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.

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Peering Over Fiscal Cliff, Marketers Cut Global Ad Spending

adrevsFrom my Forbes.com blog The New Persuaders:

Global ad spending is slowing down, prompting a prominent market researcher to cut its estimate of growth this year. eMarketer says ad revenues worldwide will rise 5.4% this year, to $519 billion, down from its 6.8% growth estimate seven months ago.

The culprit, not surprisingly: worries about the economy. No doubt the last couple of months of concern over the U.S. going over the fiscal cliff, thereby potentially triggering a recession, has marketers spooked about committing too much when it looks like consumer spending could follow national finances off the cliff.

That 5.4% increase is still a big improvement over 2011’s 3.6% growth, though partly thanks to the Olympics and the election. And eMarketer, whose forecasts are based on analysis of economic conditions and other researchers’ estimates, reckons growth will be fairly steady at about 5% through 2016.

What’s more, online ad spending, not specifically addressed in this report, is expected to grow much faster. In particular, mobile ad spending, while still relatively small, will grow like crazy–nearly tripling this year, to $4 billion in the U.S. thanks to surging “native” ads from Facebook and Twitter.

But slower-than-expected ad spending could have ripple effects on a wide swath of companies depending on a strong advertising market, from Google and Facebook to hundreds of startups.

And it gets even worse for the many companies chiefly dependent on ad spending in North America, the world’s biggest market. Here, eMarketer expects growth of 4.9% this year, dropping precipitously to 3.5% next year and bumping up and down around that rate for several more years.

Propping up growth are surging ad markets in China, India, Indonesia, South America, and even Russia.

Going Native: Disqus Says Promoted Discovery Ads Getting Traction

disqusadFrom my Forbes.com blog The New Persuaders:

Any blogger or media site knows there can be a lot of garbage in the comments on their posts and stories. Now, there’s a little gold in them, too.

A couple of months after quietly rolling out an ad system to select advertisers and publishers, commenting service Disqus is revealing a bit about the initial results. The ads build upon an article discovery feature Disqus introduced over the summer, a box below the comments that provides links to related articles either on the site or elsewhere on the Web. Disqus, which claims 75% market share among independent commenting systems such as those from Facebook and Livefyre, says 900 million unique visitors a month view 6 billion pages monthly on 2 million websites.

Promoted Discovery units are a way for publishers and advertisers (which also may be other publishers) to buy links that will send traffic their way. They barely look like ads, but that’s the point of so-called native monetization, also employed in Facebook’s Sponsored Stories and Twitter’s Promoted Tweets: They seek to avoid disrupting the flow of what people are doing, especially in a social setting–or, if you’re a cynic, they seek to conceal the fact that they’re ads. Either way, though, they often get more clicks and other engagement. …

Read the complete post at The New Persuaders.

 

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.

Here’s A New Way You’ll Soon Get Targeted For Ads: Your Hashtags

Screen shot 2012-12-11 at 8.17.52 PMFrom my Forbes.com blog The New Persuaders:

Facebook has Sponsored Stories. Twitter has Promoted Tweets. Buzzfeed has Promoted Posts. They’re all based on social gestures and activities, each targeted to people, whether friends or birds of a feather, who might share similar interests. Now, a company has come up with a new way of targeting people using one of the most common social gestures of our time: the hashtag.

If you’re bothering to read this, you probably already know hashtags are those short subject labels, starting with a # or hash sign, that describe the topic a tweet or other shared item is about. They didn’t start with Twitter, but they became popular thanks to their common use in tweets. That use has spread to other social networks, from Pinterest to Instagram (though not very often on Facebook, for some reason).

Today, social ad firm RadiumOne announced it’s making hashtag targeting available to advertisers so they can reach like-minded consumers in real-time across the Web based on the hashtags they’re using. So, for example, says RadiumOne founder and CEO Gurbaksh Chahal, Nike can reach consumers who use the hashtag #nike, or #olympics, or #fitness with ads for running shoes. Or McDonald’s could target people who tag their tweet or Instagram photo #burgers or even #hungry. …

Read the complete post at The New Persuaders.

 

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.

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