Category Archives: MySpace

LiveRail survey: 18-24 group now watches more web video than TV

Take this one with a grain of salt but it spots the trend. Online video ad network LiveRail conducted a survey of 400 people under age 25 via Facebook and MySpace and found 53% spend more time watching online video than TV. The small survey group and biased method of data collection — let’s ask youth online if they spend time online — create a rather unscientific finding, but one worth watching. Many brands, including the ad agencies that guide them, are moving more communications to online video in 2009.

What’s the impact for advertisers? LiveRail says click-through rates on advertising video overlays are 1.2%, nearly 10 times higher than CTRs on normal banner ads. However we note that click-through rates on banner ads were once above 5% when they first launched in the 1990s, and as the novelty wore off banner CTRs fell rapidly to the current 0.14% range. Video advertising may be the new marketing frontier but as online clutter grows, ongoing testing of different vendor formats needs to be part of your plan.

Social networks: Not just for kids anymore

Pew released its latest report on social media yesterday, with the headline that more U.S. adults than teens now use chatty services such as Facebook, LinkedIn and MySpace. As a percentage of each demo, teens are still more likely to socialize online; but in terms of sheer numbers adult use has skyrocketed from only 8% of those with online access using social media in February 2005 to 35% today.

The Pew survey unlocks a few surprises. Social media use is concentrated in urban areas (34% of online users) vs. rural (23%); no surprise there. But whites (31%) are less likely to use online social media than African-Americans (43%) and Hispanics (48%). And perhaps most surprising, while 17% of teens said they use social media to flirt online, 20% of adults do the same. Since adults tend to be married and teens do not, it means you grownups out there are being very, very naughty.

On Twitter network, Steve Rubel finds 98% friction

Steve Rubel got the math right but the idea backward.

Last week Rubel figured out that about 2% of all tweets — short text messages sent through Twitter — are “retweets,” or forwarded postings. He suggests this is evidence of a growing Lazysphere of laggard bloggers who simply pass along ideas that come from others.

Turn this around, though, and you can see the dampening effect on viral marketing. Communicators have been agog over the promise of social media tools such as Facebook, Twitter, MySpace, and YouTube to exploit human networks. The dream has been a marketer could seed a network with a message at very little cost, and then watch as it blooms onward to millions of consumers, like a flu virus on a crowded train system.

Alas, humans do not follow Metcalfe’s Law, and the supposed exponential power for every additional node in their networks peters out. If 98% of all content that flows through the network is original, and only 2% gets passed along purely, that means there is tremendous friction for any message to accelerate inside the network.

Sure, messages can be rewritten, but the childhood game of telephone shows how each revision corrupts the original thought. Web links can be forwarded, but if the message introducing it is changed, the meaning may be lost. Rubel’s calculations suggest pure message passalong faces a 98% hurdle at each next stage of going viral.

The warmth of ‘Social Objects,’ or why you care about Twitter

If social media will soon be like air, why are we still huddled around brands? Think of the irony. While everyone is hyperconnecting via wireless internet, we still use 1950ish big brands to deploy ourselves. MySpace. Facebook. YouTube. Flickr. If something new comes along with slightly better features, we’re not sure we want in, cause man, we love the Twitter brand.

Hugh MacLeod suggests that humans may need brand focal points to begin social conversations. MacLeod calls these points “Social Objects,” or devices similar to a bottle of wine or campfire that people tend to gravitate around … objects that somehow begin the social process.

MacLeod writes, “Social Networks are built around Social Objects, not vice versa. The latter act as ‘nodes’. The nodes appear before the network does … granted, the network is more powerful than the node. But the network needs the node, like flowers need sunlight.”

Maybe there’s hope for Facebook monetization yet.

(Photo: Jeff Casillas)

Why false hopes for Twitter and Facebook are fine

Speculative bubbles can be a good thing. The fiber-optics laid down in the 1990s telecom gold rush created the high-speed backbone for today’s internet. The 1960s space race gave your kitchen a microwave oven.

So it’s swell that the business world remains gaga over social media – because we’ll have to pass through the valley of silly investments with little return before we achieve the future of free worldwide connectivity.

Social media will never be monetized. Here, we explain why.

First, understand the bubble.

Google the phrase “(social media site) valuation” and you’ll see scores of articles talking about Facebook being valued at $15 billion, potential returns for Twitter – and none are based on reality. Investors or big software companies want a piece of social media because they think it will attract advertisers, who in turn hope for exponential returns on their ad media dollars.

But ad media dollars will never drive huge returns from social media sites. Valleywag noted recently that Facebook is consistently one of the worst performing sites for advertiser response, with CTRs well below the 0.14% national average. In April, Bloomberg reported that MySpace’s abysmal ad performance was turning News Corp. into a toxic stock. Brian Morrissey at Adweek wrote that social media metrics are still a work in progress. And we’ve noted that Twitter’s millions of users, if you predicted profits generated from advertising results, are worth about 72 cents each.

Social media will never generate acceptable response, because the users are looking elsewhere. They are playing, not reading; socializing, not searching. Widgets don’t work because the user modality has changed.

So where will social media go to survive?

In the near term, social networks must partner or be acquired by larger entities who can make money elsewhere from sources other than advertising, such as their broader communications or software portal. Google could pick up Twitter and play it forever as a freebie, hoping to pull 1.7 million users into more Google ad searches. Microsoft is intrigued by snapping up Facebook’s chatting audiences, even if they don’t pay attention to third parties, to bolster the branding and awareness of other services. We’d hate to see a FacebookVista, but who knows? The Facebook online operating system may someday marry Vista, to make it all work better.

Then, freedom arrives … and no one makes money.

In the long term, Charlene Li will be proved right: social nets become like air. Then the functionality that enables communication will break off from major portals and become standard utilities attached to everything … and no one will make money off them.

Imagine a 2011 iPhone with video and internet and GPS that allows you to push and pull content anywhere in the world for free. Why do you need to access a portal? Play this forward to the time when the cost of providing networking services is so cheap, it’s almost zero. Social media becomes a tab on every device; you become the center; no portals are necessary; advertisers can’t intercept you, but then, their third-party funding has become irrelevant.

To fund the transition to the future, we need unrealistic hopes.

Which brings us back to speculation. We won’t get that future technology for free, so people will fund it along the way with false hopes on social media return. And thus, the hype machine is necessary. Speculation leads to innovation, and innovation leads to future solutions. Tomorrow’s future translucent 3-D video glass pod is in a garage somewhere, and the 12-year-olds putting it together do so only because they want a piece of the action.

Jacob Freifeld noted back in 1996 that most speculative bubbles have an underlying truth: a “permanent advance” that causes unreal hopes initially, but remains after the frenzy abates. Social media is such an advance in how people create and connect.

It will come. We’ll all be connected with telepathy for free. But it’s going to take decades and a lot of bad initial funding to get there. So advertisers and marketers, stop complaining about poor Facebook results. Throw your budget in, and hope for the IPO.

Photo: Neil Piddock.

Why MySpace is now slathered in lipstick

MySpace hints at desperation with a new design in which more than 50% of its home page is taken over by one giant ad. We don’t mean an interstitial, one of those full-page web ads that temporarily interrupt you on a site before you click through to the real site’s content. We mean, most of the page is now a screaming billboard.

The redesign suggests MySpace is having a tough time making its ad inventory work. Don’t trust us; Bloomberg reported in April that MySpace’s abysmal financial performance had turned Rupert Murdoch’s News Corp. into a toxic stock. Valleywag noted recently that MySpace click-through rates are a little better than Facebook’s, but at 0.10% click-throughs, still aren’t anything to write home about.

But listen, MySpace, we’re trying to help. Look where your media peers have gone before. The $6 billion radio conglomerate Clear Channel once ran more than 12 minutes of radio spots per hour. Audiences began bailing, Clear Channel was forced to launch a “Less is More” campaign and reduce ad time per hour by 23% to 9 minutes and 20 seconds, and now the new Arbitron systems show that the radio audience may have slipped for good, with ratings down 30% or more in many markets.

Which brings us back to MySpace. McDonald’s and other advertisers are probably delighted they can now take over the MySpace home page. But as Ian Schafer, founder of the internet strategy firm Deep Focus, just noted on his blog, social media sites and related widget applications are going to have to show they can be a viable advertising model. The root problem for social media is that users have a different modality, and while in heavy socializing mode they are less receptive to advertising messages.

All of which explains why MySpace has put on more ad makeup.

Facebook, you just got poked by AOL

We just found a killer social media site: Has private log-ins, customizable pages, built-in instant messaging, friend invitations, and even news feeds.

It’s called — back in February 2000.

We spoke today to a reporter for BusinessWeek and, while we won’t give away the story, one question revolved around who will win among today’s social media. It all reminds us of the portal game back in the 1990s, where sites such as AOL tried to control consumer access to the web by building “sticky” features. Today, Facebook and MySpace and other social nets are trying to control the one thing they really can, your connection to friends online. This single feature — not photos or video sharing or email, which is about all else social media does — is what makes Facebooks so appealing.

But what happens if the friend connection becomes a commodity? Charlene Li at Forrester predicted it. Google is working on it. When consumers finally become the center of their online relationships by controlling relationships with a utility as simple as your email, a lot of business models, and the advertisers who support them, may fade away.

James Surowiecki and the selective slaughter of social media

We were just reading a book — you know, that handy, high-resolution content-sharing device with unlimited battery life — and found an answer to all the hyperbole today over new communications tools.

If you look at the histories of most new industries in America, from the railroads to television to personal computers to, most recently, the Internet, you’ll see a similar pattern. In all these cases, the early days of the business are characterized by a profusion of alternatives, many of them dramatically different from each other in design and technology.

As time passes, the market winnows out the winners and losers, effectively choosing which technologies will flourish and which will disappear. Most of the companies fail, going bankrupt or getting acquired by other firms. At the end of the day, a few players are left standing and in control of most of the market.

That’s James Surowiecki, the brilliant business commentator for The New Yorker, recounting the standardization of automobile design from the many early choices of gas and steam and electric. But he could have meant today’s selection of silly social media: Badoo, Bebo, Blogger, Facebook, Flickr, Flixster, Mixx, MySpace, Nexopia (see, Canada, we’re paying attention!), Orkut, Plaxo, Pownce, Reddit, Twitter, Vox, Xanga and YouTube. We get a call a week from some new social site/email/video thing launching and often can’t understand the basic business plan. We sent a friend an email inside Facebook tonight and thought, wow, this is as easy to use as email.

Today’s minor e-revolutions boil down to text and pictures, audio and video. Eventually one or two formats will win. If you don’t believe us, go into your living room and look at all the books.

(Photo by Gualtiero.)

How MySpace smacked News Corp. stock

Bad social media. Bad.

Bloomberg reports that MySpace is turning parent News Corp. into a toxic stock, after the MySpace division said it would miss revenue targets and Wall Street analysts, in technical terms, immediately threw up. Bernstein quants downgraded News Corp. price targets 13% last week, sending a shiver through Rupert Murdoch.

Why? Bloomberg blames advertisers worried about brand control. The theory goes that advertisers fret their brand may appear on MySpace next to crazed user-generated content (drunken college students, racist language, photos of cats), which creates a horrible cascade of advertisers shying away, declining revenue, and investors who avoid the stock.

But we think the real reason is social media ads don’t work.

This isn’t rocket science, folks. Internet advertisers track results at incredible detail — and what really grates on advertisers is when ads fail to perform. Social media ads, such as vertical banners on Facebook, have notoriously low click-through rates — lower than the U.S. average response on banner ads of 0.14%, and much lower than the 0.75%+ click-through rates advertisers get on ad networks and behavioral targeting. Ad responses are lower because the consumers using social media are busy chatting, typing, uploading videos, and playing games with each other. You don’t respond to an ad if you’re playing with your profile.

Advertisers need to watch and understand this trend because U.S. consumers are rapidly migrating to social media sites. In September 2006, 30% of U.S. internet users had created a profile on a social media page such as MySpace or Facebook. Last month, that number was up to 60%. With 24 hours in the day, every hour on social media is an hour not spent clicking on Google results or traditional banner ads.

The solution? We don’t have one. We think Americans are dramatically changing their internet behavior from “hunting” to “doing,” and that will put a squeeze on the entire ad industry. Watch BusinessWeek in the next few days for our take.

(Photo credit Simply Milo.)

Olympic torch riots: A lesson for marketers

Call it a case study in viral communications. The Olympic torch sparked riots in Paris yesterday. Protesters furious with China human rights abuses stormed barricades and snuffed out the torch, forcing police to retreat with the smoldering symbol of human brotherhood … to the inside of a bus.

Not to belittle this controversy, but the Olympic torch — carried on a predictable path surrounded by political controversy — is a recipe for mass hysteria. It has the same ingredients as any human fad, whether that be Razor Scooters, iPhones or Facebook. Marketers who want to understand how fads start can learn from mob behavior.

Sociologists David Haddock and Daniel Polsby list four requirements for mass action:

1. Get a crowd. Mass behavior first requires a mass. Now, crowds alone do not spark riots — people cluster together every Fourth of July without harming each other. But a big group of people is the starting point.

2. Get some clones. The crowd must attract like-minded people, say, those who want to take action and who believe others do, too. If you think of any mass tipping point, it begins with similar users — musicians on MySpace, college students on Facebook, technology buffs with the iPhone. Protesters who care about the Chinese human rights issues share a powerful, political longing too.

3. Find the nodes. The crowd must then coalesce around “action nodes.” Riots or fads don’t start everywhere at once — there are certain points in the crowd that become trigger hotbeds.

Haddock and Polsby note that “action nodes” are like little magnets, attracting people most likely to start the fight or fad. For example, at street scenes, police and television reporters often cluster around spots where violence is most likely to erupt — so if you are interested in violence, you walk to where the police and reporters are. In marketing, “cool hunters” such as sneaker-clad bloggers we know report on the latest trends — so if you want to be on the edge, you read them every day.

In the absence of visual cues, people can often guess where the hotspot is. Consider one study where people were asked how they would meet a friend in New York City on a given day without any idea of where the friend would look for them. A common answer was: go to Grand Central Station, information booth, high noon. Because my friend would probably guess that, too.

A little intuition and you’re drawn to the epicenter.

4. Launch signal. And finally, a signal event is required. This is also known as a Schelling incident, after game-theory author Thomas Schelling, which tells you not what you should do but instead what other people are about to do. No one wants to be the first out of the gate (or the first to be arrested). But if you see others are about to charge in, you dive in, too.

Signal events may happen naturally because in any random order of events, patterns emerge. Flip a quarter 50 times, you’ll get three or four heads in a row. This is why your iPod repeats songs while it’s on shuffle. If you put enough angry people together, eventually a few will bump into police at about the same time, and that “pattern” triggers others on the edge to jump in.

(This vary randomness is frustrating for anyone, such as marketers, trying to launch a viral campaign because it really can’t be controlled. Facebook’s fame and fortune started with some tipping point at a college — but it just as easily could have been another social network that took off when a few frat guys all said at once, “man this is cool.”)

And that’s the lesson for marketers. You need a crowd, clones, nodes and a signal. The reason most marketers can’t launch viral campaigns easily is because they really only control 1 of the 4 ingredients, the signal. Without the crowd in the proper position, chasing the opportunity, the fad won’t fly.