Facebook’s unfair advantage on TV
In this guest post Simon Veksner argues when looked at objectively Facebook has already built a massive advantage over TV networks.
Have you ever been to Facebook’s office? I have. It’s your standard ‘urban loft’ style media space in the heart of Sydney’s CBD, where staff walk around eating free bananas and admiring the tasteful graffiti.
In fact there is only one thing about the office that is in any way remarkable – just how few staff there are in it. (Apparently about 40).
Fewer people work at Facebook Australia than it takes to staff the NT News.
And yet its reach is – how can I put this politely – just a tad higher than that of our nation’s foremost chronicler of crocodile-related incidents.
Perhaps a better comparison, since Facebook is turning into a video medium, is with broadcasters.
And thinking that through, I just feel tremendously sorry for the broadcasters.
Consider Australia’s No.1 TV show, The Bachelorette. It’s well-made, fantastically entertaining, and fully deserves its haul of around a million viewers per episode. But just think of what Channel 10 has to do, to get those million pairs of eyeballs.
In the first episode alone, they had to hire an actual helicopter, which touched down in the middle of the SCG (also rented for the afternoon). In subsequent episodes they’ve put contestants up in vintage planes, sent them skydiving, even flown them to Perth. And that’s before you get into the cost of the mansion itself, the writers (sorry, producers), cameramen, editors, directors… plus of course the wine and cheese that seems to be a mandatory presence on every date. And the tux hire.
Whereas all Facebook had to do was build a website.
Channel 10, as a business, is running a kind of circus. To get people into their tent they have to provide a never-ending parade of entertainment. They’re paying for trapeze artists, strongmen, clowns, horses, midgets… many of whom are earning a fortune (Osher doesn’t come cheap, I’m sure). Whereas Facebook is like the circus owner who doesn’t put on any entertainment at all, but just puts up a tent – not even a real one, a virtual one – and suggests the attendees show each other their holiday photos. And we do.
Channel 10 is paying a fortune to create content. On Facebook, it’s the punters who create the content themselves.
And if anyone is thinking that it’s ridiculous to compare a website to a TV station… bear in mind that they’re both competing for exactly the same advertising dollar. Actually, they’re competing for the same investment dollar too.
I love TV and I also love Facebook. They can obviously co-exist. But if I was an investor, I know where I’d put my money.
- Simon Veksner is founder of social media agency Hungry Beast
yes, yes, none of the big new media companies make content any more, welcome to 2010.
you’d be unwise on that investment though.
facebook is like cigarettes or coke or fosters, madly popular where-ever it isn’t entrenched. use is declining dramatically in the first world hot spots where it broke out, but burgeoning in the third world slums trying to emulate the first world hot spots.
facebook is over valued now. invest (your time and knowledge) in HTML5, or even better, games. not a single one of you is yet to show an effective understanding of the biggest entertainment industry of the 21st century, or how to use it as an advertising platform.
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“Whereas all Facebook had to do was build a website.” ha ha ha ha ha ha ha ha ha ha ha ha
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The quality of op-ed’s on Mumbrella has deteriorated lately… I’m fully expecting the following topics in the coming weeks
Why e-mail is still powering 99% of businesses
Should you leave your kids alone on the Information superhighway?
Drones. Revolutionary or just an airborne fax machine?
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> all Facebook had to do was build a website.
And all one guy in the 70’s had to do was put googly eyes on a rock. What’s your point?
Suggesting that Facebook’s Sydney staff of 40 is what puts FB together every day to the world is so disingenuous it hurts. (Hint the majority are in the US).
> And if anyone is thinking that it’s ridiculous to compare a website to a TV station..
I do. I do completely. They’re two different genres of businesses doing completely different things. You may as well be comparing NewsCorp with Porsche and arguing they’re asking for the same dollars in wallets with subscriptions vs leases…
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“Whereas all Facebook had to do was build a website.”
So that’s the secret to billions of dollars? ‘Just’ build ‘a’ website…..someone forgot to tell the founders of Bebo, or Google+, or Newscorp post MySpace acquisition or Digg or…and the list goes on.
On a positive note after reading this article I’ve registered ‘just’ a website in 20 minutes, dollars already rolling in, see you in Monaco b$tches!!
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There’s a default thing at play. On TV the default is to continue watching the ads; on Facebook the default is to keep scrolling (and not stop for the ads). Both are counted, but one ‘reach’ is more valuable than the other.
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I think your description of episode 1 is why I will watch TV over FaceBook any day.
So FaceBook has around 5 million video viewers a day. Let’s be generous and say that the average FaceBook video is 5 minutes. That is 25 million video minutes a day. Wow! Massive!
Oh. Hang on. What’s that you say? The Bachelorette does around 1 million per episode. That goes for an hour. So that is 60 million video minutes in just an hour. So that is roughly twice that of FaceBook and in around 4% of the time.
Things ain’t always what they seem to be.
So I suppose you could call that an advantage – depending what prism you view it through. Definitely wins on the cheap front.
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Well written. But social content ain’t just being generated by the punters. Just ask the homepage of any news site. Or Robert Thomson: https://mumbrella.com.au/news-corp-ceo-lashes-google-for-piracy-zealotry-and-kleptocracy-at-lowy-institute-event-312252
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I think you’re getting episodes 1 and 2 confused.
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Dang you’re right it was Episode 2
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JG – and your point is what exactly? I think you’re making a logical argument, but just because TV may have more video minutes – what exactly does that mean?
Surely audience reach matters? Specific, valuable audiences reach. I don’t care if any medium brings me ten-to-the-power-of-whatever size audiences… What must matter is how valuable my content is to a carefully selected audience.
Problem with mass audience is that you impress 20 at the cost of pissing-off 200. Trust me, on TV I have to endure a tampon advert every time I watch. Yet I’ll never be the decision maker on tampons in my home…
And website Mr Veksner? Whilst Facebook was a website it really nearly lost everything. Instead they very quickly and effective “just” built an app – and hence they get the massive audiences (the numbers I think you may have wrong).
BTW, it wasn’t the 40 or so in Sydney who built it. I think they promote it and teach others how to use it.
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Hi Jörn.
Sorry for the uncomfortable facts, but I will try to explain these basic elements.
There is an old aphorism, dearly loved by the digerati, that the money follows the eyeballs (or ears) etc. Eyeballs are (or SHOULD be) measured in cumulative viewing time. That establishes the ‘weight’ of viewing.
So why is ‘weight’ of viewing so important? Because it increases the likelihood that your ad will intercept with a viewer. In the above example, an episode of The Bachelorette carries much more weight than a day of Facebook. That is, you would need to buy an ad in half the ad-breaks on TB to have the same likelihood of your ad being seen if you bought an ad in EVERY video shown in a day on Facebook. Don’t get me wrong, Facebook is one of the better performing online video options.
You mention targeting and reach in the same sentence. The more your target the less your reach becomes. Sure you may be targeting more narrowly, but such a strategy revolves around cost efficiency. For example, you could place and ad on each commercial pod between 8:30pm and 9:30 pm and in one hour you would reach more people than Facebook. Yes, the old fashioned road-block. It is still effective – but at prohibitive cost inefficiencies.
The fact is that the marketer does NOT know where their next new customer is coming from. The more you expose your brand to new potential customers the greater your chance of growing your brand. Don’t take my word for it – read Dr. Byron Sharp’s “How Brands Grow” (from the University of South Australia I might add). It is a challenging read but golly he knows his stuff.
So the marketing dilemma becomes, do I focus on cost efficiency (narrow targeting) or cost effectiveness (increased reach to get new customers). If I was in the job for the short-term my answer would be different if I was in the job for the long term and wanting to hand over a really healthy brand to my eventual successor.
Sure TV ads piss off people. But online ads do as well as the rapid rise in ad blockers demonstrates, if the insignificantly small CTR rates didn’t provide a hint.
The trouble with targeting is that it does not take into account the psychology of the ad recipient. Just because people are in the same target does not mean they all react the same and have the same take-out from the ad. There are countless times I have see an ad and thought my wife might like that product (no, not tampons I might hasten to add). Way out of the target, but effective – an opportunity for brand growth that would have gone begging.
That is how advertising works and is part of its wonderful mystery. We never know how an individual piece of creative content works because it works differently for every individual that sees it. We can have creative ‘norms’ but they are about as useful as an ashtray on a motorbike. But what we CAN do is expose that ad to as many potential consumers as the budget will allow, drive up conversion (e.g. a brand switcher, a new category entrant etc.) and start generating long-term brand growth.
I think you can guess what camp I am in.
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JG you should write a blog and link to it from here… You are giving Mumbrella loads of rich, engaging, relevant, topical content. You know who loves quality content? Google does doesn’t it! Facebook also likes it, doesn’t it? Whatever happened to graph search? (Mind you Facebook is ‘just’ a website after all.)
Fragmentation of audiences is what is a threat to the large traditional players. Ad spend can be sliced and diced and sliced again in this ever more dissolving media world.
Will fta netwroks have a business model in 10 years? Will Google / Facebook / Amazon / Apple be considered fta then? It’s exciting. Keep up guys!
That’s my 10 cents. Good convo guys!
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Nice article, Mr. V.
It’s part of the same old quality/quantity argument that digital advertising once used in its favour – only this time, in reverse isn’t it?
The digital arena, not that long ago, was constantly praised for its low wastage and ability to target the right pair of eyes.
It seems that the dynamic is flipped in this example where a more engaged and generally like-minded TB audience can receive a targeted, tailored message whereas my Facebook feed seems full of broadcast messages that don’t neccesarily apply to me.
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It’s people like you with your mindset that will eventually kill this industry for good. And yes Byron Sharp has a lot to do with that as well..
A model based on a history that doesnt exist and 2 books written in a time of dinosaurs.
Have to agree that nobody knows whats going to work, but the simple idea of put it everywhere and hope is ludicrous. No matter how much puffery you put around it.
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Duncan I am glad you have noticed that as well.
And @JG. I thank you for your cogent and reasoned argument.
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@ @JG yeah good call to diss Byron Sharp and his decades of cross industry research findings. And Sharp has no stake in one solution over another, just the scientist’s desire to prove facts. Did it occur to you that what works and what is proven has been destroyed by fads and charlatans and snake-oil salesmen?
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@JG 10:58, Targeting all potential buyers is ludicrous? How do you figure? I’d love to hear your counterpoint to JG – more than just contempt, I mean. (Richie for next bach!)
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“…nobody knows whats going to work…”
Nothing’s going to work – advertising has evolved into a deception based industry with an incredible sense of entitlement, and the public knows it. You can’t reverse that level of ill-will, no matter your marketing talents (because of your marketing talents).
The old business models are failing. The new ones are a joke. The revenue is collapsing and/or moving offshore.
The glory days are over. But keep fighting for those scraps.
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JG. Thank you. A well evidenced argument. But some is outdated. I’ve read the book you suggest and I agree it’s compelling. However I think you may misquote it a tad. I understood it to make a different argument to what you do. Anyhow, it’s certainly a valid discussion to be had as I believe I’m in the same camp you are – seeking the most effective medium. Happy to shout the first drink at the most central venue for all keen to discuss this over a beer rather than the limitations of mumbrella. Maybe a journo can join us and write up what we uncover from the discussion?
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i am going to scrounge up those stock options i had in many websites that built it and they even came and try and try again, “monetising” those “eyeballs” failed. wait, i built a website tho!! oh, list on nasdaq? check. hmm. hire a zillion ppl? yep. huh. ad server? yes. ad sales? yep. kick ass “revenue managers” and “ad products” check. where is my money? why am i not living in monaco!! where did it go wrong!?
says every single dot com from 90s/early 00s pretty much
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umm i re-read and seems you can summarise this with: “i would put money on FB if it were 2000. Go you!”
what other tips do you have? i’m going with that wildcard google over looksmart, askjeeves, and even yahoo! linux over windows! screw you, non-geeks. err.. oops. well, i made enough off NetJ to be just fine, thanks! ten dollars if you dont have to look that last one up.. in options.
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Jörn, well done on having read Byron Sharp’s book.
I must say that when I first read it, I found myself shaking my head and muttering ‘No, that can’t be right’. By the end of the book I was confused. Some things I agreed with (based on what I learned in 10+ years in retail research), and other things I kept thinking that Sharp was so out on a limb.
So, I sat down and immediately read it again. It was only then that I understood the premises that Sharp was espousing. My problem was that I was confusing sales response with brand strength. Base-line sales are one of the harder things to identify and quantify, but consistent manageable increases in base-line sales should be the primary goal for any marketer of established brands. Anyone can fiddle with price and drive short-term sales response – but watch sales fall off a cliff once you take the candy away from the baby.
And for those that still doubt, consider the following.
There is a parallel between the reach of your communications plan and your product retail distribution (sorry for the FMCG focus but it is easier to explain). If a grocery brand were to ‘optimise’ its distribution it would analyse the sales and ROI for each and every outlet. Starting at the bottom they would begin to cull retailers that weren’t pulling their weight. The previous 95% weighted (not numeric) retail distribution would slip to 90%. The next round would of optimisation would see it fall to 85% then 80%. Pretty soon a quarter of the population would not be able to buy the brand and you would have to curtail your communications to save further money. All the while, you are increasing the ROI per dollar adspend and retail distribution. So while your cost efficiency is increasing, your brand is shrinking! That is, the whole strategy is more efficient but less effective. Clearly there are also parallels with the online funnel – the efficiency (online only) is easily calculated but the effectiveness isn’t. On paper things look fine and dandy, but the brand’s health is declining.
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Facebook has ads?
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A problem with fragmentation is that no-one stumbles across something they weren’t considering. That’s why real estate agents have sexy sites, but also paper catalogues. You might have been only looking in Mosman, but flicking through the catalogue you see a place you love in Cameray.
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Facebook provides free web space without having to go through the bother of Dreamweaver or buying upload space. It ain’t rocket science.
It basically works on the same principal as a personal page on Compunet (ask your grandfather) but Zuckerberg was able to convince everyone that he “invented” it.
The advantage of TV is that everyone has TV and its free. You have to pay for a telephone connection and not everyone is on Facebook.
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