In the wake of Facebook introducing mobile-only buys on the site this month, the company’s ad partners cite strong early demand for the new ad option, based partly on promising results. Facebook initially launched mobile ad placements at its fMC conference in February, but only as part of a bundled ad buy on the site. Now marketers can choose to run sponsored story ads that appear only in a Facebook user’s mobile news feed as a separate buy. While it’s still early, third-party ad sellers on Facebook say the mobile ads so far have outperformed their desktop counterparts. They point to click-through rates of 1% or better in mobile compared to an average rate of 0.05% for ads generally on Facebook, according to a Webtrends 2010 estimate. The novelty factor could play a part in that higher response rate, as well as the ad format simply occupying a larger share of the screen on a mobile device. “If you’re on an iPhone, the unit takes up almost the entire screen, or a significant chunk of that real estate,” said Rishi Dean, SVP, product at Nanigans, which specializes in Facebook advertising. “Compare that to a desktop version of Facebook, where you’ve got seven ads or whatever on the right rail, competing for attention.” Recent data from comScore also showed adult U.S. smartphone users spend an average of about 15 minutes a day on Facebook’s mobile properties -- more than Twitter, LinkedIn, Pinterest, Foursquare and Tumblr combined. Nanigans recently added the mobile-only ad feature to its Ad Engine platform for running Facebook campaigns, allowing clients to target sponsored stories in mobile according to demographic factors like gender and age, as well as geographically. Dean said demand for mobile-only buys has been highest among mobile app and game developers, for whom his firm has already run multiple campaigns. “It didn’t really make sense for them to advertise on the desktop-only or on the desktop and mobile when they really wanted to drive people into the App Store,” said Dean, whose clients in the social game space include Kabam, Kixeye, Atari. But he expects a wider range of advertisers, especially in the local and long-tail categories, to embrace mobile advertising on Facebook over time. In that vein, Facebook has begun testing location-based mobile ads using real-time data for targeting, according to a Bloomberg report Monday. While the company didn’t provide details about prospective location-based ads, Carolyn Everson, Facebook’s head of global marketing solutions, said the mobile-only news feed ads had drawn “really significant interest” so far. Lucy Jacobs, COO of Facebook ad firm Spruce Media, said the company has been encouraged by the high click-rates in testing of mobile ads so far, with rates typically ranging from .8% to 1.7%. Sponsored story ads featuring brand page “likes” have performed especially well. However, Facebook ad partners have noted that while click rates are higher in mobile, conversion rates are lower. Nanigan’s Dean, for instance, pointed out that people who click on app ads in mobile don’t end up installing the app as often as they do on the desktop. That’s partly because mobile users are sent off Facebook to the App Store or Google Play to get an app rather than the more seamless process of downloading a native Facebook app on the desktop. (Sponsored stories don’t yet allow people to link directly to the company’s new App Center.) Even so, ad executives say the higher click rates in mobile compensate for lower conversion rates. “It does net out to be a bit better overall,” said Dean. The heightened interest hasn’t just come from app developers. Simon Mansell, CEO of Facebook ad specialist TBG Digital said about 20 clients clients, including Heineken and Hugo Boss, have made mobile part of broader ad buys on Facebook. One unnamed client spent about $112,000 in a week just on the mobile portion of a campaign, he noted. “There’s been demand to move more spend over to mobile,” he said. “It’s based more on performance of ads on mobile, than clients phoning up and saying ‘I want to be on mobile’” Other social ad firms are gearing up to launch mobile ads in the next quarter. “For a lot of our clients, it’s definitely part of their planning cycle,’ said Josh Backer, co-founder and EVP, ad delivery at Unified, which just raised a $14 million round of funding. That includes clients from app developers to banks to business-to-business companies.
Other than the occasional mouse and keyboard (and the Xbox, of course) Microsoft stays away from building and selling its own hardware for Windows computing. But last night at a Hollywood event, it appeared that the lure of Apple’s successful model was too much to resist. Or at least the Windows manufacturer felt that it learned a lesson from Google’s attempt to marshal a range of OEMs to take on the formidable iPad. And so the Microsoft Surface surfaced last night. The 10.6-inch display is powered by either Windows 8 or Windows RT (Windows for an ARM processor). The high-end unit has a built-in kickstand and an optional case includes an embedded keypad. Two models will be available, a lower-powered RT version and the high-end one running on an Intel processor and Windows 8. The low-end model will have only 32GB and 64GB options, but the high-end unit will go up to 128GB of storage. When it comes to apps, clearly Windows 8 already was being built with tablet interfaces in mind. The beta build of the OS already has a library of apps. Generally, apps written for Win 8 should run on the tablets. Microsoft has announced support from Netflix. And according to the presentation last night, Windows 7 software will also run on the Surface. Microsoft is taking more than a few pages from the Apple playbook. The Surface is being promoted for its advanced “industrial design” that tries to distinguish itself from the iPad in a few key respects. Its USB port addresses an ongoing complaint among iPad owners over the difficulty of moving content on and off the device. The 16:9 aspect ratio of the screen accommodates true widescreen/HD formats without letterboxing. The optional “Touch Cover” with key input claims to “sense keystrokes as gestures” to make touch-typing faster. Like Apple’s iPad 2 cover, this one also uses a magnetic fastener. The casing of the Surface is made of VaporMg (pronounced ‘Vapor Mag’) that is supposed to create a luxe finish. Clearly, Microsoft is positioning Surface and Windows 8 on tablets as the productivity-oriented alternative to the iPad that does not sacrifice design or the ease of consuming content as well. No pricing was announced. With powerful hardware and features, the Surface will have a tough time beating the iPad and its famously well-controlled supply chain. But by launching its own hardware, Microsoft has the option to take a loss on the hardware to try to buy its way into yet another market owned by a pioneering competitor. For Xbox the strategy was a winner. For search and Windows Phone, not so much. It raises the question of whether Microsoft will really get behind selling its own hardware. Could the Surface really serve as a reference design for other OEMs? The software company is in a tough position, in that Surface will be competing with the very hardware makers on whom Microsoft depends for licensing Windows. If Microsoft decides to eat some of the manufacturing costs in order to make the unit price competitive, it puts unfair pricing pressure on its hardware partners. And unlike Google’s open-source Android OS, Windows 8 is not free. Microsoft’s hardware partners will have to include in their tablet pricing the licensing cost of the OS, which obviously Microsoft itself does not.
engage:BDR, a full-service display ad network, on Tuesday will publicly debut First Impression, a real-time bidding (RTB) self-serve display platform that focuses on serving advertisers. The platform works across desktop and mobile with targeted ads. First Impression, built from the ground up, incorporates methods used by performance marketers. engage:BDR's engineering team focused on support tools that are familiar to marketers working with direct-response advertising to measure successful campaigns. It had to integrate with display ad networks tools, as well as provide access to a large amount of inventory. About 75 companies have begun testing the desktop platform, and 1,000 are slowly coming on board. The RTB tools for mobile have also rolled out. Nick Lynch, vice president of platform at engage:BDR, said that the company's full-service display network the company usually sees "upwards of 1% CTR" when buying direct from publishers. As former Fox Interactive Media senior account manager, he saw exchange inventory reach .25 CTRs. The mobile display offering of the RTB platform will focus on targeting specific handsets as well as publisher sites. It will automatically convert desktop campaigns into mobile to assist advertisers in making the transition. Forrester Research analysts believe the advent of RTB and ad exchanges creates opportunities for increased transparency and better control in media buying and management for buyers. Engage:BDR's focus on supporting premium ads in First Impression could be helpful to media buyers. During an interview from Cannes, MagnaGlobal Managing Partner Brian Monahan told MediaPost Editor-in-Chief Joe Mandese the research firm wants to gain a better understanding of changes in the supply side and how to define a "fully deviated consumer" to determine their exposure to ads. Monahan said if consumers are exposed to 1,100 ad units daily, it's important to determine which ones are noticed, so media buyers can learn where to shift the money and budgets.
Having more or less maximized returns from the supply chain, top-performing food, beverage and household products companies are increasingly focused on the “demand chain,” according to the 2012 Financial Performance Report from the Grocery Manufacturers Association and PwC. A relatively new term, the demand chain refers to activities that drive growth by driving customer interactions with a company’s brands and products. “The demand side consists of innovation, marketing and sales—and I would say the key is how these activities are integrated to identify and exploit opportunities,” says Sunny Delight CFO Bill Schumacher, as quoted in the report. Today, operational excellence is a given, the researchers stress; what will differentiate companies and drive their bottom lines is anticipating and meeting emerging customer needs. “Companies can still drive competitive advantage through the supply chain, but the margin on that advantage is getting narrower,” observed Don Mulligan, CFO of General Mills. “Going forward, the winners will be whoever has the best marketing ideas, the strongest sales organizations and the right service delivery. That is the demand chain.” “There is a greater focus on consumer trends and exploring the consumer landscape now,” agreed Hershey CFO Bert Alfonso. The report, noting that a quarter of global consumers and a third of U.S. consumers say that companies usually fail to satisfy their expectations—and that most say they’d be willing to spend more with companies capable of doing so--stresses that “the gap in companies’ ability to anticipate and create demand is huge, and therefore so is the opportunity.” Companies are just starting to truly grasp that consumer expectations and attitudes are changing radically, and that keeping pace is critical to their survival, the researchers point out. CPGs that shift new strategic investments to their demand chain “will stand the best chance of creating new growth,” sums up Susan McPartlin, PwC’s leader, retail and consumer industry. Consumer preferences and insights should be the core of all CPG growth strategies, influencing all functions and driving change, McPartlin emphasizes. The challenge—and the opportunity—she adds, is that companies need to reach consumers not only through physical stores, but through e-commerce and social media. And those involve considerable research and groundwork, including determining which brands and products are suited to e-commerce platforms, and how to glean and make sense of the fragmented, unstructured but hugely valuable insights in social media. Consumers are now “omnichannel” shoppers, and they “expect a seamless experience,” McPartlin says. CPG companies need to address consumers in all of their channels of choice, and map their demand chains based on consumers’ “shopping journeys.” Three-quarters of CPGs report that they’ll leverage social media for brand promotion over the next 12 months, and nearly a third will use social media to increase consumer loyalty (versus 17% saying the same last year). To stay relevant to consumers, CPGs must rethink their demand chains to drive awareness, conversation and loyalty across channels, the report sums up. They must be on the digital platforms that their customers prefer so they can influence the buying process directly, and they must also be ready to adapt as digital touchpoints evolve. And they must also, of course, develop metrics to measure the effectiveness of digital efforts. Further, since emerging markets continue to represent the largest growth opportunities, CPGs must stop thinking that they can simply rebrand legacy products for these markets, and invest in R&D and social media conversations with consumers in these markets to glean meaningful insights. Financial Performance Trends The relevance of all of the above becomes clear in the context of the CPG 2011 financial data in the report. Some key highlights: * Food, beverage and household products companies realized median net sales growth of 9.5%, 10.5% and 7.5%, respectively. *However, food sales growth was primarily driven by higher prices in response to input-cost increases, rather than unit growth. The food sector’s return on sales and EBIT were relatively flat, and other metrics (including gross margin, inventory turnover, return on average assets and cash conversion cycle) saw only slight improvement. *Beverages showed stronger trends, including improvement in return on sales and gross margins, productivity as measured by sales-per-employee; media cash conversion, and return on average assets. Inventory turns were flat. *Worst-faring were household products, reflecting many consumers’ continuing cautiousness about spending on non-foods with economic recovery still slow. After seeing strong EBIT growth in 2010, these products’ EBIT dropped by 5.6% in 2011. This sector also saw a decrease in its return on sales. One challenge: increased borrowing costs. *Very large CPG companies (net sales over $10 million) continued to thrive through international expansion and investments in digital and e-commerce (being where consumers are). Their net sales growth was 10.9% last year, and the largest-company sector was the only one to see EBIT growth. They also maintained their margins, supporting the theory that larger companies generally have stronger brands and so are better able to past price increases along to the consumer. Moreover, these very large companies’ return on invested capital was 12.5% last year (and 12.1% on both a three-year and five-year basis). *Still, large, as well as medium and small companies, saw declines in average shareholder returns. However, small companies were the only ones to see returns actually go into negative territory, and the drop was severe: from 26.6% in 2010 to negative 31.9% last year, a 58.5% swing. Small companies also saw EBIT drop by 29.2%. Medium (as well as large) companies saw modest EBIT growth. *U.S. exports of CPG products to the largest emerging nation purchasers (China/Hong Kong, Taiwan, South Korea, and the Philippines) almost tripled between 2005 and 2011, from $5 billion to $13 billion. Total global exports during the same period essentially doubled, from $40.3 billion to $80.3 billion. The $40 billion increase was split evenly among traditional export markets (the E.U., Canada, Japan and Mexico increased from $26 billion to $46 billion) and emerging economies (which increased from $14 billion to $34 billion). *The report also emphasizes that CPGs’ global and domestic sustainability initiatives—and conveying these effectively through social networks and media influencers—continues to grow in importance. They increasingly affect CPGs’ bottom lines (and brand equity value) through the sales impacts of consumer perceptions, as well as by helping companies reduce operational costs.
Facebook has agreed to give users more control over how their names appear in sponsored stories in order to settle a class-action lawsuit. The company also agreed to pay $10 million to various public interest organizations, according to court documents that were filed late last week. If approved, the proposed settlement would resolve one of two cases against Facebook stemming from the sponsored stories program, which publicizes users' "likes" to their friends. Facebook notified U.S. District Court Judge Lucy Koh last month that it had resolved the lawsuit, but details about the settlement weren't publicly available until the weekend. Koh will hold a hearing in July about whether to grant the settlement preliminary approval. The litigation dates to last April, when a group of users sued Facebook for allegedly violating a California law that gives people the right to control the commercial use of their names and images. That statute provides for at least $750 in damages per violation. But the proposed settlement doesn't call for Facebook's members to receive any money in damages. Instead, the bulk of the $10 million provided for in the settlement fund will go to "groups whose charters set out actions and programs relevant to advocacy related to the purposes for which the case was brought," according to court documents. Presumably, the lawyers who brought the case also will receive attorneys' fees. The tentative settlement also requires Facebook to provide "additional notice" to users about "exactly what occurs when they take certain actions," according to a declaration filed with the court by Edward Infante, a former federal magistrate judge who mediated the deal. He adds that Facebook also agreed to an injunction that "includes engineering additional controls to enable users to prevent specific actions from appearing in sponsored stories." A Facebook spokesperson declined to elaborate on how the company intends to change the user controls in this area. The sponsored stories case that was settled was brought by consumers including Angel Fraley, Paul Wang and Susan Mainzer; Fraley and Wang later asked to withdraw from the case, but their names are still included in the case's title. Last December, Koh rejected Facebook's bid to dismiss the case at an early stage. Facebook argued that users consented to the sponsored stories program when they signed up for the site. The ad program is mentioned in the terms of service. But the users countered that they joined Facebook before it launched sponsored stories. Facebook also unsuccessfully argued that the case should be dismissed because the users hadn't been harmed financially by the program. A separate but related lawsuit against Facebook for allegedly violating California law by including minors in the sponsored stories program is still pending before Koh. That lawsuit alleges that Facebook violates a California law banning companies from using minors' names or images in ads without their parents' permission. Other Web companies, including Netflix and Google, also have recently agreed to settle privacy lawsuits by promising to donate money to public interest groups. But courts are increasingly scrutinizing settlements that don't provide for damages to class members. The 9th Circuit Court of Appeals (which encompasses California, where the case against Facebook was brought) rejected a proposed class-action settlement involving Motorola. Consumers in that lawsuit alleged that Motorola didn't disclose the risk of hearing loss posed by Bluetooth headsets. The proposed settlement required Motorola to donate $100,000 to various health-related organizations, while the attorneys who sued would have received $800,000. That same court is still considering whether to uphold Facebook's Beacon settlement, which calls for the company to pay more than $6 million to launch a new privacy foundation, and for the lawyers who brought suit to split around $2.3 million. That deal doesn't provide for monetary damages to the users (except for the 19 who were named in the complaint).
Marketers have continually questioned Twitter's ability to produce a viable search engine. They may soon get their answer. John Wang, former search engineer at LinkedIn, joined the real-time social marketing site to work on the "next-generation Twitter search infrastructure" as a software engineer working on open-source projects. Providing insight into the direction of Twitter search, Wang explains his interest in real-time and semi-structured search systems, with a specialty in full text search, semi-structured, vertical and faceted. He believes the Web is heading into real-time information, similar to real-time bidding on display advertisements that process data to target ads on the fly based on consumer clicks and preferences. Ruslan Belkin also joined Twitter from LinkedIn in March, as director of engineering, search and relevance. While Twitter can process real-time searches, the challenge becomes building the technology to turn search keywords and phrases into actionable data that serves the most useful information and target ads in real-time. Twitter began making search improvements since its acquisition of Summize in 2008. About a year ago, the company began talking up changes to its search infrastructure. At the time, Twitter began providing personalized search, which offers more relevant results along with images and videos related to the query. When users search for a name, they see tweets alongside that person's @username in the search results. For example, previously, searching for "Justin Bieber" might only serve up tweets that included the phrase "Justin Bieber," without @justinbieber. Now, Twitter shows tweets with @justinbieber in the search results. This happens when Twitter's technology becomes confident that the real name and user name match. Twitter also made improvements to its search widget, adding relevance and duplicate filters. Now those widgets provide more relevant search results. Aside from search improvements, Twitter's Web site lists close to 100 job openings, from systems development to advertising and sales. The company is looking for an ad quality product manager to identify and implement quality signals, predictive models and data analysis to serve up the perfect ads to the correct site visitors. Twitter also wants to hire an Android mobile product manager responsible for Twitter’s offerings across various Android devices, including mobile phones, tablets and televisions.
Don’t bother mentioning the “I” word to Socialcam CEO Michael Seibel. Ever since Facebook famously bought Instagram for $1 billion or so, the press and VCs have been swarming around the purported hunt for the next Instagram. “I think it is more distracting than anything else,” he says. The enormously popular video-sharing app and site gets that treatment all the time. Seibel and his crew of four spun off from Justin.tv, where he was a co-founder, in the fall of 2010 to launch SocialCam in spring of 2011. But VCs are not his main target and hurdle, he argues. “In video we have a fundamental challenge. We need to convince people that taking video is extremely easy and valuable.” Instagram and photo-sharing apps had the long legacy of snapshot photography working in its favor. Transferring those user reflexes to the mobilized video cam is not as easy as it seems. “Convincing people to take videos at all is a harder problem,” he says. For all of the talk about mobile video being the next hot category, “it is not the mirror image of the challenge Instagram had.” And yet Socialcam has generated over 14 million app downloads, and some of its leading posters have well over 1 million followers each. But that pales against the amount of activity they see coming to the main Web site. Both site and app were launched simultaneously, and the site proved to be an especially effective driver of app downloads, Seibel says. While he is campaigning to make video-taking as much of a reflex among consumers as mobile still photography, no hard sell appears to be necessary with brand marketers. “The brands are coming to us -- not the other way around,” Seibel says. In fact, he counts about ten brands on the Socialcam leaderboard that have over half a million followers already. Lipton Iced Tea, Sierra Mist, Oprah’s OWN network, and even General Electric have in excess of 500,000 followers. Musicians and sports teams have proven to be especially powerful here. One of the advantages of Socialcam as a marketing vehicle over the standard social nets like Facebook is the alerting system. When you follow anyone on SocialCam, it sends a mobile app alert whenever a new item is posted. This, of course, forces providers to be reserved. This can’t be treated like Twitter. “I think those followers are a lot more valuable,” he says. Unlike sponsor posts in social network feeds that can scroll by unnoticed, this is a more one-to-one relationship. “The brand can get a direct connection.” He says that despite the alerting mechanism, he is not seeing users becoming overwhelmed. While he wants video to become more of a reflex for people and advertisers, the natural hurdle comes in handy here. “It is pretty cool. The bar for creating video is pretty high. The brands will create maybe two videos a week.” Sixty- to ninety-second clips are the norm among individual users, and that is the length Seibel recommends to brands. Some brands like the Brooklyn Nets are already creating spots that are exclusively for Socialcam, and others are repurposing video assets they have elsewhere on the Web. OWN, for instance is pushing out celebrity clips from its on-air programming. The Nets will throw into their mix a spot interview with GM Billy King from the sidelines after a game. My impression is that years of experience with Justin.tv have given Seibel and co. a head start on some other startups when it comes to imagining both a monetization path and future uses for advertisers. They already have a VIP program for brands that advises on best practices and the new ideas spin off of this. They are already working with film studios on promotions involving custom video filters that help the consumer replicate the look and feel of the entertainment company’s film. But in my mind the killer potential here is when the alerting system is married to geo-fencing. Farther out, Seibel is imagining the ability to leverage location as a trigger for a video alert. “One of the future use cases we are thinking of is letting brands send videos to followers when they are in a location.” If a Brooklyn Nets follower walks into the team’s new arena, they will get pinged with a new introductory video welcoming them to the venue with instructions and directions for optimizing their experience. The same idea can be applied to a mall or any retail venue. What if Walmart or Target pinged you at the entrance with a video clip on the week’s specials? While obviously it has its limitations -- not the least of which is its reliance on opt-in -- there is a natural logic to finding ways of pushing video to users over devices and in sync with location. As Seibel says, “traditionally what a brand does is pound you as hard as it can when you are at home. But we think we can help brands message people in the real world when they are in a position to buy something.” Whatever the hurdles, the geo-fenced video push model is a remarkable idea that literally untethers the power of video promotion from the TV or the desktop. There is no arguing that video remains the most compelling storyteller for advertisers. Finding reasonable and user-friendly ways to release that medium from its usual anchors in the home is one of the great tasks of outdoor advertising. But mobile is the natural, more personalized venue for this project. Better that video come to us in a personalized way when and where we need it than make every mall and retail location look and feel like Times Square.
The number of mobile Internet users will surpass desktop users by 2014, according to a forecast by comScore, which also estimates that a 47% rise in smartphone users -- equaling 106.7 million or 45.6% of the U.S. mobile population -- occurred in the year prior to March 2012. The data, part of the research firm's State of the U.S. Internet report, also details trends in social, online advertising and e-commerce. And while Android-operated smartphones now hold 51% market share -- up from 35% last year -- will the pocket-size devices live up to the ad-revenue-generating gadget Google touts, or will it fizzle out for brands as a money generator and do nothing more than make the lives of U.S. consumers a little bit easier? Putting numbers into perspective, the U.S. only accounts for 13% of the Internet population. When calculating the distribution of the world's Internet audience, comScore states that the U.S. holds about 14.6% of the online population, down from 66% in 1996. Asia-Pacific is next with 41%, followed by Europe at 26.6%, Latin America at 8.9%, and the Middle East and Africa at 8.8%, according to comScore. In Mary Meeker's latest Internet Trends report, she characterizes mobile advertising in the U.S. as a $20 billion missed opportunity. Yes, maybe -- but desktop ads and search engine marketing are not like mobile ads and search engine marketing. The I'm-going-to-hide-my-head-in-the-sand-because-I-don't-recognize-the-difference syndrome will continue to stifle growth and performance. Brand marketers must overcome a learning curve. Mobile ads and search engine marketing will do more to promote local companies than national retailers, but mom-and-pop and mid-size businesses need to learn how to connect mobile advertising and search engine marketing with social media and build apps for smartphones and tablets to succeed. Overall, worldwide, people conduct more than 4.1 million searches per minute, according to comScore -- but it's unclear whether that factors searches in apps or links to social platforms. For example, take the social site Pinterest, an electronic pin-board. Most consumers, and many marketers, don't realize the marketing potential from the site. comScore found Pinterest to be the fastest-growing social media network in both unique visitors and clicks from search engines. The network saw more than 4,377% growth in the year prior to May 2012. The report suggests that Pinterest users spend more, buy more items and conduct more online transactions than most other social media buyers. They are second only to LinkedIn users in the Buying Power Index of the top five social media sites. Businesses looking to build mobile apps should not count out Apple. Flurry, a mobile app and measurement platform, estimates that seven out of every 10 apps that developers build are for iOS. The company admits that Google made some gains in Q1 2012, rising a bit more than 30%. Flurry believes this is largely due to seasonality, as Apple traditionally experiences a spike in developer support leading up to the holiday season. The chart shows the number of consumer applications sessions across devices as of May 2012, along with revenue-generating opportunities. It turns out that "Android delivers less gain and more pain than iOS, which we believe is the key reason 7 out of every 10 apps built in the new economy are for iOS instead of Android."