How Twitter and Facebook must handle the Advertising Problem
As Twitter announces a new TV advertising platform and Facebook comes under fire for driving users away with ‘irritating’ marketing strategies, what does the future hold for the social media giants? Raymond Snoddy investigates, and warns that social media networks have to be very smart and careful if they are not to put at risk what has been achieved…
Leading social networks such as Facebook and Twitter are heading for an important turning point – and the outcome could hinge on advertising and how much users are prepared to accept and in what way.
Until now you would have argued that Facebook was home and dry. The lead was just too great for any other runner to catch up. In the world of social media you rise to unassailable greatness or you fall by the wayside like MySpace or Bebo.
In its own breaking news space Twitter has done the same and shown would be competitors, if there are any, a clear pair of heels.
And yet there are potential shadows over two of the greatest communication industry success stories of modern times, thrown up by two fundamentals of the social network world – the dictates of fashion and how quickly they can change, and the need to produce revenue and even profits.
For billion dollar organisations that can only mean advertising: lots of advertising.
After the over-valued fiasco of its flotation, Facebook’s need for revenue rises each quarter becomes paramount to avoid the shares being marked down.
While the revenues will undoubtedly keep on rising for now, perhaps even dramatically, there are signs that Facebook is being hit by both of the social media imperatives.
There is a danger that Facebook is now too much of an established corporate to be fashionable any more. A recent study by the Pew Research Center found that teenagers were deserting Facebook for other more trendy social network sites. The problem is that Facebook is full to the brim of that most unfashionable category of human beings – parents.
Anecdotal evidence also suggests that parents who do not want to participate, sign up for Facebook just to keep a watch on what their offspring are up to – just what they most want.
The numbers show that Facebook users are declining, albeit from an astonishing total of around one billion worldwide.
In the past six months it is estimated that Facebook has lost nearly 9 million visitors in the US with 2 million going AWOL in the UK alone.
This week a YouGov poll suggested that Facebook had seen a decline in its UK users of nine percentage points over the past year and that one of the main reasons was a growing irritation with the number of ads.
Simple customer numbers can be bolstered by expanding in new markets, but although Facebook executives are saying little, they must be more than a little concerned that the company seems to be well past its peak in its core developed markets. And there do seem to be signs of a resistance to ads intruding into what users perceive as social contact between friends and indeed the Facebook News Feed.
It has of course a mountain of cash and can buy any irritating aspirants nibbling at its heels. So far Facebook has bought a total of 36 companies including the famous $1 billion purchase of Instagram.
Facebook hasn’t bought any companies this month, unlike Yahoo which has bought no less than six, including Tumblr for $1.1 billion, bringing the company’s total acquisition count to a astonishing 78.
Archaeologists use radiocarbon dating and half-life is measured in thousands of years. Could it be that the half-life of a social media network can be measured in a single decade or, in some cases even less?
Twitter, which is expected to float sometime next year, also took a few potentially hazardous extra steps in the direction of advertising this week.
They haven’t done anything as crass as disrupting the news flow with ads, something that would amount to self-harm, but it’ significant none-the-less.
In future, when Twitter users comment on their favourite television programmes, they are likely to receive ads relevant to those programmes, perhaps even the ads that appeared originally in them.
Only time will tell whether Twitter users will be irritated by the intrusion or regard it all as fair game and something that echoes and enhances the overall experience.
It has long been clear that Twitter is seeking to piggyback on the enduring popularity of television and trying to dominate the second screen.
Twitter has the advantage of watching the growing difficulties of Facebook that began to come to a head as a result of the float, and can learn from Facebook’s mistakes.
Twitter emphasised in its Madison Avenue presentation that there were already limits in place on how many ads a user would see in a day.
In pursuit of the second screen Twitter also announced a raft of deals with media companies such as Time, Bloomberg and Discovery for clips which can then be shared. Twitter calls it Media Amplify and users watch an ad and get to see the clips.
There is a danger that all of this activity might dilute what unexpectedly emerged as it’s raison d’etre – the live breaking of endless news and comment.
There is no doubt just how important it has become. The US commentator Michael Wolff believes that every new news event of consequence enhances Twitter’s presence and clout.
“It is first responder news; it is a real time news index; and, for more and more news consumers, it is background or passive news, like local radio once was, but on an international scale,” Wolff argues.
At the recent Newsworks conference the editor of the Daily Telegraph, Tony Gallagher, said that Twitter was now more important to his journalists for breaking news than the Press Association.
Lord Rothermere, the DMGT chairman added that Mail Online journalists were expected to react to breaking news on Twitter within a maximum of three minutes.
Twitter has to be smart if it is not to put at risk what has been achieved – the world’s leading breaking news monopoly created by hundreds of millions of us all working for free to tell the story of what is happening right now, right here.
Intrusive advertising would be one way to damage that legacy.
As with Facebook so with Twitter – it’s for them to lose.