Thought Leadership: “Can Social Media Save TV?”
John Cole, managing director of Adknowledge, examines the importance of social media for traditional broadcasters …
There can be no doubt; traditional media is in a bad way. TV revenues are down 14% year on year and press is in an even worse state (with a reported $2.6 billion wiped off Q1 revenues in the US: a whopping 29% decline). Things will have to change at the top of these organisations for them to survive, but I fear that the executives in question see this as ‘just another recession’ that they can cost cut their way through…
Online as a whole seems to maintain its Teflon status and is still likely to grow this year (a 4% extra share of the overall UK ad pie is the latest estimate I’ve heard). Now, a lot of that will go into Search, but how do you build brand feeling using keywords? Undoubtedly, advertising spend will follow the users to where they are spending most of their time: social media. The meteoric rise of social utilities like Facebook suggests that they are set to lead the way in this respect. Indeed, I understand that Facebook is now EBITDA positive, which is great news.
Facebook founder Mark Zuckerberg was quoted this week as saying that he got the idea for having an open platform (allowing third-party developers to build apps for FB and keep the ad revenue) from using early versions of AOL. Whatever the inspiration, his brainchild has not only created a brand new industry, it has also been instrumental in catapulting Facebook to the top of the leaderboard of social platforms with, reportedly, over 200m active users now logging-on to Facebook worldwide. Two hundred million is an amazing achievement, especially when you consider that there are only one billion internet users on the entire planet. That’s one-in-five people with internet access using Facebook.
Social Apps are one of the main reasons Facebook has grown so quickly. App developers provide the functionality, and are being paid well for their efforts: the Financial Times has reported that the apps industry is worth more than $500m, which is possibly more than Facebook’s revenue itself.
For entrepreneurs, never has there been a better time to get into online publishing. Apps developers have access to 500m people worldwide via a viral network of social platforms like Facebook, Myspace, Bebo, Friendster, Hi5, Orkut and now also Yahoo! Dwell time on these apps is exceptionally high, which gives companies like Zynga – one of the largest apps businesses – access to fantastic revenue streams. Their business now employs nearly 300 people and has been reported as breaking the $100m mark in revenue. To get that in perspective, that’s over eight million dollars a month in revenue from a business model that’s only two years old.
Looking over the fence at such impressive growth must be tough for traditional media companies. They are looking to repair their profit and loss accounts and with ad avoidance from PVRs (where it’s easy for a user to fast-forward the adverts) and a fragmented audience, TV revenue and rate cards are continuing to slide. Users are spending more and more time in social networks and even when a TV show ‘goes viral’ online, they often fail to benefit financially from that success.
Consider for a moment the Susan Boyle phenomenon from the UK hit show Britain’s Got Talent. A Youtube video clip of her from the show clocked up more than 100 million views. Did Fremantle (the creators and owners of the content) make a mountain of cash from those hundred million views? The answer is, famously, no.
Whatever the deal reached between Youtube and Fremantle, the fact remains that the moment has passed and that controlling and monetising a viral hit is pretty tough.
No-one knows for sure when the next new hit will arrive and go viral, therefore TV executives need to embrace social media so that, next time, they can provide an efficient conduit for virality and keep hold of most of the revenue.
If Fremantle had built and seeded a Facebook, a Bebo and a MySpace app around Susan Boyle or the show’s content, they could have filled the app with original content and watched it grow. It would have been ideally placed to catch the viral wave within the major social platforms. They would then be the proud owners of a new cash-generating asset (an app with many monthly users), that could be used to seed new shows and serve ads for the TV show’s sponsors.
Many non-online-savvy professionals assume that ad revenue goes to Facebook or Bebo. This is not the case, because when you build and own an app – all of the ad revenue is all yours. And, as it’s a lot easier to share content within a social platform (rather than having to cut and paste a link into an email), you are laying the foundations for swifter viral success. The plug-in functionality of apps allows for explicit endorsement of your brand (“hit ‘share’ and send the clip to your friends”) or implicit endorsement of it, via a user’s ‘wall’ (“John has watched the latest amazing Susan Boyle video”).
So, my advice to traditional media and TV production companies is simple: plant your content within social apps and get it seeded. It’s a lot more fun to see your content go viral when you are making money from it.
Media Playground: www.media-playground.co.uk