Ronnie05's Blog

Facebook Tail Spin – The hard take!

Posted in Social context, media and advertising by Manas Ganguly on August 4, 2012

Facebook’s shares continue to tumble under the weight of its own expectations. Facebook’s mid May 2012 IPO was pegged at $100bn and with growth stalling, the m-cap is a downward spiral. I had written about the extremely stretched multiples which make Facebook’s share price unsustainable.


Facebook’s share price is down 47% in 3 months after the IPO. In its earnings call for the quarter, Facebook Inc reported a drastic slowdown in revenue growth and offered no financial forecasts to ease worries over the prospects for boosting advertising in its first earnings report as a public company, sending its shares to a record low.

While Facebook has pointed to early signs of success in new advertising services, but the lack of a detailed financial outlook went over poorly with investors hoping for evidence that the company could soon reverse the continuing slowdown in its business. Facebook posted a net loss of $157 million, or 8 cents a share, in the second  quarter after taking hefty stock compensation charges related to its IPO. That compared to net income of $240 million, or 11 cents, in the year-ago quarter.

Facebook has raced through eight years of break-neck growth that was to have culminated with its May initial public offering. Instead, its share price has headed south as investors questioned its valuation of more than 100 times earnings and its longer-term ability to sustain growth as users migrate to mobile devices.

Monthly active users grew to 955 million at the end of the second quarter, up from 901 million at the end of March. But mobile monthly active users surged 67 percent year-on-year to 543 million users, adding further pressure on Facebook’s business, which only recently began to offer limited forms of mobile advertising.

While advertising “impressions” lagged user growth during the second quarter but that new social ads, which appear directly in Facebook users’ “newsfeeds”, were driving up ad rates. The average price of a Facebook ad increased 9 percent during the quarter, driven primarily by the United States where rates jumped 20 percent with the company’s newly released social ads.

In effect, facebook’s slow down is a study of failing under the high growth expectation set by the blistering pace of growth registered earlier. However what seems to pinch the investors is a stretched valuation of $100billion when the new advertising avenues have not fully driving the revenue growth engines

Is social media a marketing hyperbole? (Part III)

Posted in Social context, media and advertising by Manas Ganguly on January 28, 2010

Dell is one of the few companies which have driven the social media to their advantage. While such examples are widely acknowledged and appreciated, working out such examples and such business models is tricky.

However, driving social media to one’s advantage isn’t as easy across. The beauty (and the problem) with social media marketing is that it’s a new field. As of now it’s more of an art than a science. I think we just need to see marketing guess/test/refine to find the perfect balance of advertisement and engagement. Also it is important to have the relevant engagement strategy. More often, companies are planning social media for the heck of planning it without a core idea of what they would like the social media to achieve for them. Until a good mix is found we probably will see approaches flounder… when was the last time you clicked on a FB ad?

2009 was also an year of experimentation with Social media launched to drive brands towards perceived relevance. Budgets for most parts were borrowed from other divisions to fund largely experimental programs. In many cases, these Social media programs were introduced without a relevant and integrated strategy and in 84% cases the ROI was not even monitored. In 2010, executives are demanding scrutiny, evaluation, and interpretation. Even though new media is transforming organizations from the inside out, what is constant is the need to apply performance indicators to our work. They want measurable results from social media but the exact implications of social media still evade CMOs.

53% CMOs are unsure about return on Twitter
50% are unable to access the value of LinkedIn.
Source: Bazaarvoice 2009

Most importantly, about 15% believe there is no ROI associated with Twitter, and just over 10% cannot glean ROI from LinkedIn or Facebook. This may be because of a direct disconnect between social media activity and a clearly defined end game. CMOs must establish what we want to measure before we engage. By doing so, Marketing Organizations can answer the questions, “what is it that they want to change, improve, accomplish, incite, etc?”

Quoting Brian Solis, Social Media expert, principal of FutureWorks and author, observer of Social media trends:
The debate over measuring social media investment inspired many brands to cannonball into popular social networks and join the proverbial conversation without a plan or strategic objectives defined. At the same time, the lack of ROI standards unnerved many executives, preventing any form of experimentation until their questions and concerns were addressed.

In 2010, we’re entering a new era of social media marketing — one based on information, rationalization, and resolve.
Business leaders simply need clarity in a time of abundant options and scarcity of experience. As many of us can attest, we report to executives who have no desire to measure intangible credos rooted in transparency and authenticity. In the end, they simply want to calculate the return on investment and associate social media programs with real-world business performance metrics.

Over the years, our exploration and experience has redefined the traditional metrics and created hybrid models that will prove critical to modern business practices and help companies effectively compete for the future.

Thus 2010 would be the year when Social Media Marketing takes on wings but the flight would need a well charted plan, a clear intent and dimensional details of what the Advertisers want to do in the first place. The greater the clarity on these aspects, the better the focus and the definition, the greater the efficiency for the marketers from social media. Unless it is backed by a strategy, intent and proper metrics, a hyped-up approach to social media will only make it a marketing hyperbole.

Is social media a marketing hyperbole? (Part II)

Posted in Social context, media and advertising by Manas Ganguly on January 27, 2010

Is Social Media a Marketing Hyperbole? This was an earlier post that I had written 9 months back. I return to this topic not any clearer after 9 months of social media exploits though. There is lot of hype around, but is there enough substance backing the hype.

Money spent on social media-related advertising is expected to grow this year significantly. Forrester Research’s Interactive Marketing Forecast for the next five years, estimates social media marketing to grow at an annual rate of 34 percent – faster than any other form of online marketing and double the average growth rate of 17 percent for all online mediums. Forrester had estimated that $716 million would be spent on the medium this year in 2009, growing to $3.1 billion in 2014. At that point, social media will be a bigger marketing channel than both email and mobile, but still just a fraction of the size of search or display advertising ($31.6B and $16.9B, respectively). Not surprisingly, some of this growth comes at the expense of offline advertising. Forrester estimates that online advertising will grow from 12 percent of total marketing spend this year to 21 percent by 2014, meaning that offline ad spend will fall. In fact, Forrester concludes that “overall advertising budgets will decline,” meaning efficiencies are being had by shifting money to the Web.

Another recent report published by eMarketer, has now declared that the medium is considered the top priority in the digital space according to a survey of senior marketers. 45.4% of respondents considered social a ‘top priority’ while another 42.2% deemed it ‘important’. That narrowly beat out digital infrastructure for the top spot, with other marketing tactics like search, mobile, and blogger outreach trailing significantly. The data, also indicates that ‘time on site’ is now the metric marketers are most interested in, followed by unique page views, click-thru rate, and the traditional page view. that engagement is here to stay as the preferred way of doing business. That means both more engaging ads that leverage social media, and more engaging web sites that keep users around beyond a simple page view.

Social media marketing will definitely be an important portion of the marketing mix as businesses are able to tailor their products better with engaging with users using sophisticated communication platforms. Marketeers around the world are watching some successful models like Dell execute social media in an optimal way.

Dell is one of the few companies which have driven the social media to their advantage. While such examples are widely acknowledged and appreciated, working out such examples and such business models is tricky. We would discuss the Marketeer’s dilemna in going for Social Media in my next post.

Calculating your social media initiative payback

Posted in Social context, media and advertising by Manas Ganguly on April 22, 2009

While Social media is a new kid in the block, the promises it holds are huge. It enables the marketeer to host a platform to hear what his consumers have to say about him, engage them and engineer products/services. In short it allows the marketeer to pro-create with the consumer.From a marketeers point of view, their is an abundance of media vehicles and the final choice of media is very often led by RoI or Cost/Benefit analysis. It is very interesting that calculating the RoI/ Payback of Social media is still based on the age old business perspectives and principles. So the tool and the procedure remains the same.It is just the metrics that have evolved.

Presenting the pointers to calculating the efficiency of marketing initiatives in social media:

1. Start from the objective. The more precise and focussed defination of the question, the better is the probability of a meaningful answer.

2. Identify ways to measure your objective/put metrics

3. A prior measurement of scores in the metrics sets the base

4. Identify gaps between your objective metric scores and the base scores.

5. Set time bound targets on the Gaps

6. Identify the investments you are willing to put in targets and gaps

7. Execution of the plan

8. Against the investments that have been put, the %age increase/decrease of your metrics against your targets will give you the efficacy of the programme.

Since we are talking social media initiatives, the metrics can be chosen from the list:
Views/hits; Followers/Subscribers; Comments/Blogs/Tweets/Board Posts; Tonality; Frequency; Sales; Inbound Links; Engagement Metrics; Visibility/Credibility; Inbound Links; Profile visibility @ SEO; Referrals and others.

There is another part that cannot be measured: Cross Referencing of the suite of products/services through Social Media (i.e influence of social media on perception of the brand when you seem to be only talking about the product/solution/platform.)

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