What Startup Buyout Frenzy Says About Social Media’s Future

From my Forbes.com blog The New Persuaders:

Despite the resounding thud of Facebook’s disappointing initial public offering of stock, social media still looks like a huge opportunity for marketers–and for the rapidly expanding ecosystem of companies looking to help them understand how to operate in the new medium. So social media enablers from Buddy Media to Vitrue to Wildfire Interactive have been snapped up for big money recently by seemingly unrelated companies such as Salesforce.com, Oracle, and Google.

What’s up with that? Essentially, it’s a recognition that social media can’t be successful in marketing unless it’s connected to a brand’s other marketing efforts, from traditional and online advertising to public relations. Much of the infamous dissatisfaction of brands such as General Motors with Facebook advertising stems from their relegating social media to a little experiment rather than figuring out how it’s unique and how it best meshes with other marketing channels.

That was the message from a panel this morning at MediaPost’s Social Media Insider Summit at Lake Tahoe, which is streaming live online. The panel included moderator Jackie Cohen, director of social media and communications for marketing consultant TicularMax Kalehoff, VP of product marketing for social media marketing firm Syncapse, which recently bought Clickable, where Kalehoff was VP of marketing; Mike La Rotonda, cofounder and CEO of social marketing platform Votigo; and Jeff Ragovin, cofounder and chief strategy officer at Buddy Media, recently acquired by Salesforce.com. Here are highlights of their repartee.

Q: How is social media evolving?

Ragovin: If you’re not doing social media today, it’s almost a fireable offense. …

Read the complete post on The New Persuaders.

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YouTube’s Skippable Ads Go Mobile–Will People Watch Them?

From my Forbes.com blog The New Persuaders:

As uncertainty builds over whether advertising on mobile devices will work anything like their desktop Web counterparts, YouTube today tossed out its bet that they will. In a blog post, Google’s video service said it’s now launching its most successful ad format, skippable ads called TrueView that it has offered since late 2010, on mobile devices.

YouTube credits these ads with juicing its revenues, which Citi analyst Mark Mahaney reckons could reach $3.6 billion this year, or $2.4 billion after YouTube pays its video content partners. On desktop and laptop computers, some 65% of YouTube ads run inside videos are now skippable, but YouTube says only 10% of people always skip them.

They also command 40% higher viewership than ads people can’t skip, which makes advertisers more willing to pay a higher price, knowing they’re getting watched. As a result, says Shishir Mehrotra, YouTube’s vice president of product, YouTube video now produces more ad revenue per hour than cable TV.

These aren’t YouTube’s first mobile ads. It has offered “promoted video” ads as well as so-called “roadblock” video ads that appear an entire day on YouTube home and search pages since last November. But these ads clearly hold the potential to become the most popular format on mobile devices.

At first, the ads will be available only on devices using Google’s Android software. Why? Because Apple’s current YouTube app, the one it developed at the time it released the first iPhone in 2007, doesn’t allow ads to be run on it. Apple and Google recently said that app won’t be in the next version of Apple’s iOS mobile software, which will debut on the upcoming new iPhone, expected now around Sept. 21.

Instead, Google is working to get its new YouTube app, which will be able to run ads, approved for the new iOS. When it’s out, no doubt in coming months, we’ll get a much better idea of how YouTube’s skippable ads fare on mobile devices–and a better sense of whether mobile advertising overall will work.

How To Advertise Without Really Advertising On Mobile Devices

From my Forbes.com blog The New Persuaders:

As more and more of us access online content and services via smartphones and tablets, it’s becoming apparent that advertising that works on the Web viewed on desktop and laptop computers just won’t work as well–or at all–on mobile devices. Just look at Facebook’s stock price, sitting at half its IPO level partly because investors can’t figure out how or even if the company can make money from advertising on mobile devices.

Indeed, many people in marketing are wondering if advertising is even the best way to market on mobile devices, where screen real estate is tiny and people view traditional ads as an interruption. The advent of truly mobile computing, says MediaPost columnist Steve Smith, may allow us to rethink the fundamentals of marketing.

What might work better than banners on mobile devices? A panel at MediaPost’s Mobile Insider Summit today in Lake Tahoe, streamed online, took at crack at it, and panelists had some pretty interesting answers. On the panel were moderator Anna Bager, VP and general manager of the Interactive Advertising Bureau‘s Mobile Marketing Center of Excellence; Lars Albright, cofounder and CEO of mobile engagement company SessionMBrent Hieggelke, chief marketing officer at Urban Airship, a mobile message company for apps; Jon Vlassopulos, CEO of mobile entertainment studio/agency skyrockit; and Brian Wong, founder and CEO of mobile rewards network Kiip. Here’s what they had to say:

Bager says this is the “non-banner” panel. The banner is not dead, she says, but we need to see an evolution of banners and how we advertise on different screens.

Q: How is a mobile user different from a TV, radio or Internet user?

Hieggelke: Mobile devices are much more personal. They’re never beyond an arm’s length from people.

Wong: The person is no different. The usage is a lot more intimate. The smaller screen is seen (by marketers) as an impediment, which is frustrating.

Q: How can you use mobile devices differently from other channels?

Vlassopulos: We hope the differences will wash away. If mobile can be at the beginning of the idea channel, then the other ideas and creative will flow.

Albright: Too much marketing feels random on mobile.

Wong: One of the most exciting things we’re seeing is going beyond trying to spur actions. Tapping into streams of existing behavior has a lot more promise.

Vlassopulos: The notion of interruptive advertising in theory could go away and eventually will go away. If you start to think of advertising as content, and social media has helped here, then people might see it as something they like.

Wong: When you have an intimate relationship with someone, you don’t want to mess it up by constantly yelling at them. You can do that (intimate relationship) with mobile.

Albright: New formats such as rewards and opportunities to engage work better than banners. About 90% of people opt in and engage with these new formats, vs. 90% finding them annoying.

Wong: You need to let people maintain the activity they’re already engaged in. …

Read the complete post at The New Persuaders.

How YouTube Turned Into a Real Business By Making Ads Optional

From my story in MIT Technology Review:

In 2008, when Shishir Mehrotra joined YouTube to take charge of advertising, the booming video-sharing service was getting hundreds of millions of views a day. ­YouTube, which had been acquired by Google in 2006, was also spending as much as $700 million on Internet bandwidth, content licensing, and other costs. With revenue of only $200 million, YouTube was widely viewed as Google’s folly.

Mehrotra, an MIT math and computer science alum who had never worked in advertising, thought he had a solution: skippable ads that advertisers would pay for only when people watched them. That would be a radical change from the conventional media model of paying for ad “impressions” regardless of whether the ads are actually viewed, and even from Google’s own pay-per-click model. He reckoned his plan would provide an incentive to create better advertising and increase the value for advertisers of those ads people chose to watch. But the risk was huge: people might not watch the ads at all.

Mehrotra’s gamble paid off. YouTube will gross $3.6 billion this year, estimates Citi analyst Mark Mahaney. The $2.4 billion that YouTube will keep after sharing ad revenue with video content partners is nearly six times the revenue the streaming video service Hulu raked in last year from ads and subscriptions. And that suggests Mehrotra has helped Google solve a problem many fast-growing Web companies continue to struggle with: how to make money off the huge audience that uses its service free.

In 2008, Mehrotra was working for Microsoft and hankered to have his own startup, but he agreed to talk to a Google executive he knew about working there instead. He decided against it—but that evening he kept thinking about how the exec was frustrated that most ad dollars go to TV, even though nobody watches TV ads. Yet at his Super Bowl party two weeks earlier, Mehrotra recalled, guests kept asking him to replay the ads. Was there a way, he wondered, to make TV ads as captivating as Super Bowl ads, every day?

The answer came to him in a flash. …

Read the complete story in MIT Technology Review.

How Retailers Can Benefit From Consumer ‘Showrooming’

From my Forbes.com blog The New Persuaders:

Showrooming, the practice of checking out products in a physical store and then buying them online, is a rising concern among retailers as smartphones and other mobile devices become ubiquitous. Various apps make it easy to scan a barcode to compare prices and buy a product cheaper online.

I’ve somewhat skeptical of the impact this has on retailers, in part because of my own anecdotal experience. Even more than I showroom, I research a product online–often at Amazon and other online retailers presumed to be the key culprits in showrooming–and then buy a product in a physical store because I need it now or simply want to touch a range of products, not just look at photos of them. In other words, it works both ways.

In any case, some of the most savvy brand managers are making the case that physical retailers can actually benefit from consumer behaviors that lead to showrooming, leveraging them into a marketing and advertising opportunity, or at least employ ways to head it off–without draconian techniques that may do more harm than good. Today at MediaPost’s Mobile Insider Summit at Lake Tahoe, livestreamed online, a panel offered insights into how marketers can do just that.

On the panel were moderator Carla Paschke, director of mobile innovation for marketing agency EngaugeMike Bloxham, executive director of the research firm Media Behavior InstituteHans Fredericks, VP for mobile business development for researcher comScore; Sloane Kelley, director of interactive strategy for ad agency BFG Communications; and Alexis Rask, VP and general manager of brand partnerships for retail shopping app Shopkick. Here’s what they had to say:

Q: How do each of you view the opportunities with mobile?

Bloxham: Mobile is the first umbilical media we’ve ever had. It’s deeply personal. One thing that’s really important to understand … is mobile use in the full context of their lives, other media. Mobile and TV are inextricably linked, but so are other media. We can’t look at mobile in a vacuum. People use their mobile devices to inform their thinking before, during, and after purchasing.

The idea that retailers should suppress showrooming is delusional. That ship has already sailed.

Fredericks: Folks’ usage of smartphones vs. tablets vs. laptops is different. Folks are using that PC during the course of the day. The smartphone is fairly steady during waking hours, because it’s very personal. Tablets show very pronounced evening-hours use. By and large, it is more of a home use device.

Kelley: Brands that get hip to this early can really rise above the rest.

Rask: We see two main trends. One is what to do about the in-store experience. What doesn’t get talked about enough is that arc from the couch to the store. At Shopkick, about two-thirds of our usage is couch mode. People are planning their shopping trip. They’re basically deciding: Am I going to make a left out of the driveway or a right out of the driveway?

Bloxham: TV dominates by far in the home in terms of share of mind. A lot of people also use another screen. That’s actually the first screen, not the second as we often call it. Radio dominates in the car, and there’s an opportunity to drive people to a coupon on their mobile device, like what they’re going to eat for lunch.

Rask: Mobile is the only medium where you can map a full path to purchase. …

Read the complete post at The New Persuaders.

Stung By Click Fraud Allegations, Facebook Reveals How It’s Fighting Back

From my Forbes.com blog The New Persuaders:

It’s a question that has haunted online advertisers since soon after Google perfected pay-per-click search ads a decade ago: Are those clicks from real potential customers, or are they from scammers draining my ad budget?

Now the issue of “click fraud” has hit Facebook full-force. On July 30, Limited Run, which provides software to enable bands and music labels sell physical products like records, said it was closing its Facebook account after finding that some 80% of the clicks it got during a recent ad campaign on Facebook were likely generated not by real people but by bots. Those are coordinated groups of computers hijacked by scammers or spammers, so any clicks they generate cost advertisers money for no benefit. (In a separate issue, in fact the main reason Limited Run said it’s leaving Facebook, the company also said Facebook asked it to spend $2,000 on ads in order to change its Facebook page name, something Facebook has said is not its policy.)

Limited Run said it came to the conclusion that the clicks were fraudulent after running its own analysis. It  determined that most of the clicks for which Facebook was charging it came from computers that weren’t loading Javascript, a programming language that allows Web pages to be interactive. Almost all Web browsers load Javascript by default, so the assumption is that if a click comes from one that isn’t, it’s probably not a real person but a bot.

To be clear, Limited Run isn’t charging that Facebook itself is responsible for those apparently fraudulent clicks. Often the culprits in click fraud are small-time ad networks and other outfits that pay people to click on Google and other ads they run on their sites, though that’s unlikely to be an issue for Facebook, which does not yet run its ads outside its own site as Google and others do. Perhaps, Limited Run has suggested, rivals could be using the bots to cost the company money by forcing it to pay for useless clicks.

The click fraud issue has at times loomed large for Google and other companies because of the potential impact on advertiser trust, and Google continues to fight click fraud–as does Facebook. Indeed, the issue isn’t new for Facebook either, with complaints, including lawsuits, bubbling up since at least 2009.

But while click fraud doesn’t seem to have driven away a large number of Google advertisers, whether because the company has minimized it or because advertisers simply factor it in as a cost of doing business online, the issue is a particular concern for Facebook now. It’s trying to prove to skeptical advertisers and investors that its ads work, and claims that there’s rampant click fraud don’t help. At the same time, Facebook has said recently that some 1.5% of its nearly 1 billion accounts are “undesirable,” meaning “user profiles that we determine are intended to be used for purposes that violate our terms of service, such as spamming.

Facebook has declined to say much about the Limited Run situation, though the company says it believes it catches and filters out the vast majority of “invalid clicks” before they’re even charged to advertisers. Its own page on “click and impression quality” doesn’t reveal much detail about how it deals with click fraud, however, so I asked the company for more insight on what it’s doing about the problem.

Mark Rabkin, an engineering director on Facebook’s ads team, responded to questions by email. While at times he’s repeating what Facebook has said before, he also reveals that the company has a growing staff of 300 people working on security and safety and explains in more detail the various ways the company tries to catch bad clicks. Here are his answers. …

Read the complete interview at The New Persuaders.

Those Awful Apple Olympic Ads? Eliminated!

From my Forbes.com blog The New Persuaders:

Mayday, indeed.

You know those new Apple ads that began running during the Olympics, featuring an Apple “genius” helping out clueless Apple users in completely Contrived situations? Gone. Eliminated. Expelled.

Mashable reports that Apple’s ad agency, TBWA\Media Arts Lab, says that short run the first weekend of the Olympics was the intention all along. But it’s hard not to think that the storm of negative reaction had a lot to do with the ads getting tossed almost as fast as those slacker badminton teams.

By many viewers’ estimation, the ads, including the “Mayday” spot above, made Apple users look like idiots, something that clearly didn’t fit Apple’s brand. That ad, for instance, got 241 “likes” and 1,867 “dislikes” on YouTube.

Still, regardless of whatever face-saving excuse is being offered today–who can really believe a multi-spot campaign with a new recurring character was planned to run only a few days?–it’s to Apple’s credit that it spiked the campaign before it did any more damage. The twin themes of Macs being easier to use and Apple offering great customer service are fine fodder for ad campaigns–but separate ad campaigns, not mashed up into one frenetic, unrealistic set of spots.

One set of bad ads won’t hurt Apple much, but like few other companies, Apple must maintain its image as the elegant and cool alternative. It’s pretty clear execs decided these ads didn’t do the job.

Why Google May Be Secretly Happy That Apple’s Dropping Its YouTube App From Next iPhone

From my Forbes.com blog The New Persuaders:

OK, so Apple will drop its YouTube app from iOS 6, the new version of its iPhone operating system due out this fall. Cue loud and histrionic coverage about Apple’s thermonuclear war, as the late Apple cofounder Steve Jobs put it, vs. Google and its Android mobile software.

Except it seems likely that script is off the mark. Here’s why: Most people may not realize it, but that YouTube app on their iPhones is actually designed by Apple, a holdover from the iPhone’s introduction in 2007, when all the apps were Apple’s and YouTube was a big draw. (So big that one of Apple’s original iPhone ads highlighted YouTube, as in the video above.) Problem is, since then, Apple has appeared to do relatively little to advance the app, which now looks old (almost as old as that TV used in the app’s icon, at least on my impossibly old iPhone).

Even more important from the point of view of Google and the pro content producers on YouTube, the Apple YouTube app doesn’t allow ads to be run against all those billions of videos views a month that YouTube draws on mobile devices. So search for “Lady Gaga” on your iPhone and what do you see? Well, Lady Gaga, but very little from official channels such as ladygagaofficial, which means very few official videos. Contrast that to a search on “Lady Gaga” on YouTube.com, and official videos are there, along with ads all over the place.

Why the huge difference? Because she can’t run ads on the iPhone YouTube app, and no ads means no money generated. Multiply that by thousands of artists, movies, and all kinds of content that advertisers want to run ads against–ads that will bring in up to $3.6 billion in revenues this year, by Citigroup analyst Mark Mahaney’s recent estimate for YouTube. Now you realize why Google may not mind much that the creaky old adless Apple app is heading for the trash can icon.

Read the complete post at The New Persuaders.

Facebook Social Ads: What’s Working, What’s Not

From my Forbes.com blog The New Persuaders:

One of the biggest uncertainties about Facebook is how well its social ads work. The social network and its partners have trotted out study after study showing that people more often click on Sponsored Stories and related ads that contain a friend’s name, but advertisers and especially investors are not yet universally convinced.

Today at TechCrunch’s Crunchup conference in Silicon Valley, we got the skinny from two people who know as much about Facebook advertising as anyone: Greg Badros, Facebook’s vice president of engineering and products and the guy in charge of advertising engineering; and longtime adman Tom Bedecarre, chairman of digital agency AKQA, now a unit of ad giant WPP. Here’s what they had to say in conversation with TechCrunch’s Josh Constine.

The bottom line: Both men indicated that Facebook is just at the start of the opportunity. But the guy with the checkbook really wants more kinds of ads than Facebook currently provides–and implied that the size of those checks in the future depends on getting them. …

Read the rest of the post at The New Persuaders.

Why Investors Love Yelp Even As They Hate Other Social Stocks

Image representing Yelp as depicted in CrunchBase

Image via CrunchBase

From my Forbes.com blog The New Persuaders:

Unlike those other two little social media companies whose disappointing second-quarter reports last week knocked their shares to all-time lows, Yelp today wowed investors with better-than-expected second-quarter earnings and outlook for the rest of the year. After falling almost 6% today to $18.82, shares in the local business reviews site have rocketed up in after-hours trading by 14%.

Needless to say, a good quarter and outlook both help, but there’s more behind investors’ enthusiasm about Yelp versus Facebook and Zynga. They perceive some key positive fundamentals, too:

* Reviews of local businesses present a clear, understandable opportunity for advertising, and local advertising is a nut that no one online has yet cracked the way the Yellow Pages did in phone books. Yelp’s reviews provide a prime place for this advertising to appear. Local advertising rose 89% in the quarter. Meantime, fairly or not, both investors and advertisers still aren’t sure about Facebook’s and Zynga’s business models.

* Yelp has network effects in its favor, since the more reviews it gets (up 54% from a year ago, to 30 million), the more businesses are likely to create Yelp pages and advertise, in a self-reinforcing cycle. Active local business accounts rose 113% from a year ago, to 32,000. …

Read the complete post at The New Persuaders.

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