Tag Archive: social media

  1. Instagram faces a backlash against ‘TikTokification’

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    For many years Instagram was the undisputed leader of the social media platforms. Just 12 months after launch, it had acquired 10 million users, and it had 1 billion users by June 2018. By 2021, Instagram had generated around $25bn in ad revenue for parent company Meta. It has helped build influencer careers and activist communities, as well as helping people stay connected with their friends and family and the brands and influencers they like.

    Despite that success, Instagram has recently been making changes in order to address the threat posed by TikTok. However, those changes are proving deeply unpopular with users, provoking a backlash against Instagram. Is it losing touch with what made it so popular?

    The TikTok-shaped elephant in the room

    It won’t come as a surprise that TikTok has enjoyed spectacular growth over the last four years. Just four years after its launch, it had 1 billion active users – not far off Instagram’s 1.3 billion. Many experts believe that it will soon overtake Instagram in this respect. In terms of engagement, TikTok is far ahead of its rival: users spent an average of 25.7 hours a month on TikTok in 2021, compared to just 7.9 hours on Instagram. TikTok is also the favored social platform of teens: 33% said it was their preferred platform in 2021, compared to 31% for Snapchat at 22% for Instagram.

    And while Instagram still dominates in terms of ad revenue – $47.6bn in 2021 compared to TikTok’s $4bn – TikTok’s is projected to raise to nearly $12 billion this year, making it bigger than Snap and Twitter combined. It’s on track to become a serious threat to Google/Meta duopoly of digital advertising.

    Reeling them in with Reels

    Meta is clearly flustered by TikTok’s continued growth. Its response has been to significantly increase its focus on video on both Facebook and Instagram. Indeed, Mark Zuckerberg said on a call to investors that Reels is a major part of Meta’s TikTok defence strategy. Instagram launched Reels – short, snackable videos – back in 2020, and have given them increasing prominence ever since. In 2021, Instagram CEO Adam Mosseri announced that the platform would be pivoting to video because ‘we’re no longer a photo-sharing app. People are looking to Instagram to be entertained. We have to embrace that’. Instagram started adding slots for recommended videos from accounts users didn’t follow into their regular feeds. In summer 2022, it announced that all videos posted onto Instagram would become Reels.

    A backlash against Instagram

    This approach, whilst understandable given the wider move towards video, has thrown up a number of problems for Instagram. Chief among them is the effect that it has had on user experience. A large proportion of users’ feeds is now content from people they don’t know, usually in the form of Reels. Posts from their friends and people they follow are drowned out by a cacophony of video clips and sponsored content. Testing of a full-screen feed, similar to TikTok’s, has exacerbated the issue.

    Instagram has suffered a significant backlash, with highly influential users such as Kylie Jenner and Kim Kardashian, who each have more than 300 million followers, criticizing its new strategy. Other users have commented that Instagram no longer feels like somewhere to share photos and videos, but more like a ‘chaotic hub for Meta to build relationships with brands’. The danger is, of course, that by neglecting the user experience, Instagram is deterring the very audiences that those brands are paying to access.

    Why do users love TikTok but hate Instagram’s move into video?

    It’s not the move into video per se that is behind the Instagram backlash. There is a clear movement into video by creators. Users are lapping it up on many platforms, including – and particularly – TikTok. So why has TikTok got it right and Instagram wrong?

    A key factor in TikTok’s success is its superior algorithm, with its remarkable ability to suggest content that users love. An effective algorithm relies on high-quality data, and TikTok is pretty aggressive in how it harvests data from its users – much more insistently than Facebook or Instagram. This means that good content on TikTok reaches millions of users, even if the creator has no followers. This makes it a very attractive platform for creators, and therefore brands.

    Another factor in the discrepancy between TikTok and Instagram is the simple fact that Instagram appears to be trying to be TikTok – but users want it to be Instagram. Its huge popularity grew from sharing photos and stories. This allowed users to connect with their friends as well as the brands and public figures they liked. Right now, Instagram seems to be actively pushing against that original mission by suppressing content from people you follow in favor of suggested Reels from people you don’t. And in following this path, it is losing sight of what made it so popular in the first place.

    It’s not just TikTok that Instagram copies

    Meta has form for copying or acquiring innovative products. Some critics suggest that this is because innovation at the company is lacking. Just last week, Meta announced that Instagram is testing another feature which appears to be copied directly from a competitor. Candid Challenges mimics the BeReal concept, which prompts users to post an unfiltered photo of themselves once a day. It has tapped into a desire for authenticity, which allowed it to push Facebook out of the Top 10 apps on the App store. However, Instagram faces a challenge thanks to its user interface. Candid Challenges risks getting lost in the myriad Instagram features. Meanwhile, BeReal is designed around this single purpose – much like TikTok with snackable videos.

    However, Meta had much more success with Stories, which took Snapchat’s disappearing photos as inspiration. Their success came from a desire for realness and authenticity – people were beginning to feel that their everyday lives weren’t ‘Insta-worthy’, so they stopped posting every day. Stories – which delete after 24 hours – meant that they required less thought. In two years, Stories attracted 400 million daily users and changed the way that people share and consume online.

    After the backlash, what does Instagram’s future hold?

    To see off the backlash, Instagram needs to sort out its user experience. Mosseri has recognized that the full-screen feed is ‘not yet good’, and said that ‘I want to be clear: we’re going to continue to support photos, it’s part of our heritage’. But he still maintains that videos are the future. ‘More and more of Instagram is going to become video over time. We see this even if we change nothing’. Clearly users will engage more with video if video is what they are fed, but Mosseri is right that video is undoubtedly the future. It makes sense for Meta to continue its drive towards video, so that it maintains a key role in the creator ecosystem.

    Another factor that Instagram has in its favour is that it is by far the largest platform for influencer market. Furthermore, its wide variety of content formats are almost all shoppable, which is a big draw for advertisers.

    It’s not over for Instagram. It is so much bigger than TikTok that it shouldn’t need to mimic what the Chinese social platform is doing. In doing this, it risks losing sight of what made it popular in the first place, and alienating its users. It needs to find a way to hero what users want from it – namely, sharing and seeing photos – and integrate Reels seamlessly, in a way that works for users, creators and advertisers.

    What does it all mean for advertisers?

    First things first: despite the backlash, Instagram isn’t going anywhere, so don’t pull your social spend from the platform.

    Advertisers should remember to follow buying power and respond to demographic characteristics. The belief that users stay with the platform they have grown up with appears unfounded: teenagers, for example, seem to migrate to Instagram as they enter early adulthood. They are moving to Instagram as they accrue buying power, making Instagram a wise choice for media investments. What’s more, younger people – on TikTok – learn faster and require less frequency to remember an ad or brand, which means less investment is required on TikTok.  Even Instagram seems not to have realised this.

    However, TikTok should still play a key part in any advertiser’s marketing strategy, especially those seeking to target a younger audience. And the very fact of TikTok’s success and Instagram’s pivot to video should point the way to a video-first future. Social content can no longer just be about photos – it needs to feature short, engaging video too. Brands need focus on their video game and optimize their content for the platform on which they are publishing.

  2. Meta versus TikTok: the battle for our attention

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    For years, Facebook and Instagram have dominated our social media lives and, indeed, how we behave and interact across the internet. Facebook Meta has come to shape our online lives, and its influence is so vast that bodies such as the European Union and the US congress spend huge amounts of time and money working out how to exert control over it. But for all Meta’s dominance of our time and attention – and the ad dollars of millions of advertisers worldwide, its confidence appears to have been wobbled by an ‘upstart’ – TikTok. The Chinese-owned video-sharing platform soared in popularity during the pandemic and has morphed from a lip-synching and dancing app to one that creates trends and forges deep connections between creators and users, keeping the latter engaged video after video. And now, the cracks are starting to show at Facebook, which has just reported its first-ever decline in daily active users (DAUs). The battle between Meta and TikTok is on.

    Meta – the reigning monarch

    Facebook’s dominance of the social media industry is still undisputed. In Q4 of 2021 it boasted 2.9bn monthly active users – not far off half the Earth’s population. Meta, Google and Amazon together accounted for more than 74% of global digital ad spend in 2021 – which is more than 47% of all money spent on advertising in that period. Meta’s share of the digital ad market is 23.8%.

    But there are signs of trouble ahead for the social media giant – and signs that it is nervous too. It is facing a challenge in terms of both user numbers and advertising, reporting their first-ever quarterly decline in DAUs in the fourth quarter of 2021. Facebook lost around 500,000 daily users in the last three months of 2021. The number of monthly active users on Facebook stayed relatively flat, while growth across Meta’s other platforms – WhatsApp, Messenger and Instagram – was modest. Furthermore, Buzzfeed found that audiences are spending less time on Facebook. This decline in time spent on Meta’s platforms puts direct pressure on ad spend. That pressure is exacerbated by the economic pressure that many small businesses are facing as the world emerges from the Covid-19 pandemic; these small businesses make up a large part of Meta’s advertiser base and, if they are having to cut down on their ad spend, Meta’s ad revenue will inevitably suffer. Insider Intelligence has lowered its forecast or Meta, predicting that the company’s revenue will decrease by $2.5 billion in 2022 and 2023. The company’s share of digital ad spend will fall under 22% by 2023 – down from 25% in 2020.

    TikTok – the pretender to the throne

    The fact is, those daily users and ad dollars are going somewhere. In a rare direct nod to competition (quite possibly because of the various antitrust lawsuits that Meta is facing), Mark Zuckerberg emphasized the threat Meta faces from platforms such as TikTok and YouTube, as people are increasingly drawn toward short-form video content.

    YouTube has been big for a long time, but TikTok’s ascendancy over the last few years has been meteoric. It got its billionth user in 2021, just four years after its global launch; that’s half the amount of time it took Facebook, YouTube or Instagram, and three years faster than WhatsApp. TikTok was the world’s most downloaded app in 2020, and in 2021 it became the first app not owned by Meta to cross the 3 billion app download mark. Also in 2021, the typical TikTok user spent an average of 19.6 hours on the app every month – more or less equalling Facebook.

    And it’s not just user figures that suggest that TikTok is the one to watch. It is also the most lucrative app globally for in-app purchases. Users spent $850 million on TikTok’s virtual ‘Coins’ currency in the first quarter of 2022. What’s more, the company’s unique approach to social commerce, which involves pairing marketers with content creators, drives huge demand for products: the #TikTokMadeMeBuyIt hashtag has had over 11.5 billion views.

    All this is propelling TikTok’s ad revenue: in 2022, it is expected to bring in $11.64 billion – that’s triple its 2021 figure and more than Twitter ($5.58 billion) and Snapchat ($4.86 billion) combined. It’s still small in terms of share of the digital ad market – but Meta evidently still feels threatened.

    Meta and TikTok: A play for the crown

    TikTok’s huge growth in the last few years, its clever social commerce strategy and the fact that it is winning the battle for the hearts, minds and attention of under 25-year-olds (and indeed under-18s) – which happens to be where Facebook is suffering its most significant declines – means that Meta is paying attention and reacting accordingly. The tech giant needs to maintain its ad revenue until the metaverse – into which it has invested heavily – takes off (if it takes off). It does not want an ‘upstart’ like TikTok snapping at its heels.

    Meta’s reaction to the TikTok threat seems to be “if you can’t beat ‘em, join ‘em”. Its Reels product is a direct rival to TikTok’s short-form video format. Mark Zuckerberg admitted in an earnings call that Reels is a major part of Meta’s TikTok defence strategy. They are also exploring the introduction of virtual coins on Facebook and Instagram, nicknamed ‘Zuck Bucks’. It is, however, interesting that Meta’s investment in these projects has been limited – especially given that Zuckerberg has form for investing in projects that he does believe in, such as the metaverse.

    However, Meta is not just using product innovation or imitation in order to keep the TikTok threat at bay. It was revealed recently that it hired a Republican consulting firm in the US to seed public distrust around TikTok. Op-ed and letters to the editor in various local publications have expressed concern that TikTok poses a danger to American children – particularly in relation to the fact that it is Chinese-owned and holds an extraordinary amount of data on teenagers across the world. Meta has defended the campaign and its actions, saying that it believes that all platforms should face scrutiny consistent with their size and success. The eagle-eyed have noted, however, that the thought-pieces in question have criticized trends that have gone viral on TikTok – but originated on Facebook and Instagram.

    The political angle

    Given Meta is a huge American tech company, and TikTok a huge Chinese one, it’s impossible to discuss this matter without touching on global politics. There is a tendency in the West to see the West as a bastion of democracy, free speech and freedom – and to see the ‘rest of the world’ but particularly China and Russia as restrictive, non-democratic and, in the case of Russia, outright aggressive. The fact that TikTok is Chinese owned may well have an impact on its future in the West. The app is already banned in India, and many other countries have considered banning it; the Trump administration in the US toyed with the idea of forcing the sale of the American business to an American company, but this idea was dropped after Trump lost the 2020 election. TikTok collects an enormous amount of data – it is, for example, using facial and voice recognition, even in the US. The fear is that the governing Chinese Communist Party (CPC) will use this very private data to its advantage – and given that they are closely involved in all major Chinese companies, it’s naïve to believe they are not doing this.

    That said, the West also has access to a staggering amount of data. The US can access all data that passes through servers in the US, and the data offered by data brokers from cookie and app data gives anyone who wants it far more intelligence on our behavior than we could reasonably expect them to have – and both the West and the East can use and abuse that data.

    These data flows are likely unsustainable in the long-term – individuals and regulatory bodies will demand more privacy in the future, even if market changes are slow to catch up. We are already seeing increased scrutiny on Meta in the US, the EU and beyond – TikTok will undoubtedly not be immune to it.

    So – is the future TikTok’s?

    While Meta is still by far the biggest social media company, and has a huge percentage share of the digital ad spend market, dwarfing TikTok’s, it is obviously flustered by TikTok’s success, especially when compared to its own stagnating and even declining figures. Facebook has more users, but TikTok has the attention of the demographic that advertisers most want to target and form a relationship with. Both companies will continue to be scrutinized for how they handle data and privacy – we all know the level of scrutiny that Meta faces, and TikTok – being Chinese-owned – will need to get used to a similar level of enquiry.

    For the last couple of decades, Facebook has had huge influence on how people across the world behave on the internet and even off it. It has changed how we interact, how we discover news, brands and products, even how we speak. But with young people devouring short-form video, interacting with creators and buying socially, it looks like the next two decades could well belong to TikTok. And marketers – particularly, but not exclusively, those who want to target a younger audience – should make plenty of space in their marketing plans for the Chinese-owned platform.

    Header image: Kaspars Grinvalds/Shutterstock

  3. TikTok: would a US ban spell the end for the video-sharing platform?

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    You’d think that an app best known for dance crazes and lip-sync comedy would be about as apolitical as they come – but you’d be wrong.

    TikTok caught up in US-China tensions

    TikTok, the short-form video sharing social network, has been caught up in the increasingly tense relationship between the US and China, with President Trump considering a nationwide ban of the app. TikTok is owned by ByteDance, a Chinese organisation which is thought to be the most valuable private company in the world. Many lawmakers across the world are concerned about the security of user data and risks around potential foreign interference. India banned TikTok (and 58 other Chinese apps) at the beginning of this month, saying they posed a ‘threat to sovereignty and integrity’, while Australian Prime Minister Scott Morrison has said that his government is ‘having a good look’ at the platform. It should be noted that all three countries with ongoing concerns about TikTok have difficult relationships with China.

    TikTok is hugely popular with the critical younger audience

    TikTok was formed in late 2018 as a result of a merger between two other big Chinese apps – Musical.ly, an app for lip-sync music videos, and Douyin, a short-form video platform. It has since grown enormously, reaching the 2 billion download milestone in April this year, making it the most downloaded non-gaming app ever – surpassing even Facebook and WhatsApp. It was downloaded 315 million times in the quarter that ended on March 31st, the highest number of downloads for any app in a quarter. This is a reflection of its huge popularity as the world went into lockdown during the coronavirus pandemic, and consumers sought light-hearted entertainment and engagement. TikTok’s userbase skews very young: 65.3% of its users in the US are under 29, and 31% of 13-18-year-olds in the UK used the app during lockdown. This youthful, highly engaged audience is a huge lure for advertisers: TikTok is on track to earn $500m in ad revenue in the US alone this year.

    Security concerns

    However, it’s not all been smooth sailing for the social platform. The current and threatened bans aren’t the first problems it has encountered. TikTok was fined $5.7m in 2019 by the US Federal Trade Commission for illegally collecting personal information from children under the age of 13; as part of the agreement it was also required to delete all videos and data relating to under-13s, something which it is now alleged it failed to do. Just last month, TikTok was one of 53 apps that Apple security researchers flagged were regularly seeking access to a handset’s clipboard. These security breaches have made many uneasy: some government entities in the US have banned staff from using the TikTok app on government-issued phones, while Amazon told employees to delete the app – although it rescinded the instruction later that day.

    TikTok will remain popular with advertisers

    Some advertising industry figures are wondering aloud whether the threat of a ban will affect advertisers’ attitudes towards the platform, ultimately making that $500m ad revenue target harder to achieve. The general consensus seems to be that it will not. TikTok’s core appeal is its huge, youthful audience: the ability to reach them on a meaningful level is critical for many advertisers. What’s more, it may well benefit from the Facebook boycott. Many brands who normally spend most of their social dollars on Facebook and have chosen to pause their spend with the tech giant in the support of the #StopHateForProfit campaign will be looking to spend their social budgets elsewhere. TikTok’s young audience and recent launches – its self-serve ad platform and TikTok for Business – will make it an attractive alternative. The self-serve ad platform, which allows advertisers to buy and manage ad campaigns directly and access creative tools, flexible budgets and performance targeting could lure small and medium businesses in particular – Facebook’s core revenue driver. TikTok has also pledged $100m in ad credits for small businesses suffering as a result of lockdown.

    There will always be an appetite for platforms with a youthful audience

    The future is uncertain for TikTok, and its success undoubtedly hinges on the US government’s decision. However, no matter which way the decision goes, TikTok’s very existence and its enormous success show that there is a huge appetite for platforms that appeal to a young audience. If they fall, then the space that they leave will no doubt be filled rapidly.

    Image: Marmolejos / Shutterstock

  4. The Facebook boycott: what are the implications for brands and for Facebook itself?

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    Facebook has faced significant challenges over the last few years, notably since 2016, which saw the tech giant embroiled in controversies relating to the election of President Trump in the US, and to the UK’s Brexit referendum. 2020 is not proving to be any easier.

    The world’s largest brands boycott the world’s largest social media platform

    The current controversy was sparked when President Trump reacted to the Black Lives Matters demonstrations in a post on Twitter and Facebook, which he ended with the phrase ‘when the looting starts, the shooting starts’. Twitter reacted by hiding the post behind a warning that it ‘glorified violence’; Facebook, on the other hand, did nothing, with Zuckerberg saying that it was “better to have this discussion out in the open”.

    Shortly after this debate, a consortium of civil rights groups started urging advertisers to reduce or even halt their spending on Facebook throughout July, under the #StopHateForProfit hashtag. The campaign gathered momentum, peaking with Unilever’s announcement last Friday (June 26th) that they would cease all their US advertising on Facebook until the end of the year. Within two hours of the announcement, Mark Zuckerberg released plans to prohibit hate speech ads and to better protect groups such as immigrants on Facebook. He also said that the platform, undoubtedly with one eye on President Trump, would label posts that violate their policies but need to remain published ‘in the public interest’.

    Facebook’s changes weren’t enough

    But Zuckerberg’s pledges weren’t sufficient to stem the flow: over the weekend and into the beginning of this week, more and more brands announced they would be joining the boycott. Facebook is now facing the loss, at least temporarily, of income from 150 brands as large as Verizon, Starbucks, Adidas, Coca-Cola and Honda – as well as Unilever of course. To give an idea of the amount of money this means, Unilever and Verizon spent $850,000 and $504,000 respectively on Facebook in the first three weeks of June alone. The World Federation of Advertisers claims that a third of the world’s biggest brands will, or are likely to, suspend advertising on social media, while an additional 40% are undecided.

    What are the implications for Facebook?

    The loss of income because of the boycott will undoubtedly be a real blow for Facebook – but by no means a fatal one. The majority of its income comes from the longtail: eight million small and medium-sized companies who are priced out of TV and therefore can’t afford not to advertise on Facebook. However, Facebook’s share price was affected by the boycott, down by 10% to $212.50 over the course of the week to June 28th. They have no choice but to closely consider their next steps, particularly ahead of what is sure to be a contentious presidential election in November.

    The Facebook boycott was catalysed by the Black Lives Matter movement, but came amid a context of haphazard policing of the site. Facebook’s stance on hate speech has long been less clear than its position on other controversial content such as nudity; this is partly because it believes that it shouldn’t be responsible for this content, and partly because it’s so much more difficult to automate this work. It has made significant progress in this area: according to its Community Standards Report, in 2017, Facebook identified just 25% of hate speech removed from the platform itself, relying on users to flag the other 75%. By the spring of this year, however, 88% of the hate speech removed was found with its own tools, meaning it could remove or restrict four times as much as it had two years earlier.

    Facebook, and many of the other social media companies, continue to maintain that they are tech platforms, not media platforms, with the limited responsibility for content that that status implies. However, in introducing measures such as those described above, they are arguably de facto admitting that they are publishers and therefore have a duty to ensure that their content abides by local and international laws.

    What is motivating brands to boycott Facebook?

    Facebook has long been a key advertising platform for brands, giving them access to billions of users across the planet. Boycotting the company as part of the #StopHateForProfit campaign is a very sound PR move, and a great example of the world’s largest corporations using their power for good – in this case, holding social media companies to account. Advertising budgets for many brands, especially travel and consumer goods brands, are shrinking as the world faces an almost certain recession following the coronavirus pandemic. They will be seeking to make cuts and the #StopHateForProfit campaign may have presented an opportune moment to start making those cuts whilst simultaneously spurring change. What’s more, media cost deflation for most traditional media types and lower-than-expected inflation for digital channels mean that advertisers may feel they are in a strong position regarding where they place their advertising spend, allowing them to boycott a previously key channel. However, it’s important to remember that, while this move by advertisers may have been partially instigated by the fall-out from Covid-19 crisis, digital is a key channel and has become even more so during the pandemic as billions seek entertainment and information at home – this is a big move. Some brands will also undoubtedly use their break from the platform to evaluate the impact that Facebook activity has on their marketing results. In short, the move by marketers to boycott Facebook is both altruistic and strategic: it will be fascinating to see how it pans out.

    Brands have long been uneasy about advertising on Facebook, thanks to historical brand safety issues and because they are worried about contributing to the consolidation of the Facebook-Google duopoly. No matter what the reasons or motivations for the boycott, perhaps now is the time that Facebook will be forced to implement fundamental change to the platform, including allowing marketers to better control where their ads are placed, and making the algorithms that control content more transparent.

    Image: BlueSkyImage / Shutterstock

  5. Facebook: the changing fortunes of a tech titan

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    It is not so long ago that Facebook’s halo shone brightly. It was apparently created with the most laudable principles in mind: to connect people and to create communities around issues that people care about. For advertisers, it provided the holy grail of being able to create highly targeted ads and deliver them to the right user at the right time.

    But then it all went wrong. The company has been buffeted by a series of major privacy and security scandals on a seemingly almost monthly basis. Its reputation has plummeted in inverse proportion to the number of negative headlines it has received. Is this the beginning of the end for Facebook? And is it still a brand safe platform for advertisers?

    What’s gone wrong for Facebook?

    What hasn’t? The real troubles started in 2016, when Facebook faced accusations that it had allowed external forces to interfere in the UK’s Brexit referendum and the US presidential election, as well as allowing the spread of misinformation. Then, of course, came the Cambridge Analytica scandal where a whistle blower claimed that the data analytics firm working with Donald Trump’s election campaign had been given access to the personal information of up to 50 million individuals in order to target them with personalised political ads.

    That saw the opening of the floodgates: in the last 18 months there have been multiple scandals, including claims of sensitive data being given or offered to third parties such as Spotify, Netflix and a Russian email service linked to a close associate of Vladimir Putin; the spreading of fake news; the enabling gender and racial discrimination in job and housing ads; the hacking of 30 million accounts; the inflation of video view metrics; and a smear campaign to silence or discredit prominent Facebook critics. Most recently it emerged that Facebook is still leaking data to third parties, and last week it was in trouble for refusing to follow rival Twitter’s lead and limit or ban political ads.

    A sharp decline in corporate reputation

    This scandals and controversies have had severe reputational ramifications for Facebook. It now has an exceptionally low reputational score in the Reputation Institute’s US RepTrak ranking, below even a cigarette company. This, according to the Reputation Institute, is because of Facebook’s response to these crises, rather than just the crises themselves: Mark Zuckerberg and his leadership team have always focused on trying to protect their image, rather than their reputation.

    Is Facebook still a good option for advertisers?

    Of course, many of these issues are rooted in the fact that Facebook makes the lion’s share of its revenue from its advertising business: last year, 98% of their global revenue was generated from advertising. User data is at the heart of the product it offers advertisers. But will their problems have any impact on marketers? There are queries around a decrease in the number of active users, as well as in the quality, effectiveness and reliability of consumer data – and, of course, whether continuing to use Facebook’s advertising products insinuates that you are ok with their behaviour. However, it would be safe to assume that the many people who still use Facebook – and their number is in fact increasing – aren’t unduly bothered by the scandals that the platform has faced. Furthermore, while Facebook is taking steps to improve privacy and security, they will always ensure that their product offering – their core income – stays useful and relevant to advertisers. Marketers should focus on ensuring that their advertising stays relevant, diverse and emphasises the brand’s commitment to data security and privacy. It is also worth thinking deeply about what targeted advertising contributes to your marketing strategy: are you actually accessing new customers, or just those who would already buy your products?

    Thanks to Facebook’s reliance on advertising revenue, advertisers are in a position of great power. They could use this to great effect: by teaming up with agencies and advertising bodies they could make it clear to advertising platforms such as Facebook exactly what they expect in terms of privacy and data usage. In the face of such a unity of strength, could they refuse to comply?

    How can Facebook win back the trust of its advertisers and users?

    As for Facebook themselves, they must continue to focus on the issues of trust that currently surround its brand: it must be honest and transparent with both users and advertisers, and identify effective ways to eliminate the preponderance of fake news that still litters its platform.

    Facebook has undeniably played a key role in the targeted advertising revolution, but to maintain its status it has a lot of soul-searching to do.

    Image: Shutterstock

  6. Is Snap really a threat to the Google-Facebook duopoly?

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    A few weeks ago we wrote about how Amazon poses a serious threat to Google’s search dominance. But Amazon is just one of a few companies snapping at the heels of the Google-Facebook duopoly that has for so long dominated digital advertising. Third quarter results, released in the last few weeks, revealed that the ad businesses of Amazon, Pinterest and Snap all grew more rapidly than that of the industry giants in Q3. Amazon is the biggest disruptor in terms of size, but it’s Snap – owners of Snapchat – that is enjoying the fastest growth.

    Snap’s growth is remarkable

    The latest round of quarterly results were not a resounding success for Facebook or Google. While Facebook’s results were better than expected, it recorded its third consecutive quarter of sub-30% expansion; meanwhile, Google’s growth is languishing below 20%, at 17.1%.

    Things were much brighter for Snap: its ad business grew 50% year on year in Q3, and its stock price surged by over 175% this year as advertisers increasingly look to the platform to provide a return on their investment. Why?

    What is behind Snap’s success?

    Snap’s CEO, Evan Spiegel, has credited two major changes at the company for their success. The first is an initially poorly received redesign which Spiegel says boosted time spent watching premium content by 40%, thereby increasing ad revenue; the second is their adoption of a self-serve ad platform over the last two years, which has made it easier for brands to buy ads on the platform and expanded Snap’s ability to sell ads.

    Those ads are increasingly popular as Snap is good at leveraging its hard-to-reach audience and building innovative, intuitive ad products that increase ROI for advertisers. Its core userbase is the often hard-to-engage youth audience: 90% of 13-24 year-olds in the US say that they use Snapchat, and they’re highly engaged – they open the app on average 20 times a day, and dwell time is around 25-30 minutes, significantly longer than that of other social networks. All this gives brands plentiful opportunities to reach their audiences at the right time, with the right message – and that amounts to increased ad revenue for Snap.

    Snap’s range of ad products come in a range of different formats, including Snap ads which allow users to swipe up to visit the advertiser’s website or app and can be optimised against reach, clicks and sales; and commercials, a more premium offering which are unskippable and appear within premium content. They feel more like a TV buy for advertisers and have high viewability and completion rates. In October, Snap launched a new product to target direct-response advertisers, for whom Instagram – their historical home – is starting to feel a bit crowded. Its new dynamic ads allow advertisers to create ads linked directly to their product catalogues and can be served to users based on their interests, using a variety of templates created for mobile. This new product brings Snap’s offering more in line with that of its bigger competitors, and is one of a range of features that has helped to make Snapchat more shoppable, engaging and effective for marketers.

    Snap’s focus on the development of effective advertising formats is commendable, and will be key to its future success; indeed, it will be key to the success of the digital advertising industry as a whole. Traditional channels continue to have the upper hand when it comes to the price-effect ratio, and digital players must aim to emulate their success.

    AR is key to Snap’s future success

    While Snap’s star is certainly in the ascendant, there is still plenty of work to be done: it is still unprofitable and it only has 210 million daily active users – mediocre compared to the 500 million who use Instagram’s Stories product every day. CEO Spiegel stated on the quarterly earnings call last month that augmented reality (AR) will be crucial for the company’s future: each daily active user interacts with a Snap AR product, such as lenses and filters, an average of 30 times per day. This month the company is launching Spectacles 3, a redesigned version of its augmented reality sunglasses, and in the next seven to 10 years plans to integrate other AR wearables into its range. Snap has historically led the way in AR and has had viral success with some of its AR filters, but Instagram and Facebook are moving into the space, so Snap will need to move quickly to retain its first mover advantage and remain the dominant AR platform.

    So, is Snap a serious threat to Google and Facebook?

    Snap’s product development and innovation are turning it into a serious contender for advertisers’ ad dollars, and its growth rate means that the digital advertising giants – Google, Facebook and increasingly Amazon – need to pay attention, particularly as Snap has such high access to the millennial and Generation Z audience. It does however have a lot of work to do if it is to grow exponentially and become a real threat.

    Image: Shutterstock

  7. Apple is retiring its iconic iTunes in a move reflective of a changing industry

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    Apple is retiring its iconic iTunes in a move reflective of a change in industry

    Back at the beginning of the millennium, the music industry was in a serious state. CDs were in decline as consumers digitised the way they consumed music: but they were doing it for free via Napster and other pirate websites.

    And then, in 2001, the industry’s knight in shining armour appeared, in the shape of Steve Jobs. He announced the birth of iTunes at the Macworld Expo, heralding a music revolution. The era of MP3 music was here, and over the next six years Apple would sell more than 100 million units of the iconic iPod with which to listen to those MP3s. Apple was at the pinnacle of its success, having redefined what music ownership looked like: no longer physical records, tapes or CDs, but a world of songs in your pocket.

    In the 18 years since its launch, iTunes has become a media behemoth, a one-stop shop for users to consume not just music, but movies and TV and, latterly, podcasts too. But over the last few years, downloading has been eclipsed by a new kind of access: digital streaming.

    A new contender in the market

    In 2008, just a year after the launch of the first iPhone and when iTunes was at the height of its powers, a small Swedish start-up called Spotify launched its music streaming service across eight European markets. Its two-tier model – free to the consumer ad-funded, and a premium subscription option – gave users on-demand access to stream millions of tracks. Music streaming was still in its infancy, accounting for just 1% of global music revenues in 2007, and Spotify’s initial growth was good but unremarkable. By 2013, they had 30 million active users and 8 million premium subscribers.

    It is the six years since 2013 that have seen a seismic shift in how music is consumed. By March of this year, Spotify’s user base had skyrocketed, with 217 million active users and 100 million premium subscribers around the world, a number which looks set to continue growing. By opening up the streaming market and persuading users to give up ownership of their music, Spotify has arguably redefined the music industry, just as Apple did when it persuaded users to give up physical ownership.

    The consolidation of Apple

    iTunes’ download model was starting to look clunky and old-fashioned. In 2015, Apple launched Apple Music, its streaming service which it hoped would compete with Spotify and other broadcasters with its three distinct components – on-demand streaming, radio and Apple Connect, which allows artists to upload songs, videos and photos for followers. Since then, as streaming has increasingly become the norm, there have been rumours that iTunes would be wound down.

    That finally came to pass this week, as Apple announced at its annual Worldwide Developers Conference in San Jose that it would replace iTunes with standalone music, television and podcast apps. This will align Apple’s media strategy across the board: iPhones and iPads already offer separate apps for Music, TV and Podcast, and Mac/Macbook users can expect the same.

    However, the move is symbolic as well as practical. As Amy X Wang says in Rolling Stone, “by portioning out its music, television and podcast offerings into three separate platforms, Apple will pointedly draw attention to itself as a multifaceted entertainment services provider, no longer as a hardware company that happens to sell entertainment through one of its many apps” – and that’s increasingly important as iPhone sales have started to slow. Garden Tower 2 can be used inside or outside. However, most people use theirs indoors. The reason is that the composter was originally marketed for those living in cities with small homes and no private outdoor space. It’s the perfect solution to having your own garden in an urban apartment environment. Read our detailed Garden Tower 2 review to decide if this innovative kitchen composter is right for you. The composting container’s rotating design ensures each plant gets adequate sunlight. The rotating feature also makes it easy to access all of your plants.

    Consolidation moves reflecting the wider market

    This move towards entertainment services is being seen across the technology and communications sector: we’ve seen the tech giants buy up rights to live sport, while AT&T acquired Time Warner for $85bn and Disney bought most of the 21st Century Fox empire, fending off an offer from Comcast. This trend is of course being driven by changing consumer behaviour as internet connections over 4G and now 5G accelerate – allowing for uninterrupted streaming of music, TV and films. We’re seeing the effects of technology on the media and communications industries, and lines between these sectors will continue to blur. This blurring of boundaries will then pose another issue on how they can all be monitored & assessed both separately and in totality.

    Image: Shutterstock

  8. Changing the rules of the internet: can Zuckerberg turn around Facebook’s fortunes?

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    After a difficult year, Facebook is looking for solutions

    Facebook is facing heavy scrutiny from people and governments across the world after a range of transgressions: the Cambridge Analytica scandal, the hiring of a PR firm to attack George Soros, the departure of 10 top executives and the livestreaming of the Christchurch terrorist attack among them. These and other issues have forced Zuckerberg and his senior management team to appear before governmental committees and the press to explain exactly how they are going to change. This was all reflected in Facebook’s share price, which peaked in July 2018 but had plummeted by 40% by the end of the year.

    The conclusion? Facebook must focus on real, meaningful evolution in order to ensure a prosperous future – and that’s just what they appear to be doing.

    More cooperation between governments and tech companies

    After months of appearing before government committees and journalists around the world, in March this year Mark Zuckerberg seemed to finally kick off the evolution that his organisation so urgently needs. Having rejected demands for increased regulatory oversight of Facebook for years, in an editorial in the Washington Post Zuckerberg called for more cooperation with governments to deal with the problems posed by internet platforms and emergent internet technologies: “By updating the rules for the internet, we can preserve what’s best about it – the freedom for people to express themselves and for entrepreneurs to build new things – while also protecting society from broader harms”.

    Changing the rules of the internet

    Zuckerberg argued that there were four areas that would require deeper cooperation between tech companies, governments and regulators: harmful content, election integrity, privacy and data portability. Measures he suggested included the creation of an independent body to review Facebook’s content moderation decisions and the formation of a set of standardised rules for harmful content; regulation for common standards for verifying political actors; a focus on creating laws that address advertising for divisive political issues; and GDPR-type regulations across the world. Nick Clegg, the head of Facebook’s global affairs and communications team, spoke about how “the way that the rules are drawn – or not drawn – will be quite different to how they are drawn in ten years’ time… and I think big tech companies have a choice: either they play ball and they try to play a responsible role in that debate, or they try to duck it all together.”

    Practical changes for the Facebook platform

    Facebook hasn’t stopped at promoting cooperation between tech firms and governments: the evolution strategy has also extended to a series of changes, announced in April, that ‘put privacy first’ because ‘the future is private’. These changes include encrypting Messenger messages and fully integrating the Messenger platform with WhatsApp; trialling a ‘private like counts’ feature; and ways of sharing content without a permanent record. Furthermore, the company is rolling out ‘FB5’, an aspirational redesign of the platform that puts the spotlight on what Facebook would like to be – thoughtful, meaningful and calm. The Groups functionality will be central, and there will be an increased focus on Marketplace as well.

    Other ideas for how to control Facebook

    The challenge facing those governments and regulators with whom Zuckerberg wants to work to create a new, brighter internet is massive. Siva Vaidhyanthan notes that “regulators are trying to address Facebook as if it’s like companies they have encountered before. But Facebook presents radically new challenges. It is unlike anything else in human history – with the possible exception of Google.” Governments are trying: the UK, for example, proposed a duty of care standard for platforms to ensure they filter harmful content, and the US government is expected to issue a $5bn fine for the violation of a 2011 order preventing the distribution of user data to companies such as Cambridge Analytica. But Vaidhyanthan compares this approach to dealing individual weather events rather than tackling climate change. Others have suggested more radical approaches: Facebook’s co-founder Chris Hughes called for Facebook to be broken up because “Mark’s influence is staggering, far beyond that of anyone else in the private sector or government. He controls three core communications platforms – Facebook. Instagram and WhatsApp – that billions of people use every day… The government must hold Mark accountable.” Meanwhile, US senator and presidential hopeful Elizabeth Warren proposed dramatic antitrust regulations, and a Bloomburg article suggested that, as social media has been proven to be addictive, it should be regulated in the same way as the tobacco, alcohol and gambling industries – and not the communications industry.

    Radical solutions for a brighter future

    The issues that Facebook faces are dramatically different to, and more important than, those faced by any other company, and they require dramatically different solutions. The varied approaches announced by Facebook in recent months are collaborative, radical and positive, and we at ECI Media Management look forward to seeing them come to fruition. Train your Attack, Strength and Defence levels with iFighter, the best free combat bot for OldSchool RuneScape

    With increased transparency in the Facebook marketplace, response from consumers is likely to be varied. Users, Governments and Corporations alike should clearly understand how their data is being used by Facebook to target Ads. Changes to transparency and the required investment into security, will no doubt impact the firm’s profits. As customers and co-operations learn more about the result of their time and investment into the platform, initially it is likely demand for the Ad space will see a minor drop, before companies become educated on how to utilise on this newfound transparency. At ECI Media Management, we recognise the value and immense scale of Facebook, which will be crucial to monitor as it moves into this new era.

    Image: Shutterstock

  9. US senator and presidential hopeful Elizabeth Warren takes on Big Tech

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    Embattled tech firms face a new challenge

    There’s no denying that the tech giants are having a hard time of it at the moment. There have been the scandals that we’re all so familiar with: Facebook is still dealing with the fall-out from the Cambridge Analytica affair as well as accusations that it allows interference in national elections, while earlier this year Google once again had to face the wrath of angry advertisers whose ads had been run alongside inappropriate content on YouTube. They’re also facing numerous legal challenges from national and EU lawmakers in Europe over issues such as privacy, fake news, tax and competition – and of course there is GDPR to contend with.

    Into this rather bleak landscape strode Elizabeth Warren, a Democratic candidate for the US presidential election in 2020. In a blog post Warren laid out a plan to break up the tech giants, namely Amazon, Facebook and Google, by forcing them to divest some of their biggest acquisitions and money-spinners.

    Why is Warren proposing such radical antitrust measures?

    So what are the reasons that Warren gives? There are two key ones: in her view, the big tech companies damage small businesses and innovation which stifle healthy competition. In effect, she believes that Facebook, Google and Amazon in particular have too much power over the economy, society and democracy. Facebook scored an own goal by promptly removing her ads around this issue from the platform. It later restored them, but they had neatly illustrated Warren’s point for her (!).

    What would these antitrust regulations mean?

    The implications of Warren’s proposals are huge. She would pass legislation designating platforms with more than $25bn in revenue as ‘platform utilities’, which would be banned from owning both the platform and the participants at the same time. This would mean that, for example, Google would need to spin off Search, with Amazon doing the same with Marketplace. Perhaps even more dramatically, Warren also claimed that she would appoint regulators to reverse mergers that had already been completed – including Facebook’s purchase of Instagram and WhatsApp, and Amazon’s acquisition of Whole Foods. This would lead to a world where Facebook would be competing with Instagram and Amazon’s power over sellers – and buyers – would be curbed significantly.

    Warren wants to implement these measures to “restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last”. She points to the antitrust case involving Microsoft in the 1990s which forced the ‘original’ tech giant to behave with increased restraint into the new millennium and, argues Warren, paved the way for the growth of the very giants she now wants to shrink.

    Are there alternative ways to promote competition?

    Warren is not alone in wanting to address the huge power held by the tech giants, particularly as the public feels increasingly uncomfortable about the amount of power they wield, but she is the first to have crossed the threshold to an antitrust solution. Of course, the chances are that Warren will not be the next President of the United States (she’s up against many other Democratic candidates, not to mention the incumbent) and, even if she is, many believe that her measures will be extremely difficult to implement. However, what is undeniable is that the tech firms must evaluate how they operate in order to regain trust from users and from governments. A middle ground could be, as suggested by the Report of the Digital Competition Expert Panel, which was commissioned by the British Government and led by Barack Obama’s economic adviser Jason Furman. The report recommends a new regulator to force firms to ‘rewire’ themselves so that users have more control of their data and can switch between providers; it also suggests modernising antitrust rules.

    As ever, Google, Facebook and Amazon have an uphill struggle on their hands, and they must examine their business models hard if they are to continue their success and deflect the scrutiny of governments across the world.

    Image: Shutterstock

  10. Amazon is coming for your ad dollars

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    The online shopping platform has streamlined its advertising offering, making it a real threat for Google and Facebook.

    Turning the duopoly into a triopoly

    When we think of major digital ad platforms, our thoughts naturally turn to the giants, Google and Facebook. There is no doubting that for many years the ‘big two’ have had a duopoly of advertisers’ digital budgets across much of the world. Google’s ad revenue in quarter two of this year was a huge $28 billion, while Facebook’s was a smaller but still very sizeable $13 billion, of which 15% was generated by Instagram. We’ve discussed in our blog before how Facebook seems to be struggling to grow in the face of privacy scandals and user stagnation and, conversely, how Google appears to go from strength to strength.

    However, there is a third player that’s turning the duopoly into a triopoly. A report published by eMarketer in September revealed that Amazon will more than double its US digital ad revenues this year, meaning it will overtake Oath and Microsoft to become the third largest digital advertising platform. This news came as Amazon revealed that it had streamlined its somewhat messy advertising offering into a single brand, Amazon Advertising.

    Amazon’s key advantage is its deep understanding of consumer purchasing habits

    Amazon Advertising’s model is based on the fact that around 49% of product searches in the US start on Amazon – and that offers invaluable insights into the minds of purchasers. While Google can store your implicit shopping intention, Amazon knows your actual purchasing behaviour – what you bought, when you bought it, how many clicks it took you and what other product categories you bought or considered at the same time. These insights can be used to create intelligent retargeting campaigns that showcases products that the consumer is more likely to buy at a specific time. With the drive towards Amazon Prime and the purchase of Whole Foods, those insights can become even more pertinent. Furthermore, ads on Amazon can be optimised within a matter of hours, allowing advertisers to drive a much higher return on their investment.

    Advertisers are moving budgets from Google search into Amazon ads

    It is these razor-sharp insights and real-time optimisation that are the headache for Google and Facebook, particularly the latter. Media agency executives have revealed that some

    advertisers are moving more than half the budget that they would normally invest with Google Search (an estimated 83% of Google’s ad revenues) into Amazon ads, amounting to hundreds of millions of dollars. The brands in question are almost all from the consumer product goods category, whose products are sold on the Amazon platform, and are attracted by the offering discussed above as well as the seamless shopping experience: there’s no need to set up an account or input card details, as there might be with a Google search ad. Amazon is also unburdened by the fake news problems that have dogged Facebook and, as an apolitical space, it is unlikely to be leveraged as a political tool.

    Will the lure of profit be at the expense of user experience?

    It’s possible, even likely that Amazon will be bewitched by the huge profits that can be won from advertising, at the expense of the user experience. The purchasing behaviour data that Amazon has at its fingertips means that they can develop much better targeting tools than Facebook – and just as good as Google’s. Highly effective branding campaigns therefore become a reality, and while the consumer could find these at best a distraction and at worst disturbing, it will be difficult for Amazon to resist short-term profit for something in which it is unbeatable.

    Google and Facebook are safe for now – but challenging times are ahead

    Google and Facebook aren’t in any immediate danger. Amazon is a distant third in the triopoly: it commands 4.1% of digital ad spend in the US, compared to Facebook’s 20.6% and Google’s 37.1%. And while Google’s Search revenues may be flattening somewhat, some of the drift is going into other Google properties such as YouTube, and not just Amazon’s coffers. Furthermore, brands from very lucrative advertising categories such as automotive and travel don’t currently have much incentive to move any investment to Amazon as their products are not easily sellable on the platform.

    Challenging times are ahead for Google and Facebook, in this and many respects. Amazon is certainly one to watch in this space.

    Thumbnail image: Shutterstock

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