Facebook Turns Ten

It's a big month for Mark Zuckerberg. Not only does Facebook turn ten but it does so very profitably.

In its early years, before Facebook was monetised, there was a lot of scepticism around how will he make money. A few initiatives went pear shaped, such as revealing too much or unplanned information about members, but eventually they figured out an advertising model that worked on desktop. Than smartphones took off, and an alarming number of people migrated to use apps and mobile sites to access their accounts. Market scepticism returned, but Mark Zuckerberg persisted, and this week Facebook 'reported profits of $523m and a 63% increase in revenue for the fourth quarter, beating expectations' (BBC). And 'he did it while saving shareholders money and hugging the planet' (NY Times).

Put aside the controversy around the founding of Facebook, the privacy debates, the trial and error of the last few years, and you have to give it to the lad. He is as ambitious as ever, reflected in a recent speech at the Open Compute Project. He wants to change the way tech companies do business, and as the organisations' name suggest (where he spoke about this), do so via open sourcing. Employing hundreds, thousands, or even hundreds of thousands people to build and better systems is surely unbeatable.

He wants to connect the world and everything in it, creating something that has been previously described as the 'internet of things'. Ambitious? Yes. Can he do it? I'd say admirably he is on the right track. And yet, Facebook's mission 'to give people the power to share and make the world more open and connected' arouse some cynicism in me about the ultimate motivation of a company whose business case and in fact their survival rests on exploiting its users' data.

Commoditisation of online advertising

Digital advertising is big business. In Australia it reached $2.2bn last year and is forecast to be the largest in terms of ad spend by 2014 reaching as high as $3.4bn (according to neo@Ogilvy). It’s equally a big industry elsewhere in the World, in the US for example, digital advertising generated $7.3bn in Q1 of ‘11, representing a 23% YOY increase. And it’s expected to grow still.

Much of this growth is predicted to come from video and mobile. And because these are still relatively new platforms in the digital mix, publisher will have an opportunity to correct some of the catastrophic pricing mistakes of the past.

Anyone working in the industry knows that from the beginning, online advertising had fixed CPM (cost per thousand) rates, based on showing a particular ad unit a 1000 times. However, while all audience metrics (time spent online, unique visitors, page views, etc.) exponentially grew over the last ~10 years, ad dollars failed to follow, creating a huge discrepancy between supply and demand. To make at least some money of the millions and billions page impressions, publishers started ‘flogging’ their unsold inventory via ad networks, achieving on average less than a dollar for a thousand page views.

But as time went by, supply continued to grow and advertisers continued to press for more by paying less. Soon publishers yielded under the pressure and started offering CPC (cost per click) or a CPA (cost per acquisition) models, receiving revenue only, when the advertising banners were clicked upon. This was great for advertisers, as it enabled measuring every dollar spent online and reduced their risk to almost none. At the same time it also created a perception that online media is of little value unless it generates user action (click or acquisition). Awareness, Interest, Desire to purchase (first 3 letters of the AIDA acronym that describes the traditional purchase funnel, that ends in Acquisition, standing for the 4th letter), became unnecessary accessories of a digital campaign, as did brand awareness and recall.

Digital is soon to be commoditised further still, through online ad exchanges, which enable real time buying and selling of online inventory, based on price alone.

So, why are video and mobile well placed to break the cycle of performance driven buys in Australia? Mobile is set to overtake online media (debated, but seems completely conceivable), and video is set to see a boost from the current 1bn streams per month, once the new fibre optic cable is rolled out in the not so distant future.

Publishers have a real opportunity to position these platforms in a way that will see the premium ad dollars migrate to these channels. The audience is consuming it, its effectiveness has been proven, the only thing left is to determine and stick to pricing based on true value.
(Matt Berriman: how to devalue one of your own key propositions, Australian, page 27.)

Advertising creative genius meets humour

Here is an Aussie advert… stuff we can get away with on national TV in this country!

The magic of the red brick – the World’s Greatest Salesperson

When times are hard (recession), a good salesperson is one of the most important assets a company can have. So to bring the precious skills back in the limelight at this year’s Cannes Lions 2010 Advertising Awards, OgilvyOne posed a challenge to the young and brave media professionals: sell us a brick. (post here)

And here is the winning entry by Todd Herman, a young Canadian who takes us on a 2 minute journey and ticks all the boxes of a great sell. Persuasion, emotional connection, case study, product knowledge and passion. He uses sound effects and visuals really well, and seem to take cost out of the equation - you want it before you know how much. Brilliant work, enjoy.

Furthermore, this clever chap created the buytheredbrick.com 
website, which is only a click away from the eBay auction site, where you could purchase the original brick itself (auction ended on the 9th April with proceeds going to help rebuilding Haiti).
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Search for the World’s greatest salesperson

When times are hard (recession), a good salesperson is one of the most important assets a company can have. So to bring the precious skills back in the limelight at this year’s Cannes Lions 2010 Advertising Awards, OgilvyOne posed a challenge to the young and brave media professionals: sell us a brick.
Watch their call for entries below – brilliant work, as you’d expect from Ogilvy.

More on the equally brilliant winning entry in a little while!


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Ambush marketing at the World Cup

36 young women stripped down to bright orange mini dresses to promote the Dutch Bavaria Brewery during the Netherlands/Denmark match. They were swiftly escorted out and Fifa is looking into how to take legal action.

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When everyone wants a piece of the action…

And either there is just not enough to go around, or the price doesn’t stack up for some. But the media crowd is not a ‘giver-upper’. No, they put their creative minds together and find a way: ambush marketing.

You may have heard of the latest stunt by Bavaria Brewery at the Football World Cup.  Watch it here.

On one side there is Fifa, who are ardently trying to protect the advertising rights of the event – rightly so, sponsors fork out a fortune to be part of it (that is part of one of the largest corporate advertising spectacular with the sport element occasionally fading into the background)…

While on the other side there is the challenger brand, Bavaria Brewery, Budweiser’s competitor, who are pulling this stunt the second time around. Yes, they amused us in 2006 with the ‘orange lederhosen’… And of course, they are getting a huge amount of publicity for a fraction of the official sponsorship. But can you really, honestly say that you loath their efforts (bar the Budweiser camp of course)? I think they are rather cool…

Photo credit: www.guardian.co.uk
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What do marketers want?

After receiving another client brief recently I caught myself reminiscing on all the different type of media I have sold and managed campaigns on over the past few years. Radio, promotions and events, magazines, direct marketing, metro print, and digital. The briefs can vary quite a lot in campaign objective, duration, budget, just to mention a few; but there is one thing that never changes: what marketers want.
Sure, sometimes the objective is to improve unprompted brand awareness in a certain market, generate audience engagement, or increase people’s trust in the brand. However all these will eventually contribute to the bottom line, and in the end, that is exactly what marketers want. Sales, conversions, acquisitions.
And the way to get that brief in the first place is to convince them about how your media outlet can assist in increasing their numbers.

Changing print media - Execupundit.com: Thoughts on News and Papers

I love newspapers. And I often read them to get insight, a detailed background, or perhaps a new and intriguing angle – something I haven’t thought of yet. But I have to agree with the ‘Thoughts on News and Papers’ blog post. I, too “gather my news from blogs or online sites and occasionally hit the news button on Google. The delivery is immediate, a service that newspapers just can’t supply simply because the type of delivery they use just can’t move that quickly.” (source: View from the Ledge in Execupundit.com: Thoughts on News and Papers)
”What I do look for is opinion, analysis, feature articles, and personal essays. In essence, newspapers have become magazines where I look for entertainment and perspective.” And that’s a great USP (unique selling point) for papers. No wonder the sales of the chunky weekend papers are holding up strong in Australia. There are glossy mags, lengthy feature articles and everything in between. And the more papers embrace the new order, the firmer will they hold their place in the today’s media landscape.
Newspapers we still love you. Only a bit differently…