Recently, Facebook achieved one of its most significant milestones since its launch in 2004 when the company’s CEO Mark Zuckerberg announced that the social network reached one billion users on September 14th. For Facebook, attaining a user base that consists of 1/7 of the world’s entire population is a major accomplishment. However, many of the small businesses which utilize Facebook as an online marketing and advertising outlet are still skeptical of the network’s ability to enhance their revenues despite having the most massive user base on the Web.
Small business owners are not the only ones concerned with Facebook’s performance as an ad revenue-driven organization. The company’s stock value remains unimpressive and many investors are reluctant to add Facebook to their portfolios, regardless of the brand’s ever-increasing visibility. While the announcement has undoubtedly granted the world’s largest social network substantial bragging rights, it has seemingly done little to really enhance the company or its profitability.
However, a more interesting statistic has also been revealed by Facebook as of late that may prove beneficial to their brand. As of April 2012, the network’s monthly user growth had fallen to 1.74%, the lowest it has been since its 2004 debut. Today, Facebook claims it has reached 2.04% monthly growth. This marks the first increase the network has seen in over 13 months and could help to restore investor confidence in the brand going forward.
Although it is critical for Facebook to increase their viability to investors and improve their company’s waning stock values, it is just as important to build consumer confidence. As a business driven almost entirely by advertising revenue, Facebook must take greater measures to attract advertisers, particularly small to mid-sized businesses which account for a large percentage of online advertising revenue.
Facebook’s audience is clearly larger than ever before and maintains the greatest potential as an advertising and marketing platform; but the company should begin to investigate other revenue streams in order to grow from a fiscal perspective.
E-Commerce is the most likely route and could put Facebook in direct competition with online retailer, Amazon. The development of a “Facebook Store” could position the company as a formidable competitor and drive up share prices, while simultaneously making Facebook more attractive to advertisers. Additions of features such as the “Promote” button and the soon-to-be-released “Want” button are definitely steps in the right direction, but a more comprehensive strategy may be necessary.
For now, Facebook’s popularity may be unparalleled, but its profitability is minimal at best. Business owners have yet to see any discernable benefits from the network’s growth to upwards of 1 billion users and an investment in long-term revenue enhancement should be considered an essential component of Facebook’s business model. If the network is able to successfully expand its offerings beyond its current capabilities, the future of Facebook will not only be secure, but beneficial to small business owners, as well.
The social gaming company, Zynga, is facing serious financial difficulties. Yesterday, the company reported losses in the second quarter of 2012 and the subsequent stock devaluation saw shares drop by 39% to just $3.09. These figures indicate a decrease of almost 70% from Zynga’s initial public offering in December.
Additionally, roughly 15% of Facebook’s revenue is attributed to Zynga’s offerings on the social network. As WebiMax CEO Ken Wisnefski predicted yesterday on Bloomberg Television, Facebook also saw its stock values drop yesterday. While Facebook is likely to rebound by the end of 2012, Zynga may not be so fortunate. The two companies have vastly different business models, but Facebook is decidedly more versatile and adaptable. Rumored upcoming features such as the “Want” button indicate that Facebook may be investigating E-Commerce as a potential future revenue stream. Should such efforts prove successful, they could diminish or even eliminate the need for Zynga’s games as a major source of income. Although Zynga is developing new games outside of Facebook, the company’s potential for alternative revenue is much more limited and there may be difficulty entering new markets.
Despite the stock decline and disadvantages, there is still hope for Zynga. The company should utilize its own substantial social media presence to better promote and market its newer titles. If Zynga is able to achieve the previous success of older titles such as FarmVille by capitalizing on its social user base, the company could foreseeably become more profitable on a long-term basis.
Currently, Zynga is on a challenging road to financial recovery. However, the implementation of proven Internet marketing strategies may be the answer the brand is undoubtedly looking for.
Facebook announced their Q2 earnings this evening at 5:00pm, New York time, via conference call with shareholders. The social media firm was expected to announce earnings of $0.12 per share on revenues of $1.16 billion. Facebook announced earnings of $0.12 per share on revenues of $1.18 billion which was in-line with analysts’ expectations, however their stock price is down more than 11 percent in after-hours trading.
Kenneth Wisnefski, founder and CEO of WebiMax, visited with Bloomberg today and spoke with Mark Crumpton, on his show The Bottom Line. Wisnefski, a social media expert and serial web entrepreneur, told Crumpton “Facebook’s growth is slowing down and investors are meeting it with a lot of distrust at this point.”
Facebook spent approximately $1.93 billion during the quarter, as the company continues to invest heavily in recruiting key talent, research and development, and reinvesting in current technology. As of today, the company employs slightly less than 4,000 employees.
“There is a lot of concern with advertisers right now that they are not seeing the type of return that they would like to see from Facebook,” states Wisnefski. “Advertisers have thus started to shy away from it.”
Facebook indicated that advertising revenue accounts for 85 percent of overall revenues.
While Q2 was in line with analysts’ expectations, investors were looking for more from Facebook, including a significant increase in revenues and earnings per share. The in-line results have sent the stock to an all new low since going public in March.
Wisnefski argues that Q3 should be a profitable and successful quarter as there are multiple products the company is rolling out that has not had enough time to mature at this point.
“Facebook launched mobile ads this quarter and are still in the introduction phase of the product life-cycle,” states Wisnefski. “Sponsored Stories (as they are labeled), are posts and other actions by brands and consumers that are promoted by a brand. Sponsored Stories have been effective to this point, as they have a click-through rate of 1.14 percent, almost double the rate of .59 percent for ads in the news feed of desktop users. In addition, the click-through rate for Sponsored Stories was 53 percent higher than standard ads.”
Facebook faces significant challenges ahead, none more than convincing marketers and advertisers that advertising on the social media platform has its benefits and generates a return for advertisers.
Wisnefski concluded his conversation with Crumpton with the following thought “I think Q3 stands to be better than Q2, as now the company is in position to start showing some value.”
Amid the controversy of Facebook’s IPO several months ago, there has been considerable debate on not just the viability of advertising on Facebook, but doing so across social media platforms. The potential was always there, but its sustainability for generating revenue over the long-term has yet to be fully proven.
Now, with new research out from Gartner, social media advertising appears to be proving itself one ad-type and platform at a time. The numbers don’t lie. Last year, social media revenue was 11.8 billion, and the research projects that number to be $16.9 this year, an increase of over 40% – and advertising will make up the biggest share of that revenue, projected at $8.8 billion this year. Second to advertising in relation to share of overall revenue was social gaming, which Gartner expects to reach $6.2 billion this year. But on a day that Facebook announces their second quarter earnings, it is all about the ad revenue.
While standard Facebook ads are still finding their way, their mobile ad offerings, which they added in the second quarter are doing exceptionally well. They are doing so well in fact that they are outperforming their counterparts on the standard platform to an almost troubling degree. Sponsored stories are the only mobile ads offered as of yet and they are actions, including posts, from both brands and everyday users/consumers that the brands promote.
Now the “troublingly” successful figures…the CPM for every thousand sponsored story ads is $9.86 which is approximately 13 times that experienced by the standard format ads, this according to TBG Advertising and reported by Internet Retailer. Further, the mobile ads that were in news feeds had double the click-through rates of ads in the news feed on the standard platform – 1.14% compared to .59%.
Companies have found how to generate revenue from mobile, and advertising is the largest piece of the pie. With the biggest industry player, Facebook, increases in various CPM and click-through rates show that the ads are indeed working for many brands, which is a positive sign, but not a dead-set indicator on their long-term advertising viability or market value. The industry changes just too quickly and they need more success under their belt for such assertions.
But what it does tell us is that Facebook is working on the fix that so many were calling for during their IPO, an improved advertising structure. They are off to a positive start in that regard, but they must build and retain their ability to adapt and evolve their advertising offerings as the nature of their user behavior changes. More ecommerce and social networking is expected on mobile in the coming years, so the mobile platform may be where they make their most money at least that is what the early indicators are pointing to.
Lastly, companies that are not advertising via social, and could benefit, should re-evaluate and look to enter the market. Doing so requires selecting the appropriate platform that matches your target audience and desired ad-type.
Also, be sure to check our CEO, Ken Wisnefski, for his interview with Bloomberg TV at 2:10 PM today discussing the latest on Facebook and their earnings outlook.
For more information on social media and how best to enter this market in terms of advertising potential, reach out to me directly at rbuddenhagen(at)webimax.com and @ryanwbudd.
MOUNT LAUREL, NJ — (July 24, 2012) – The egregious developments that have been unfolding in the Penn State scandal have all in society watching in great sympathy for the victims of the cases, but alongside these individuals and their struggle, is the fight for all those not responsible at the university that are now charged with rebuilding the school’s reputation as a quality institution. Kenneth Wisnefski, founder and CEO of WebiMax announced “there is a dynamic shift in the way a brand-reputation is more susceptible in the digital world”, and furthermore declares “crisis communications techniques have made major strides in becoming a digital format.”
This tragic Penn State case is another example in a long line that brings to light how brands, and their large affiliations, can be negatively impacted to a great degree by the actions of a small number. In this case, most throughout their entire community including alumni, affiliations, athletes, as well as current and future students were not involved but will be impacted by the University’s tarnished reputation.
“Now with the evolution of technology, instant communication, mobile, social media, and the 24-hour news cycle” states Wisnefski, “brands of universities, businesses, celebrities, and other entities are more vulnerable to lasting damage than ever before.”
With Penn State, those involved within the scandal made decisions that continue to have devastating effects on many people as well as the image of the university.
“One of the major problems that are evident by the University’s response is that current officials have not taken a fully transparent approach and have not been as proactive in their management of the institution’s image and reputation as they could be,” states Wisnefski.
As the amount of these cases continues to occur, Wisnefski sees a call to action for executives and marketers alike to pay greater attention to taking a more proactive brand management approach starting from the top. They must realize that there is a message in all decisions and actions taken, and a pre-emptive brand strategy forces executives to make the right decisions based on ethics first and the message that their action or inaction will send as a result.
“Those in the public eye must have this realistic understanding, that is, the best way to conduct your business and control image. But when crises do happen, there needs to be reputation control through open communications and a proactive approach,” states Wisnefski.
As Wisnefski declares crisis communications plans are making a shift from traditional response techniques to a digital format, social media plays the more significant role in modern-day crisis communications strategies. A recent press release by Gartner, Inc., states that by 2015, 75% of organizations with business continuity management (BCM) programs will include social media services in their crisis communications plans.
Facebook declared during the IPO that over 20 billion minutes are spent on the social media profile each day by their 900+ million user base.
“The difference we are seeing with Penn State University is they are not engaging their community of over 270,000 Facebook followers and 44,000 Twitter followers in their response techniques,” states Wisnefski. “They seem to be operating under an older crisis communications model that does not incorporate the use of social media and other digital components.”
However, Wisnefski also states that it is the careful planning and preventative measures that need to be in place in order to hedge against such damaging blows to a brand’s reputation.
“Furthermore, we have seen the majority of branding professionals not plan effectively and choose not to add a social media component to the crisis communications plans until such an unfortunate event takes place, and it is too late,” concludes Wisnefski.
It is in the planning states that branding professionals and marketers need to incorporate social media into their plans, as the landscape moves from a traditional to digital format.
Terms such as “domain authority” and “page authority” are part of the everyday vernacular in the Internet marketing industry, but what do they mean for online business owners? As it pertains to visibility on the Web and greater revenue, they mean a lot.
Essentially, a website or page’s authority is the prevalence it has in organic search engine rankings. Higher authority correlates to more visibility and potentially, more conversions and sales. In digital marketing, gaining said authority is a common goal of many campaigns. In the past, that goal was achieved through efforts such as link building, content development and routine site maintenance. Today, however, social media is playing an increasingly important role and maximizing social engagement is gradually becoming a crucial part of marketing initiatives.
Companies that specialize in social media enhancement understand the value of networks such as Facebook, Google+, Twitter and Pinterest. Friends, fans, likes and tweets provide much more than bragging rights for a business; they can also provide authority to individual pages or domains. Additionally, social media is an effective platform for gaining brand recognition, which is valuable both on and offline.
Consumers spend a significant amount of time online searching for brands, local businesses or products that they like and sharing them amongst their peers. This phenomenon has grown to worldwide proportions and has become a cornerstone of social media marketing. Delivering content to users and offering products and incentives via social shares has proven to be impactful on the profitability and visibility of many brands.
Once a greater social following has been established, it is important to encourage shares and feedback through social media outlets. By creating a “call to action”, businesses are more likely to gain more momentum in the SERPs and throughout the social space.
Social media is a long-term investment for a business. Profiles must be carefully maintained and frequently updated. However, a properly optimized social media presence is almost certain to increase authority and ensure success in the online marketplace.