How Did I Do On My 2012 Predictions?

2012: The Year Ahead

Photo: Mike Licht, NotionsCapital.com

From my Forbes.com blog The New Persuaders:

It’s that time of year: time to reflect on the past year, time to get wasted and watch a glass ball smash into the ground, time for people like me who foolishly offered predictions for the past year to face the music. So here’s how I did on my 2012 predictions:

* Facebook goes public, but won’t start an IPO landslide: Bingo! Indeed, Facebook’s ill-received IPO led to a months-long drought in IPOs as investors realized they were not a sure route to riches. The situation may be improving, but mostly for enterprise more than consumer companies.

* Facebook’s ad business booms–but not at Google’s expense: Bingo! While Facebook’s revenues slowed even before its IPO as it continued to experiment with new ad formats and scrambled to provide mobile ad units, ad revenues have since accelerated, up 36% in the third quarter over last year. At the same time, while Google’s revenue growth disappointed investors in the third quarter, it was mostly thanks to the impact of its Motorola acquisition, not a shortfall in its core ad business.

* Image ads finally find a home on the Web: Half-right. YouTube proved there’s a real market for TV-like video ads if you give viewers the choice to view them or not, as its revenues were expected to hit $3.6 billion in 2012, according to Citibank. But Facebook’s struggles to attract brand advertising despite a TV-scale audience, while partially successful, show that no one has yet come up with brand ad formats that work consistently and at large scale online. Or at least brands, which still spend most of their money on TV ads, don’t believe it yet. And they write the checks.

Continue reading

About these ads

Instagram Backs Off New Photo Policy–But Here’s How It Might Really Make Money

Image representing Kevin Systrom as depicted i...

Instagram cofounder Kevin Systrom (Image: CrunchBase)

From my Forbes.com blog The New Persuaders:

Not surprisingly, the Facebook-owned mobile photo-posting service Instagram has backed off the language in its new privacy and terms of service policies that set off a firestorm online. The worry was that people’s Instagram photos could be sold without users getting compensated (never really true) or could be used in ads (which did certainly look likely).

Apparently, neither will be the case, at least for now. Instagram cofounder Kevin Systrom just posted on the company’s blog under the title “Thank you, and we’re listening”:

I’m writing this today to let you know we’re listening and to commit to you that we will be doing more to answer your questions, fix any mistakes, and eliminate the confusion. As we review your feedback and stories in the press, we’re going to modify specific parts of the terms to make it more clear what will happen with your photos.

Legal documents are easy to misinterpret. So I’d like to address specific concerns we’ve heard from everyone:

Advertising on Instagram From the start, Instagram was created to become a business. Advertising is one of many ways that Instagram can become a self-sustaining business, but not the only one. Our intention in updating the terms was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram. Instead it was interpreted by many that we were going to sell your photos to others without any compensation. This is not true and it is our mistake that this language is confusing. To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear.

Systrom then provides clues to how Instagram might really make money from advertising on the site:

To provide context, we envision a future where both users and brands alike may promote their photos & accounts to increase engagement and to build a more meaningful following. Let’s say a business wanted to promote their account to gain more followers and Instagram was able to feature them in some way. In order to help make a more relevant and useful promotion, it would be helpful to see which of the people you follow also follow this business. In this way, some of the data you produce — like the actions you take (eg, following the account) and your profile photo — might show up if you are following this business.

The language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we’re going to remove the language that raised the question. Our main goal is to avoid things likes advertising banners you see in other apps that would hurt the Instagram user experience. Instead, we want to create meaningful ways to help you discover new and interesting accounts and content while building a self-sustaining business at the same time.

So it seems that whatever advertising Instagram does, it will be quite a bit like Facebook’s Sponsored Stories, or even precisely like them. Although that won’t comfort people who don’t like the possibility that their actions can become an ad, they’re already subject to those terms if they use Facebook.

I wouldn’t be surprised to see Instagram follow Facebook’s well-worn playbook, which calls for the company to push the envelope, then back off a bit, rinse, repeat. But for now, pending future changes, your cute cat photos are safe from becoming ads for your local pet salon.

News Flash: You Never Really Had A Vote On Facebook Anyway

Screen shot 2012-12-10 at 4.20.30 PMFrom my Forbes.com blog The New Persuaders:

So the vote on Facebook’s new policy-voting policy fizzled. (Yes, it was that confusing.)

But so what? The fact is, neither Internet services like Facebook nor, really, any other business is a democracy. Facebook instituted the trappings of a democracy with its previous policy that called for a vote on new policies if thousands of members commented on it, presumably in a mostly negative fashion. A vote was triggered on three occasions in the past few years–and now for the last time.

The vote, which closed todaycame in overwhelmingly against the changes in Facebook’s data use policy, which included eliminating a vote on such policies. Some 88% of respondents voted against the new policy, apparently hoping to retain the right to vote. The problem: The voting policy in question required 30% of the site’s 1 billion-plus members to vote in order for a policy change to be overturned. And only about 0.07% voted at all.

Good thing we don’t vote that way for public offices, or we’d never elect anyone–although some libertarian wackos citizens might think that is a good thing.

Anyway, the tepid turnout just goes to show that the voting was a sham in the first place. I don’t know that Facebook purposely set it up that way, since I have no reason to attribute evil intent to its executives. But surely the company had to know that by requiring 30% turnout of its 1 billion members, it was a 100% certainty that almost nothing short of a requirement to publicly disclose your Social Security number would ever elicit enough votes to make any difference.

And that just goes to show how ridiculous the supposedly democratic method was. The failure of the voting mechanism also shows that Facebook itself needs to rethink how it proposes changes and how it deals with the aftermath. The joke often made about Facebook, especially with regard to its constant privacy blowups, is that CEO Mark Zuckerberg makes a change, then apologizes if there’s an outcry, but doesn’t change much (if at all), and eventually people get used to the change anyway.

That may not be the best way to deal with things, but you can hardly argue that it didn’t work. Unremarkable IPO aside, Facebook is a runaway success, no thanks to any amount of faux democracy. Can you imagine Google or (snort) Apple putting their policies to a vote?

In some cases, Facebook may need to back off Zuckerberg’s clear intention to push the envelope on getting people to reveal more about themselves online. In other cases, it simply needs to be more careful in explaining the benefits of its policy changes. And in all cases, it has to realize that it can never please everyone.

But ultimately, you do retain the right to vote about what Facebook, or any other company, does: You use the service, or you don’t. You don’t like something–really don’t like something–then you stop using the service.

Facebook users voted a long time ago. Their mostly mute response to the latest vote clearly says that’s the only vote they care to make.

Here’s Why Facebook Likes Microsoft’s Atlas Ad Server

fbthumbsupFrom my Forbes.com blog The New Persuaders:

After spending years trying to dump its Atlas online ad-serving business, Microsoft reportedly is in talks with Facebook to sell the unit that helps advertisers and ad agencies place ads on websites and track their impact.

The news comes five months after Microsoft wrote down nearly the entire value of its $6.3 billion acquisition of aQuantive, of which Atlas was a part. Following its recent move to de-emphasize its own ad tech, Microsoft has been shopping the unit around, most recently to AppNexus. Business Insider reports that before Facebook talks began, the highest bid Atlas got was $30 million.

There’s no guarantee the deal will happen. But why is Facebook interested? Some speculate that it’s a way for Facebook to close the final technology gap on a plan for an ad network, similar to Google’s AdSense, that would place Facebook ads on other websites. Could be. But I tend to agree with one AppNexus Senior VP that there’s an even bigger goal that goes along with that: proving Facebook ads work.

That has been the No. 1 social network’s overriding task for the past year, especially since its underwhelming IPO. It has released vollies of case studies showing how its ads actually do spur sales down the line. But for whatever reason, most likely the difficulty of applying success by one company or industry with its social ads to others, many advertisers and agencies remain skeptical.

Atlas would enable Facebook to track the impact of its ads, which it’s already quantifying through a deal with Datalogix, which tracks in-store sales, not just on Facebook but on other websites as well. Privacy advocates are not happy about the Datalogix deal, and adding an Atlas-powered ad network won’t make them any happier.

But Facebook may finally be on the verge of closing the elusive loop between its ads and ultimate sales that result from them in a way that to date no one but Google has done really well and on a huge scale.

No Brand Shakedown, Says Facebook–Here’s How Page Posts Reach Fans (Or Don’t)

From my Forbes.com blog The New Persuaders:

A lot of businesses with Facebook pages are up in arms about their posts showing up in their fans’ news feeds way less often lately. They and their ad agencies think Facebook did it deliberately to force them to buy ads to promote those posts, and they’re not shy about telling the world about it.

Facebook says it did change its EdgeRank algorithm, which decides based on various criteria which posts individual Facebook users see in their news feeds, in September, chiefly to help reduce spam messages. But the No. 1 social network, which has been intensifying its efforts to boost ad sales following a disappointing IPO last May and a swoon in its share price, categorically denies that it’s essentially blackmailing brands into buying ads by reducing their reach with fans. In fact, it says posts are showing up overall at about the same 16% they’ve been for awhile now.

Indeed, it has just opened up a new news feed option that runs only posts from pages you’ve “liked.” The move won the approval of Mark Cuban, whose anger in one tweet catapulted the issue into the public eye. But lots of questions remain.

Today, the company is trying to get the word out about how its system works with a “whiteboard lunch” for the press, with the aim of explaining how page posts find their way into news feeds. I’ll cover the highlights here starting about noon Pacific time, so refresh until about 1:15 p.m. for the latest. It’s pretty casual, not a formal presentation, so most of this will be a little scattered, but potentially useful to marketers.

Will Cathcart, product manager for news feed, comes on first to tell how Facebook thinks about the news feed. On an actual whiteboard! He says Facebook tries to figure out how interested you will be (Yoda, in his example) in each page post. If he comments on or shares or likes (or “hides”), say, posts from the Rebel Alliance, those will show up more often. But if he reacts in a significant way to a post by, say, Vader, that will inform future visibility of Vader’s posts. If he often complains that posts from, say, the Empire, those posts may drop out of his news feed entirely. …

Read the complete post at The New Persuaders.

Uh-Oh–Survey Says Most People Find Facebook And Twitter Ads Misleading

From my Forbes.com blog The New Persuaders:

To hear Silicon Valley and nouveau ad-tech types tell it, traditional advertising sucks. The best way to attract people’s attention and engage them more fully is to create ad formats that more closely resemble the activities people are already doing on a site–in other words, to make ads look less like ads.

That’s the idea behind so-called “native” ads such as Facebook’s Sponsored Stories and Twitter’s Promoted Tweets. Although various studies seem to indicate these ads are indeed more effective than standard banner ads–a low bar, it must be said–a new survey released today indicates that a lot of consumers don’t trust native ads. According to the survey by app advertising firm MediaBrix and Harris Interactive:

* 45% found Twitter promoted tweets misleading.

* 57%  found Facebook sponsored stories misleading.

* 86% found sponsored video ads that appear to be content misleading.

The survey also found that a large majority of people who have seen Twitter Promoted Tweets in the past 12 months said they hurt or had no impact on their perception of the brand advertised. Some 72% said the same thing about Facebook’s Sponsored Stories. And 85% found sponsored video ads didn’t leave them with warm feelings. “While anyone pushing the native ad agenda or otherwise would agree that we need to provide user experiences that are not jarring or disruptive, we also need to ensure that we are direct and honest with our consumers about when they are being marketed to,” MediaBrix CEO Ari Brandt said. “Some formats achieve this better than others.”

Mind some caveats about this research. For one, it doesn’t compare native ads to banner ads, so there’s no telling whether trust in banner ads is any better than these native ads. Also, what people say they feel about ads and brands may have little to do with the ads’ effectiveness. And MediaBrix has a dog in this hunt, since it offers its own kinds of ad formats for social and mobile apps.

Still, it’s a splash of cold water on a trend that some very high-profile companies are counting on to become the next Google. And it’s a lesson that marketers apparently constantly need to be reminded about: Don’t try to fool your customers, because it can destroy trust in your brand.

Why Do Obama Supporters Appear In Facebook Ads As Romney Fans?

From my Forbes.com blog The New Persuaders:

Recently, I’ve been seeing a Sponsored Story ad on Facebook pages indicating that several friends “like” Republican presidential candidate Mitt Romney. No surprise there. Sponsored Stories are those personalized ads the social network allows advertisers to run that show friends have “liked” a brand, and they’re increasingly common as Facebook doubles down on social advertising.

But what on Earth was the name of a friend, who I know is a vocal Obama supporter, doing on a Romney ad? The answer raises questions about how effective, or at least how accurate, these ads are–not necessarily due to a particular fault by Facebook but thanks to the byzantine rules and privacy features that have developed over years of user outrage and resulting Facebook accommodations.

Anyway, I asked my friend if he knew he was shilling for Romney. His response:

“Lol…..I liked him so I could see his FB feed. You should read my comments.” [Hint: They’re not complimentary.]

To be clear, you can see Romney’s posts on his page without “liking” him, but to see them in your own news feed, you need to “like” him. And once you do, like it or not, you become potential fodder for an ad that will appear to your friends.

Another friend of a friend who’s an Obama supporter also was surprised to see his name on a Romney ad. He told his friend:

“I never liked his page. I commented on one of their crazy lies.. gave them a serious piece of my mind ya know!!!!! All kinds of people have been telling me why do u like Mitt???? I’m pissed!!!” …

Read the complete post at The New Persuaders.

Follow

Get every new post delivered to your Inbox.

Join 87 other followers