On behalf of everyone here at WebiMax, have a Happy Thanksgiving!
As expected, social media is on fire this morning and will continue throughout the day as both President Obama and Governor Romney secure their votes from the American people. Both candidates have a strong social media presence but it appears the incumbent has a slightly larger lead on Twitter, evidenced by the amount of activity and trending topics that involve Obama and not Romney.
I was speaking with the Washington Post yesterday describing the major role that social media will play on Election Day and it seems to be coming true. Arguing that President Obama seems to have a stronger social media influence is evidenced today by the fact that 3 out of 10 trending hashtags on Twitter involve President Obama while none represent the Romney / Ryan ticket. What’s more, President Obama is even running a sponsored and promoted initiative today through Twitter. This could indicate positive news for the President as Governor Romney has an inferior presence on Twitter today.
An infographic by OpenSite designed to show the impact of social media and the Election indicates that this year, 4 out of 5 adults will gather their election news through the internet. It furthermore explains that 53 percent of adults will fact-check claims made by both candidates online this year. The most staggering number is the fact that 40 percent of eligible voters will use social media to help them make their decision this year on who to vote for. Given these statistics and the current influence of President Obama, he looks to have an advantage.
CNN has one of the better live election maps and is tracking the votes all day as they come in. NBC News provides a comprehensive 2012 Election Book that includes statistics, battleground map, advertising spending and more. FOX News also provides a live election map including up to the minute updates from the polls.
There are more than 23 million small businesses in the United States, representing 54 percent of all U.S. revenue. While the majority of these firms oftentimes have smaller marketing budgets versus larger firms, competing against the majors becomes an integral component to any small business marketing strategy and thus a major focus for sustainable growth.
Key statistics gathered from the Small Business Administration indicate that since 1990, as big business eliminated approximately 4 million jobs, small businesses actually added 8 million new jobs. While small businesses are essential components to the overall economy, it is becoming more challenging to compete in a global climate dominated by higher leveraged organizations; until now.
Lesser expensive and highly efficient marketing tools have entered the marketplace and such tools including social media, mobile marketing, and even paid search components now find their way in to small business strategic planning sessions. While these tools have proven to be extremely effective for the small business sector, there remains a significant percentage of small business owners who have been hesitant to accept the change. Given the fact that the median age of the U.S. based small business owner is 49.25 years, this generation is historically hesitant to change their marketing methods and incorporate modern-era marketing including using smartphones versus television and billboard advertising.
There are presently 116 million U.S. smartphone users, a representation of 37 percent of the overall population, according to eMarketer. While mobile marketing has become a larger piece of the pie, a recent study indicates that only 20 percent of local businesses said they are implementing mobile marketing. Simply put, businesses that focus the majority of their operations within a defined geographic radius are missing out on potential consumers, while larger competing firms are scooping up the opportunity. Take, for example, a local coffee shop losing business to Starbucks or Dunkin Donuts.
Leveraging social media is cost-effective and can dramatically increase the efficiency of a small business marketing strategy. Consumers are on social media. They are no longer tuned in to the TV and radio through the workday as much as they are checking in on Facebook, Twitter, and Google Plus. In fact, Facebook just crossed the 1 billion user mark and Twitter has an average of 6.9 million daily active users. Creating brand awareness and enhancing visibility through the use of social media has become a major asset to small business.
With the increase in small business advertising through the use of social media, mobile, and paid search, these firms are able to effectively reach their customers directly, using less resources than big business. Lesser advertising and marketing expenses can help a small business compete on price against the larger firms which can ultimately improve their bottom line and create sustained growth even in a recovering economy.
Less than 2 months after Facebook’s botched IPO, the social media titan seems to “want” to make a comeback and win over investors once again. The company is developing a “want” button, aimed at creating a virtual wish-list for their 900+ million users. Additionally, General Motors, who ended their Facebook paid advertising campaign due to unimpressive results, is in talks to resume their paid advertising campaign worth a reported $10 million annually.
Last week, I had the pleasure of visiting with FOX News and discussed the chance that Facebook is making a return to the credibility it once had.
A few notable points stick out to me:
Development of the “Want” Button: Industry experts have found in Facebook’s sourcecode a new button, titled “want”. This button is comparable to their “like” button that is current, however this time, it gives consumers the ability to express their intention with a product or brand. I like this for Facebook. As I state in the interview, this takes some of the work away from investing in market research, and almost allows companies to have their own research conducted through the social network. Imagine you are a television manufacturer and hundreds of thousands of people click the want button, you will immediately see what type of ROI you can expect to make on this particular product.
Facebook Jobs Board: Facebook is in a very strong position to launch a sort of “jobs board” that would directly compete with LinkedIn, Monster, and CareerBuilder. Consider this: Facebook stated during their IPO that users spend an average of 10.5 billion total minutes per day on the platform. Small businesses (who already have a follower-base on Facebook) can post jobs and disengage from Monster and CareerBuilder, and ultimately save costs from posting on these career websites. Facebook certainly has the reach needed to market this service with over 900+ million global users.
These developments and anticipated announcements all point to a possible Facebook comeback. Already, the firm is more than 20% above their low since having gone public.
The United States Supreme Court largely upheld the Affordable Care Act in a 5 to 4 decision. The bill marks a major victory for the Obama administration and will have a major impact on small business owners that own and operate U.S. based companies.
There are two main ways that the bill will leave its mark. First, small business owners that currently offer health-care to their workers can reduce their costs by an estimated 5 to 10 percent on average. There are even tax incentives for companies that offer health-care coverage to their workers. On the other hand, however, some small business owners that employ closer to 100 workers may choose to not offer coverage to their personnel as the taxes they will pay in penalties are actually cheaper than offering benefits. The worker then needs to find coverage on their own as stipulated by the individual mandate.
This is an ongoing debate that has governing officials and small business owners weighing their options.
It is hard for companies to balance costs with taking care of their employees. Statistics gathered from healthreform.gov, a federal government website managed by the U.S. Department of Health and Human Service, indicates 33% of the 13 million uninsured Americans work for firms with less than 100 personnel. With the dramatic rise in healthcare costs, it has become challenging for Entrepreneurs and small business owners to offer these benefits to their workers.
As the Obama Administration has marked this a pivotal win in an election year, entrepreneurs and small business owners alike will have to make equally tough decisions as members of the Supreme Court made during yesterday’s ruling. Small business owners must decide whether to offer health-care coverage or pay the taxes which may be less expensive.
Up to this point, there has not been enough done to support small business initiatives with taking care of workers. For example, the health-care law did not require small business owners of a certain size to offer coverage. Republicans are calling for an appeal to the law, including Republican Presidential hopeful Mitt Romney, who stated if elected President, his first day in office he will appeal the law.
From 2000 to 2007, the percentage of small businesses offering health-care coverage and related benefits fell from 68% to 59% as indicated by healthreform.gov. During the same time period, health-care costs rose dramatically. In fact, most small business owners state the reason they choose not to offer health-care to their workers is due to the rising cost in premiums.
It seems clear that until the rising costs are addressed, the problem cannot be solved; then enters the debate of “doing the right thing”. That is, offering your employees coverage and thus increasing your costs, or savings and continuing to reinvest in the company.
Since coming online in 2004, Facebook has risen to the top of the social media landscape and asserted itself as the essential platform for connecting with people over the internet. Now, with over 900 million users, it is extremely popular and being used at an increasing rate as a marketing and advertising platform for businesses across all industries. Although, there is considerable worth for businesses on the platform, the value of it for these specific purposes varies greatly.
Within marketing, Facebook is excellent for branding, engagement, and growing reach, but with advertising it is not so cut and dry. Advertising on Facebook is great for some brands but it simply does not give adequate ROI for many others as evidenced by the timely withdrawal of General Motors’ (GM) advertising efforts on the platform. This is the essential point of the company’s disappointing IPO. The company has assumed an advertising-focused business model to capitalize on their massive stores of personal information in order to generate their revenue, but the nature of advertising on the platform cannot support the valuation that was seen in the run-up to the launch.
For a company that generates 82% of its revenue from advertising (first quarter 2012 figures), Facebook’s advertising model needs to be more robust across the board for it to be the sustainable long-term income generator that the initial valuation positioned it to be. The reality is their advertising model does not reflect this as the average quarterly revenue per user is only $1.21, compared to AOL’s $2.39, and Google’s $7.14. With that said Facebook will have value and indeed make money, but the significant variance in advertising ROI is the primary element that will prohibit them from generating the kind of advertising revenue that would justify their desired value.
Additionally, the very climate that gave legs to Facebook’s growth is also a threat to its long-term viability. Online social behavior is very dynamic and there is inherent vulnerability in Facebook’s product – its user experience. Facebook is built on user behavior and the experience they have with the site, and there is no guarantee that current positive behavior will continue. If behavior changes negatively over time and users engage with each other less or spend less time on the platform (as has been experienced in Australia), the value of ads will drop and the company’s worth will be degraded. Such “Facebook fatigue” has been seen in pockets already and there is potential for more of this in the future.
Similarly, the social media industry is constantly evolving in terms of what users want, what is possible, and the inevitable competition that arises. With advances in all facets of technology growing so quickly, from the functionality of the standard web, to mobile devices and smart TV’s, the way users engage with social media and what they look for will undoubtedly change. In this process, it is possible for strong Facebook competitors to arise offering something new and different, two elements that gave life to Facebook early on. What gives Facebook its strength is its popularity and user-base size, but these numbers are not set in stone as their competition increases. The recent rise of Pinterest, which recently became the fastest standalone website to surpass 10 million visitors-per-month, is a firm example of such competition as it offers something very different than what Facebook delivers. The argument is not that Pinterest, or others, will directly overtake Facebook but that Pinterest and other news platforms will steal time spent on social media away from Facebook, devaluing its revenue-generating ads.
Facebook certainly has a future, but it is likely not anywhere near as bright in financial terms as the build-up to its IPO would lead us to believe. Those looking to market themselves and gain exposure by engaging with customers on the platform, do so purposefully as there is significant return for the relative cost. For advertising, though, businesses should evaluate if it is the right option for them based on the products they sell and the type of conversions they are looking for. In the end, the future direction of Facebook depends on their ability to respond to changes in the social landscape as well as improve their advertising offerings and larger revenue generation model, a tall task given the discussed inherent challenges.