via mobile must be useful and relevant - not broadcasted, or in other words: advertising.

In terms of digital newspapers and tablets, Russell Feldman, associate director of technology at YouGov says: “The decline of print media sales will only accelerate during 2012. Tablets and apps will increase the digital cannibalisation of paper copies as they erode more of those previously inaccessible locations to digital devices; for example, nearly one quarter (24%) of tablet users access the internet whilst in bed.”

Tablet usage is still small (currently only 4% of the UK population own one) but that number is growing and, as the market develops and new entrants such as the Kindle Fire gain traction, newspaper and magazine publishers will focus more effort on specific tablet versions of their publications.

Finally, DAB take-up hasn’t quite lived up to the initial hype. To make this happen, Dan Brilot, media consulting director at YouGov says: “The radio industry needs to educate and support consumers as they become accustomed to new ways of listening and to ensure that reach and frequency opportunities are truly maximised - not lost - in the digital age.”

Posted in Content, Digital communications, Digital media, PR, Slates, Smartphones, Social media, Trends and research, Useful resources | No Comments »

read more

Britain shows strong digital culture

December 14th, 2011

Ofcom’s sixth International Communications Market Report was announced today and it shows Britain’s digital culture is developing well against other countries.

According to the report, covered in the Guardian, the British spend more time online, own more Smartphones and digital video recorders and watch more television over the internet than any country on the Continent.

Breaking down the statistics, apparently the British spend an average of 746 minutes (more than 12 hours) a week online, longer than any of the world’s major economies except the U.S.

However, the UK tops the charts in terms of Smartphone use and online and digital TV viewing, as 46% of all British mobile subscribers are Smartphone users, more than in Europe and the US and up from 24% the year before. The next highest was Spain, with 45% penetration.

61% of young mobile subscribers have been able to acquire Smartphones, and one quarter of 55 to 64 year olds claim to access the internet from their phones.

The UK also tops the online TV viewing figures with 27% of Britons watching TV online every week, higher than the U.S., where the total is 23%. UK digital TV penetration is also the highest in Europe, with 97% of households receiving more than the five basic channels. France is the second highest, with 93%, and America at 87%.

The UK  leads the field in buying online, as 79% ordered goods and services. The Dutch are the next most likely to make it to the checkout, with 74% spending online.

Considering our lower broadband penetration (The UK’s broadband penetration is 74%, where as France has reached 77%, Canada 83% and the Netherlands 89%) and often patchy mobile service outside of urban centres, the figures show that the British as a nation have not only accepted digital, but are making it a strong part of our culture in terms of communication, leisure and retail habits.

Posted in Blog, Content, Digital communications, Digital media, Smartphones, Social media, Trends and research, Useful resources | No Comments »

read more

CMI B2B Content marketing report review

December 6th, 2011

The B2B Content Marketing: 2012 Budgets, Benchmarks and Trends report, was published yesterday by the Content Marketing Institute in the U.S., led by its founder Joe Pulizzi.

We usually try to focus on UK/Euro stats on this blog, but I found the data in this piece to be particularly interesting. You can see the full findings here, and the sample of 1,092 marketers was taken in August 2011, and focused on how well B2B marketers are achieving their goals when it comes to content marketing, and how much has changed in the past year.

The 2011 study follows the 2010 piece of the same name and therefore allows for comparison between this year and last year.

In brief, the report shows:

Usage and effectiveness
• 9 out of 10 organisations market with content marketing
• On average, B2B marketers employ eight different content marketing tactics to achieve their goals. The most popular tactics are: (see graph below for full breakdown)
- Article posting (79%)
- Social media (excluding blogs) (74%)
- Blogs (65%)
- eNewsletters (63%)
- case studies (58%)
- in-person events (56%)

• Marketers are using content marketing to support multiple business goals, led by:
- brand awareness (69%)
- customer acquisition (68%)
- lead generation (67%)
- customer retention/loyalty (62%)

The least widely employed goal for content marketing is lead management/nurturing.

Measurement
• Web traffic is the most widely used success metric (58%). However, this year, sales lead
quality (49%) is the second-highest used metric (versus direct sales in the previous study).

Budget
• Marketers, on average, spend over a quarter of their marketing budget on content marketing
• 60% report that they plan to increase their spend on content marketing over the next 12 months.

Challenges
The greatest reported challenge is “producing the kind of content that engages prospects
and customers” (41% of respondents). And nearly the same percentage of respondents in 2011 as in 2010 reported that “producing enough content” (20%) and “budget to produce content” (18%) are their greatest challenges in content marketing.

While in-person events and webinars are still seen as the most effective tactics, on average, the following ranked notably higher in perceived effectiveness compared to the 2010 report:
• Blogs: 45% increase
• Case studies: 32% increase
• Videos: 36% increase
• Webinars/webcasts: 25% increase

The challenges section will resonate with many marketers, identifying points that will continue to test brands of all types, specifically: producing the kind of content that engages prospects and customers, producing enough content, and budgeting to produce content, which is difficult enough without considering those organisations that have little or no experience of the resource required to produce high quality and engaging content in a consistent way.

Of the tactics, it was a bit of a shock to see blogs coming out highest in terms of perceived effectiveness compared to 2010. The general trend has been away from blogs, but perhaps this is a reflection of quality beginning to tell over quantity, as those that have actually put the effort into B2B blogs are now seeing the return over the ‘me too’ blogs that see very little in either response or effort.

Measurement is always a prickly subject, and it was no surprise to see web traffic ranking as the most popular, although sales lead quality is beginning to show a little more relevance for those B2B businesses putting the time in to identify metrics and better understand opportunities and outcomes.

Posted in Blog, Blogging, Content, Digital communications, Digital media, PR, Social media, Trends and research, Useful resources | No Comments »

read more

Exchanging ideas, building networks and the detail of content curation

December 1st, 2011

Content curation as an online concept has matured quickly since Brian Solis laid out terms in his book Curation Nation in April this year.

I found the book a puzzle but it helped me form new ideas around content curation online. I went back to basics and developed a working model of how to store, link and add value to online information.

This is work in progress and centres currently on:

· Understanding the specific values of all content forms

· Finding the appropriate format: text, video, animation, audio, image

· Assessing what is timely, useful and relevant; and what is background

· Knowing how to label and store information so that it is findable and visible

· Continually rethinking the details

· Understanding the current limits and possibilities of curation automation.

The work of DNA researchers, touched on in a Radio 4 programme today, helped to further crystallise these thoughts. Research teams are working on a rapid form of DNA identification (DNA barcoding) and the system is designed to provide rapid, accurate, and automatable species identifications by using short, standardised gene regions as internal species tags.

Wikipedia says that DNA barcoding “is a taxonomic method that uses a short genetic marker in an organism’s DNA to identify it as belonging to a particular species. It differs from molecular phylogeny in that the main goal is not to determine classification but to identify an unknown sample in terms of a known classification. Although barcodes are sometimes used in an effort to identify unknown species or assess whether species should be combined or separated, the utility of DNA barcoding for these purposes is subject to debate.

“Applications include, for example, identifying plant leaves even when flowers or fruit are not available, identifying insect larvae (which typically have fewer diagnostic characters than adults), identifying the diet of an animal based on stomach contents or faeces, and identifying products in commerce (for example, herbal supplements or wood).

The current DNA barcoding project aims to curate information on 500,000 species over the next five years. I hope we can find ways to speed this process to include the 8.7 million known (and dropping) species on Earth.

As Paul D. N. Hebert and T. Ryan Gregory write in their Oxford Journals article: “DNA barcoding allows a day to be envisioned when every curious mind, from professional biologists to schoolchildren, will have easy access to the names and biological attributes of any species on the planet.

“In addition to assigning specimens to known species, DNA barcoding will accelerate the pace of species discovery by allowing taxonomists to rapidly sort specimens and by highlighting divergent taxa that may represent new species. By augmenting their capabilities in these ways, DNA barcoding offers taxonomists the opportunity to greatly expand, and eventually complete, a global inventory of life’s diversity.”

A crude taxonomy of internet data has been in process since the advent of Google but it is a half-hidden process. Given the lack of truly open explanation about how online data is sorted, we do need to work on content curation theory and practise informed by the DNA research ideas while half-understanding and deploying practices informed by the ‘secret sauces’ held by the search engines.

While we work towards this, the debate around online content curation continues to be engaging and useful. The internet is much more than a marketing tool but the commercial imperative should help to drive forward our ideas towards a coherent Online Content Curation Theory.

Towards this, Lee Odden recently published an article on TopRank that pulled together ideas from 10 market industry leaders, which is well worth a read: Content Curation Definitions & Context.

Posted in Trends and research | No Comments »

read more