The Free Lunch Ends on Facebook

Promoted posts on Facebook is the only way to get exposure anymore.
Promoted posts are the only way to ensure decent exposure on Facebook now.

It had to happen.  Suffering from a raft of unflattering news stories about its inability to monetize the Facebook business model and under withering criticism from investors whose post-IPO stock price has been battered, Facebook has been rolling out new policies aimed at redressing the situation.

The result?  No longer can companies or organizations utilize Facebook as a way to advance their brand “on the cheap.”

Under a program that began rolling out this summer and has snowballed in recent months, businesses must pay Facebook anywhere from a fiver to triple figures to “promote” each of their posts to the people who have “liked” their pages plus the friends of those users.

And woe to the company that doesn’t choose to play along or “pay along” … because the average percentage of fans who sees any given non-promoted post has plummeted to … just 16%, according to digital marketing intelligence firm comScore.

Facebook views this as a pretty significant play, because its research shows that Facebook friends rarely visit a brand’s Facebook page on a proactive basis. 

Instead, the vast degree of interaction with brands on Facebook comes from viewing newsfeed posts that appear on a user’s own Facebook wall.

What this means is that the effort that goes into creating a brand page on Facebook, along with a stream of compelling content, is pretty much wasted if abrand isn’t  willing to spend the bucks to “buy”exposure on other pages.

So the new situation in an ever-changing environment boils down to this:

  • Company or brand pages on Facebook are (still) free to create.  
  • To increase reach, companies undertake to juice the volume of “likes” and “fans” through coupons, sweepstakes, contests and other schemes that cost money.
  • And now, companies must spend more money to “promote” their updates on their fan’s own wall pages.  Otherwise, only a fraction of them will ever see them.

Something else seems clear as well:  The promotion dollars are becoming serious money

Even for a local or regional supplier of products or services that wishes to promote its brand to its fan base, a yearly budget of $5,000 to $10,000 is likely what’s required take to generate an meaningful degree of exposure.

Many small businesses were attracted to Facebook initially because of its free platform and potential reach to many people.  Some use Facebook as their de facto web presence and haven’t even bothered to build their own proprietary websites.

So the latest moves by Facebook come as a pretty big dash of cold water.  It’s particularly tough for smaller businesses, where a $10,000 or $20,000 advertising investment is a major budget item, not a blip on the marketing radar screen.

What’s the alternative?  Alas, pretty much all of the other important social platforms have wised up, it seems. 

For those businesses who may wish to scout around for other places in cyberspace where they can piggyback their marketing efforts on a free platform, they won’t find all that much out there anymore.  Everyone seems to be busily implementing “pay-to-play” schemes as well.

FourSquare now has “promoted updates” in which businesses pay to be listed higher in search results on its mobile app.  And LinkedIn has an entire suite of “pay-for” options for promoting companies and brands to target audiences.

It’s clearly a new world in the social sphere … but one that reverts back to the traditional advertising monetary model:  “How much money do you have to spend?”

Tablet Computer Adoption: Fast and Furious

Tablets are growing faster than smartphone adoptionThe tablet computer hasn’t been around long at all.  But it’s making a huge splash in the digital arena … and giving not only laptops but also smartphones a run for their money in the bargain.

Consider these data points as reported on recently by Mark Donovan, a senior vice president at comScore, a leading Internet cyber-analytics firm:

  • Tablet adoption is happening significantly faster than what was experienced with smartphones.
  • The majority of iPad users don’t own an iPhone or some other type of smartphone.
  • Tablet “early adopters” are equally male and female – a departure from the norm which typically finds early adopters of new digital technology being primarily young men.
  • There is very high usage of tablets for shopping, watching video, and other media consumption. That’s also a departure from what was experienced with smartphones, where it took much longer for consumers to become comfortable shopping from their smartphone devices.
  • People use tablets and smartphones differently – and at different times. For example, smartphone usage peaks during the day whereas tablets are used more in the evening.

That tablets are making big gains on laptop computers is no surprise at all, considering their lighter weight, nearly effortless portability, brighter screens, and the ease of using them in environments not conducive to a keyboard-and-mouse (like in bed).

But of the trends noted above, I think the most intriguing one pertains to tablet computer usage versus smartphones – specifically, how tablets are becoming an alternative to smartphones rather than an adjunct.

Indeed, it seems as if some people aren’t making the transition from feature phones to smartphones that everyone expected; they’re opting for tablets instead. We may see the adoption rates for smartphonesbegin to flatten out as a result.

Indeed, Adobe Systems reported in May 2012 that tablet traffic is growing at a rate ten times faster than smartphone traffic.

But if you really think about it, maybe these latest developments aren’t so surprising: Many folks have long complained about the “miniaturization” of display screens that are a necessary evil of mobile phones. Now that the tablet has come along, there’s finally an effective solution to that dilemma – and the market has responded accordingly, blowing away even the most optimistic sales forecasts for tablets.

Goodbye Hotmail … Hello Outlook

Hotmail becomes OutlookMicrosoft has finally bitten the bullet and acknowledged the catch-up ball it needs to play in the e-mail space.

Last week, Microsoft announced that it’s unveiling a completely revamped version of its Hotmail free online e-mail service.

Dubbed “Outlook” in a bid to transfer some of the goodwill from Microsoft’s popular Office email application to the free e-mail space, the successor product to Hotmail incorporates functionalities designed to make it more directly competitive with Google Gmail, which has been growing by leaps and bounds in recent times.

You may not realize it from the persistent dearth of industry press coverage about Hotmail, but it’s actually held the rank of the world’s largest online mail service, owning more than a third of the world market share (~325 million users), according to June 2012 reporting from cyber-statistics firm comScore.

But Microsoft’s margin over rivals has shrunk considerably, with Gmail hard on its tail at ~31% market share of users and Yahoo holding a similar percentage (~32%).

It may be surprising to learn that in the ever-changing digital space … but prior to this revamp Microsoft hadn’t updated any of the features or functionality of Hotmail in nearly a decade.

“A lot has changed in the last eight years, and we think it’s time for a fresh look at e-mail,” Chris Jones, a Microsoft exec, stated in a blog post that has to be the understatement of the decade.

Here’s some of what’s in store for users when they switch from Hotmail to Outlook:

  • A clean, uncluttered look – just like Gmail.
  • Tasteful, unobtrusive advertisements appearing in the right column of the screen – just like Gmail.
  • Users can link up with all major social media accounts to view the latest updates from their contacts and friends – just like Gmail.

Is this beginning to sound a bit repetitive?

But there is one feature that may give Outlook a bit of a leg up on its free online competitors: The service will automatically detect mass messages like sales notices, daily deals, newsletters and social updates and place them in separate folders. Users can customize this functionality to sort incoming e-mail any way they wish.

I haven’t used Hotmail in the past … although I might be tempted to consider Outlook now that these newest innovations have been added.

But the long-term success of Outlook – and any free e-mail platform – is going to be how effectively they can connect various online assets together to provide “one-stop convenience” for users.

One thing’s certain: There’s no way Microsoft can let another eight years go by before making more enhancements to its free e-mail service offering, considering the always-aggressive posture of Google and its Olympian competitive spirit.

What to Make of all the Interest in Pinterest …

I love PinterestUntil now, I’ve hesitated to blog about Pinterest, the digital bulletin board and newest “breakout network” in social media.  I wanted to see how it was evolving before jumping to conclusions about its importance and staying power.

Without a doubt, Pinterest is one of the biggest stories in the social sphere right now. It seems that something as simple as enabling users to post “boards” of their collections of photos has struck a nerve.

Pinterest is one of the most user-friendly social sites in cyberspace.  Pinterest participants use a “bookmarklet” button installed in their browser to affix photos or images to virtual bulletin boards set up on particular topics or themes such as interior decorating, food arts and fashion.  Each image has an accompanying clickthrough link to the web page where it was found.  Users can also “re-pin” images they find on other Pinterest boards.

Simple, easy … and popular.  In its most recent Digital Marketing Benchmark & Trend Report, Experian reports that Pinterest is now the third most popular U.S. social networking site. Only Facebook and Twitter rank higher.

Just how well is Pinterest doing? Consider that this invitation-only site has ~10 million users and receives nearly 25 million visits in a single week. That’s 30 times larger the volume of visits recorded on Pinterest just six months ago.

I’m still trying to determine how much staying power this latest social media phenom possesses. The rapid adoption rate tells us something right off the bat … and there are a few additional reasons why Pinterest may be here to stay in a big way:

  • Pinterest is a highly effective form of digital scrap-booking that seems to be extremely popular with its users.
  • Online audience measurement firm comScore reports that users spend an average of 1.5 hours per month on Pinterest, second only to Facebook.
  • Pinterest is easy and intuitive to use, making it popular with people who aren’t your typical “geeky” computer user. Pinterest users tend to skew older … more female (~80% actually) … and generally located more in “flyover country” than in coastal zones like New York and California.

Any time a social network can claim to have attracted the hearts and minds of the broader population, that’s noteworthy … and it leads me to believe that Pinterest isn’t merely a passing fad.

Indeed, we may have just scratched the surface of what Pinterest will be and what it will offer in the years ahead.

What are your thoughts about Pinterest?  Dynamic or dull?  Flash-in-the-pan or here to stay?  And how do you see it being used by marketers to promote their products and brands?

What’s the Very Latest with Consumers and How They’re Using QR Codes?

Scanning a QR code with a smartphoneI’ve written before about QR (quick response) codes and how they’re viewed as a marketer’s dream.

What can be better than the ability for consumers to point-and-click their smartphones for instant access to product details, a coupon or other information … without them having to type in a web address?

But it’s been observed that U.S. consumers are a bit more reticent to use them compared to their Japanese counterparts (where QR codes got their start).

And a July 2011 survey of ~500 adult social media users conducted by research firm Lab42 (Chicago, IL) found that nearly 60% of the respondents were not familiar with QR codes. Furthermore, only ~13% of the respondents were able to use a QR code when prompted to do so in the research, suggesting that many of those saying they were familiar with QR codes may never have actually used them — or maybe only experimented with them once or twice.

But now that some time has elapsed since QR codes have made their debut in America, we have access to field research to help us understand how U.S. consumers are actually interacting with them.

The data comes in the form of a new MobiLens study by comScore, which has found that ~14 million mobile users in the U.S. scanned a QR code on their “smart” mobile device at least once during June 2011.

That figure represents ~6% of the total mobile audience over the age of 13. Not a big percentage, but considering that smartphones still represent only a minority of all mobile phones in circulation (just shy of 40%), it shows that use of QR codes is happening to some degree.

And what are the demographic characteristics of QR code users? According to comScore, they’re more likely to be male (~61% of the code scanning audience) … they definitely skew younger (~53% are between the ages of 18 and 34) … and they’re more likely to be upper-income folks (~36% have household incomes of $100,000+).

What are the most popular sources of scanned QR codes? The study shows that this skews more toward “traditional” media: magazines and newspapers:

 Printed magazines or newspapers: ~49% of the QR code audience
 Product packaging: ~35%
 Websites on a PC: ~27%
 Posters, flyers or kiosks: ~24%
 Business cards or sales brochures: ~13%
 Storefronts: ~13%
 Television: ~12%

I got a chuckle out of the fact that QR codes published on websites receive so many scans … it would seem to me that if someone is already sitting at a desktop or laptop computer, what’s the point of scanning a QR code into a smartphone? But I’m sure people have their reasons.

And where are people situated when they’re scanning a QR code? To hear many marketers tell it, they’re most excited about placing QR codes on billboards or in other public paces. But comScore has found out that most people are scanning QR codes not while “out and about” … but when sitting at home:

 Scanning QR codes at home: ~58% of the QR code audience
 … At a retail store: ~39%
 … At the grocery store: ~25%
 … At work: ~20%
 … Outside, or when using public transit: ~13%
 … In a restaurant: ~8%

If you’re interested in reviewing additional findings from the comScore MobiLens study, you can find them here. Because of the “newness and novelty” of QR codes in the American market, not doubt comScore will be returning to this research topic regularly to chart how consumer behaviors continue to evolve over time.

The Ripple Effects of High Gasoline Prices

Shopping at home is rising along with gasoline prices.We’ve all heard the news reports about the effects that high gasoline prices are having on families who rely on automotive transportation for their livelihoods. It’s all well and good to promote the use of public transportation, but when your job is 25 miles away along suburban or rural roads, it’s often impractical to adjust commuting behaviors.

We’re also reading how high gas prices are affecting other aspects of the economy, such as the rising price of food items in the grocery stores due to higher transportation costs.

To this, we can now add another consequence of the high cost of petrol. Paralleling the gas price spike has been an increase in Internet activity.

Marin Software, a leading paid search manager platform for advertisers and agencies, has performed an analysis across more than $2 billion worth of paid search marketing activity. The firm established a benchmark based on the share of activity across the Google and Bing search engines, and then studied cost-per-click activity, clickthrough rates and conversion rates.

Marin evaluated the rise and fall in the volume of clicks along with the rise of gas prices over the time period January – March 2011. Voila! It found a positive correlation between rising gas prices and increased click activity.

In a similar vein, digital market intelligence firm comScore is reporting that U.S. e-commerce sales were ~$38 billion during the first quarter of the year. That’s up ~12% compared to the first quarter of 2010. And while e-commerce volume has been up over the past six quarters, this is only the second time the growth as been in double digits.

So the premise that the higher gas prices climb, the more the propensity is to shop from home and avoid the cost of driving appears to be on target. And it’s probably being helped along by the plethora of “free shipping” offers that are also out there — along with avoiding paying sales taxes.

Looking forward to the day when gasoline prices may plateau or fall back, it’ll be interesting to see if Internet activity drops back as well. Or will more people have become used to the comfort of shopping from home in their boxer shorts – so that online activity remains at an elevated level?

I have a suspicion it’ll be the latter.

More Insights on Online Display Ad Effectiveness

Ad clickthrough rates
Clickthrough rates are only part of the story in online display advertising.
Last week, I blogged about the low level of clickthroughs on online display ads – basically a cipher at 0.09%.

In a conversation with a business colleague of mine who is with one of our healthcare client accounts, she mentioned that it’s also important to consider the branding aspects of online display advertising. The idea that people may not click through at that precise moment in time, but are favorably disposed to pay a visit later on.

This got me to looking for additional research into the matter. What I found from several advertising digital media marketing and data reporting companies – MediaMind (Eyeblaster) and comScore – confirms this impression.

An analysis by comScore of consumer clickthrough behavior covering ~140 online display ad campaigns found that only about 20% of the conversions came after clicking on a banner ad. The remaining 80% of conversions happened among those who had seen the ad but not clicked through at the time. Instead, they converted at a later date.

Other interesting points from comScore’s analysis include:

 Online display ad campaigns yielded nearly 50% improvement in advertiser website visits as measured over a 30-day period.

 Users who were exposed to the online advertising were ~38% more likely to conduct an advertiser-related “branded” keyword search in the subsequent 30-day period.

 Users who were exposed to the online advertising were ~17% more likely to make a purchase at the advertiser’s retail store.

Similarly, MediaMind’s analysis of ~100 million conversions from thousands of online ad campaigns has found concurring results – namely, that only ~20% of conversions are the result of a clickthrough, while the vast majority of the conversions happen at some point after viewing the banner ad without clicking on it at that moment.

The takeaway from all this: It’s a mistake to consider online advertising clickthrough rates in a vacuum. Because at best, it’s only a partial measure of the effectiveness of an online ad program.