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Archive

Posts Tagged ‘Social’

Bebo bargain: After selling to AOL for $850M in 2008, founders buy it back for … $1M ???

July 1st, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now

Michael Birch is buying back Bebo for the rock-bottom price of $1 million in yet another attempt to turn it into a product people use.

AOL bought social network Bebo in 2008 for $850 million in cash. AOL was trying hard to “buy and merge its way into relevancy” and saw Bebo as an opportunity to enter the hot social networking space and turn its business around. At the time, AOL was laying off thousands of employees to try and refocus the organization. Bebo was meant to be “the cornerstone” of AOL’s online strategy. Despite the fact that it was a second-tier social network falling far behind Facebook and Myspace, Bebo still had a respectable 40 million total users and 22 million uniquely monthly visitors, as well as strong security features and a functional developer platform for third-party applications.

The acquisition turned out to be a total disaster. Bebo did not live up to its price tag and the business was declining. AOL sold it to digital media investors Criterion Capital Partners in 2010 for a reported $10 million. Selling the property, rather than shutting it down, allowed AOL to write off the loss against other capital gains.

Bebo founder Michael Birch then rejoined Bebo as an investor and advisor in late 2010 by purchasing a significant stake in the company. Kevin Bachus, an early member of Bebo’s Microsoft Xbox team, came onboard as chief product officer, and Bebo was reportedly receiving between 10 to 12 million unique visitors a month and doubled its mobile traffic to 1.6 billion page views per month.

Bebo stayed mostly under/off the radar after that with occasional announcements of updates and partnerships, but never gained any real traction. It continued to be deadweight, and in April 2012, minority shareholders (including Michael and wife Xochi Birch) filed a $5 million suit against Criterion for “destroying the site ” (because before then, it was doing so great). Then in May 2013, TechCrunch reported that Bebo filed for a Voluntary Chapter 11 Bankruptcy Petition.

Meanwhile Michael and his Xochi founded and funded Monkey Inferno, a “Personal Incubator” for coming up with “cool internet projects.” The office touts a complete bar, iPad-controlled entertainment system, massage room, ping-point table, and private chef. The first product to emerge from Monkey Inferno is a mobile application called Beer Hunt which recently won a Demo God award at Demo Mobile. Beer Hunt is a social application that turns trying interesting and new beers into a game.

The Birchs have also been busy putting their money to use with The Battery — an private, exclusive, social club in San Francisco that is designed “to engage and stimulate forward-thinking minds.” According to AllThingsD, The Battery is slated to open at the end of this summer and will feature a restaurant, gym, 20-person hot tub, game room, wine cellar, five bars, and of course, a koi pond. The property cost $13.5 million in 2009 and Birch said that future features include “a chandelier of taxidermic seagulls in full flight” and a “23,000-pound suspected steel staircase.”

$850 million sure goes a long way.

Considering all these costs and purchases, shelling out a piddling $1 million for Bebo (which was the source of this wealth to begin with) seems like quite a bargain. At less than one-tenth of one percent of the sale price, I’d even call it a steal. Birch asked in a tweet “Can we actually reinvent it? Who knows, but it will be fun trying…” Chances are AOL isn’t feeling quite as lighthearted.

Birch has not yet responded to request for comment.


Filed under: Business, Deals, Entrepreneur, Social Tags: , , , ,

Bebo bargain: After selling to AOL for $850M in 2008, founders buy it back for … $1M ???

July 1st, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now

Michael Birch is buying back Bebo for the rock-bottom price of $1 million in yet another attempt to turn it into a product people use.

AOL bought social network Bebo in 2008 for $850 million in cash. AOL was trying hard to “buy and merge its way into relevancy” and saw Bebo as an opportunity to enter the hot social networking space and turn its business around. At the time, AOL was laying off thousands of employees to try and refocus the organization. Bebo was meant to be “the cornerstone” of AOL’s online strategy. Despite the fact that it was a second-tier social network falling far behind Facebook and Myspace, Bebo still had a respectable 40 million total users and 22 million uniquely monthly visitors, as well as strong security features and a functional developer platform for third-party applications.

The acquisition turned out to be a total disaster. Bebo did not live up to its price tag and the business was declining. AOL sold it to digital media investors Criterion Capital Partners in 2010 for a reported $10 million. Selling the property, rather than shutting it down, allowed AOL to write off the loss against other capital gains.

Bebo founder Michael Birch then rejoined Bebo as an investor and advisor in late 2010 by purchasing a significant stake in the company. Kevin Bachus, an early member of Bebo’s Microsoft Xbox team, came onboard as chief product officer, and Bebo was reportedly receiving between 10 to 12 million unique visitors a month and doubled its mobile traffic to 1.6 billion page views per month.

Bebo stayed mostly under/off the radar after that with occasional announcements of updates and partnerships, but never gained any real traction. It continued to be deadweight, and in April 2012, minority shareholders (including Michael and wife Xochi Birch) filed a $5 million suit against Criterion for “destroying the site ” (because before then, it was doing so great). Then in May 2013, TechCrunch reported that Bebo filed for a Voluntary Chapter 11 Bankruptcy Petition.

Meanwhile Michael and his Xochi founded and funded Monkey Inferno, a “Personal Incubator” for coming up with “cool internet projects.” The office touts a complete bar, iPad-controlled entertainment system, massage room, ping-point table, and private chef. The first product to emerge from Monkey Inferno is a mobile application called Beer Hunt which recently won a Demo God award at Demo Mobile. Beer Hunt is a social application that turns trying interesting and new beers into a game.

The Birchs have also been busy putting their money to use with The Battery — an private, exclusive, social club in San Francisco that is designed “to engage and stimulate forward-thinking minds.” According to AllThingsD, The Battery is slated to open at the end of this summer and will feature a restaurant, gym, 20-person hot tub, game room, wine cellar, five bars, and of course, a koi pond. The property cost $13.5 million in 2009 and Birch said that future features include “a chandelier of taxidermic seagulls in full flight” and a “23,000-pound suspected steel staircase.”

$850 million sure goes a long way.

Considering all these costs and purchases, shelling out a piddling $1 million for Bebo (which was the source of this wealth to begin with) seems like quite a bargain. At less than one-tenth of one percent of the sale price, I’d even call it a steal. Birch asked in a tweet “Can we actually reinvent it? Who knows, but it will be fun trying…” Chances are AOL isn’t feeling quite as lighthearted.

Birch has not yet responded to request for comment.


Filed under: Business, Deals, Entrepreneur, Social Tags: , , , ,

Bebo bargain: After selling to AOL for $850M in 2008, founders buy it back for … $1M ???

July 1st, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now

Michael Birch is buying back Bebo for the rock-bottom price of $1 million in yet another attempt to turn it into a product people use.

AOL bought social network Bebo in 2008 for $850 million in cash. AOL was trying hard to “buy and merge its way into relevancy” and saw Bebo as an opportunity to enter the hot social networking space and turn its business around. At the time, AOL was laying off thousands of employees to try and refocus the organization. Bebo was meant to be “the cornerstone” of AOL’s online strategy. Despite the fact that it was a second-tier social network falling far behind Facebook and Myspace, Bebo still had a respectable 40 million total users and 22 million uniquely monthly visitors, as well as strong security features and a functional developer platform for third-party applications.

The acquisition turned out to be a total disaster. Bebo did not live up to its price tag and the business was declining. AOL sold it to digital media investors Criterion Capital Partners in 2010 for a reported $10 million. Selling the property, rather than shutting it down, allowed AOL to write off the loss against other capital gains.

Bebo founder Michael Birch then rejoined Bebo as an investor and advisor in late 2010 by purchasing a significant stake in the company. Kevin Bachus, an early member of Bebo’s Microsoft Xbox team, came onboard as chief product officer, and Bebo was reportedly receiving between 10 to 12 million unique visitors a month and doubled its mobile traffic to 1.6 billion page views per month.

Bebo stayed mostly under/off the radar after that with occasional announcements of updates and partnerships, but never gained any real traction. It continued to be deadweight, and in April 2012, minority shareholders (including Michael and wife Xochi Birch) filed a $5 million suit against Criterion for “destroying the site ” (because before then, it was doing so great). Then in May 2013, TechCrunch reported that Bebo filed for a Voluntary Chapter 11 Bankruptcy Petition.

Meanwhile Michael and his Xochi founded and funded Monkey Inferno, a “Personal Incubator” for coming up with “cool internet projects.” The office touts a complete bar, iPad-controlled entertainment system, massage room, ping-point table, and private chef. The first product to emerge from Monkey Inferno is a mobile application called Beer Hunt which recently won a Demo God award at Demo Mobile. Beer Hunt is a social application that turns trying interesting and new beers into a game.

The Birchs have also been busy putting their money to use with The Battery — an private, exclusive, social club in San Francisco that is designed “to engage and stimulate forward-thinking minds.” According to AllThingsD, The Battery is slated to open at the end of this summer and will feature a restaurant, gym, 20-person hot tub, game room, wine cellar, five bars, and of course, a koi pond. The property cost $13.5 million in 2009 and Birch said that future features include “a chandelier of taxidermic seagulls in full flight” and a “23,000-pound suspected steel staircase.”

$850 million sure goes a long way.

Considering all these costs and purchases, shelling out a piddling $1 million for Bebo (which was the source of this wealth to begin with) seems like quite a bargain. At less than one-tenth of one percent of the sale price, I’d even call it a steal. Birch asked in a tweet “Can we actually reinvent it? Who knows, but it will be fun trying…” Chances are AOL isn’t feeling quite as lighthearted.

Birch has not yet responded to request for comment.


Filed under: Business, Deals, Entrepreneur, Social Tags: , , , ,

Social casino games have a new Caesar — and it’s not Zynga

July 1st, 2013 No comments

Caesar’s Interactive Entertainment has toppled Zynga as the No. 1 publisher of social casino games, according to a report by research firm Eilers Research.

That shows that the social casino game market, which is now worth $1.2 billion worldwide, is becoming a lot more competitive thanks to growth in demand, increased startup activity, and a series of high-profile acquisitions.

Caesar’s is one of the world’s largest legal gambling companies. It acquired Israel’s Playtika in 2011 and picked up popular social games such as Slotomania. Now, that title as well as Slotomania Adventures, Bingo Blitz (acquired with the purchase of Buffalo Studios), and Caesar’s Casino have pushed Caesar’s to the No. 1 position with 18.6 percent of the overall market in the second quarter, Eilers Research said.

By comparison, Zynga has 15 percent of the market. Zynga previously dominated the market with Zynga Poker. It has expanded to titles Zynga Slingo, Zynga Slots, and Zynga Bingo, and it recently acquired Spooky Cool Labs as part of an expansion in the space.

Eilers said that IGT, the big slot machine company, has moved into the No. 3 position with 14 percent of the market thanks to its $500 million acquisition of Double Down Interactive. WMS is in the No. 4 spot.

Overall, social casino game revenues on Facebook were down 2 percent from the previous quarter to $309 million. Zynga lost market share in the quarter due to double-digit percentage declines in users for Zynga Poker on both Facebook and mobile platforms. Big Fish Games’ Big Fish Casino is the largest standalone social casino app on mobile with an estimated $14.5 million in quarterly revenues, mostly from iOS.

The overall market is expected to grow 67 percent this year to $2 billion by the end of the 2013, Eilers said.

The social casino game market.
Eilers Research

The social casino game market.


Filed under: Business, Games, Mobile, Social

GamesBeat 2013GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!
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Editorially curated site Upworthy sees explosive growth

June 30th, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now

megaphone

Finding good content on the Internet can be tedious at times, so it’s not difficult to see why a site like Upworthy is currently experiencing impressive growth.

The site, cofounded by Peter Koechley (formerly of The Onion) and former MoveOn.org organizer Eli Pariser, was built to unearth articles, videos, and photos that “matter.” Over the last month, Upworthy has hit a few traffic milestones, including a total 30 million unique visitors to the site, an average of six minutes spent on the site per user per visit, and over 3 million subscribers (via social networks, email, etc.).

The site employs a team of editors (six full-time and about 20 contributors) to curate the most important news of the day. Those curators not only find the most compelling content, they also rewrite the headlines, craft summaries of the content, and find an appropriate piece of art. It reminds me a lot of the old Digg — or lesser-known site Mixx — except this one is powered entirely by the people who are just really good at finding news (like my good friend MrBabyman, aka Andy Sorcini, did during Digg’s heyday.) Upworthy’s platform also helps share all that content across social networks and tracks what’s getting attention.

“We put as much effort into our distribution efforts as we do in finding good content,” Koechley toldVentureBeat. “Having good content doesn’t mean anything if you aren’t actively trying to get people to see it.”

News curation is nothing new. Many news publications (VentureBeat included) have done it directly or indirectly for years, as have sites like Digg, Reddit, and a growing number of news reader services (Zite, Pulse, News360, etc.). Occasionally it’s responsible for surfacing viral content, but there’s a considerable amount of time and energy involved. But Koechley told me Upworthy wants to stay conscious of making the process of surfacing viral content using its close-knit team of curators, and letting its distribution and tracking platform guide them.

Megaphone image via Shutterstock


Filed under: Media, Social
    


Tags: , , ,

Editorially curated site Upworthy sees explosive growth

June 30th, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now

megaphone

Finding good content to consume on the Internet can be tedious at times, so it’s not difficult to see why a site like Upworthy is currently experiencing impressive growth.

The site, is cofounded by Peter Koechley (formerly of The Onion) and former MoveOn.org organizer Eli Pariser, was built o unearth the articles, videos, and photos that “matter.” And over the last month, Upworthy saw a few traffic milestones, including a total 30 million unique visitors to the site, an average of six minutes spent on the site per user per visit, and over 3 million subscribers (via social networks, email, etc.).

Upworthy itself is a site that employs a team of editors (six full-time and about 20 contributors) to curate the most important news of the day — or rather for each day — that everyone should see. Those curators not only find the most compelling content, they also rewrite the headlines, craft summaries of the content, and find an appropriate piece of art. It reminds me a lot of the old Digg or lesser known site Mixx, except this one is powered entirely by the people who are just really good at finding news (like my good friend MrBabyman, aka Andy Sorcini, did during Digg’s hey day.) Upworthy’s platform also helps share all that content across social networks and track what’s getting attention.

“We put as much effort into our distribution efforts as we do in finding good content,” said Upworthy founder Peter Koechley in an interview with VentureBeat. “Having good content doesn’t mean anything if you aren’t actively trying to get people to see it.”

News curation is nothing new. Many news publications (VentureBeat included) have done it directly or indirectly for years as well as sites like Digg, Reddit, and a growing number of news reader services (Zite, Pulse, News360, etc.). And occasionally, it’s responsible for surfacing viral content, but there’s a considerable amount of time and energy involved. But Koechley told me Upworthy wants to stay conscious of making the process of surfacing viral content using its close-knit team of curators, and letting its distribution and tracking platform guide them.

Megaphone image via Shutterstock


Filed under: Media, Social
    


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Vine gets a Kindle Fire App as Instagram video usage soars

June 29th, 2013 No comments

Twitter has released a Kindle Fire app for its short video service Vine today.

Vine has enjoyed steady growth since Twitter acquired the service last year. Initially, Twitter released an iOS app for Vine followed by an Android version about four months later. I can’t help but wonder of the release of this Kindle Fire version has something to do with the company trying to keep that growth steady after Facebook’s recent announcement that filtered picture sharing service Instagram would be gaining the ability to record 15-second videos.

Since Instagram Videos launched, some reports indicate that Vine usage has dropped off significantly. — as much as 40 percent, as Marketing Land notes. The drop off could be temporary, as people may have just wanted to check out the shiny new Instagram feature. But Twitter does have reason to worry. Instagram was perfectly tailored to Twitter prior to Facebook buying it. That means tons of Twitter users are not only familiar with Instagram, but they also probably still use it.

The release of a Kindle Fire Vine App might be one way of ensuring that its easy for people to continue using Vine. Honestly, I wouldn’t be surprised if Twitter was rushing to get a Vine app released on Windows Phone and BlackBerry for the same reason.

The Vine Kindle Fire app is free and available now via Amazon’s Android App store.


Filed under: Mobile, Social
    


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Vine gets a Kindle Fire App as Instagram video usage soars

June 29th, 2013 No comments

Twitter has released a Kindle Fire app for its short video service Vine today.

Vine has enjoyed steady growth since Twitter acquired the service last year. Initially, Twitter released an iOS app for Vine followed by an Android version about four months later. I can’t help but wonder of the release of this Kindle Fire version has something to do with the company trying to keep up that growth after Facebook’s recent announcement that the filtered picture sharing service Instagram would be gaining the ability to record 15-second videos.

Since Instagram Video launched, some reports indicate that Vine usage has dropped off significantly. — as much as 40 percent, as Marketing Land notes. The drop off could be temporary, as people may have just wanted to check out the shiny new Instagram feature. And even if Vine usage isn’t in decline, Twitter still  has justification to worry. Instagram was perfectly tailored to Twitter prior to Facebook buying it. That means tons of Twitter users are not only familiar with Instagram, but they also probably still use it.

The release of a Kindle Fire Vine app might be one way of ensuring that its easy for people to continue using Vine. Honestly, I wouldn’t be surprised if Twitter was rushing to get a Vine app released on Windows Phone and BlackBerry for the same reason.

The Vine Kindle Fire app is free and available now via Amazon’s Android app store.


Filed under: Mobile, Social
    


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The driving forces of change in mobile advertising

June 27th, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now
Cheryl Morris is the director of marketing for Nanigans.

In less than a year, Facebook became the market leader in mobile display ads – outpacing giants like Google and Apple to control approximately a quarter of all mobile display revenues. What represented zero percent of Facebook’s ad revenues a year ago is on track to be a billion-dollar market this year in the United States alone.

Facebook broadly launched its first mobile ad product just weeks after its IPO. Fast-forward three months and mobile represented 14 percent of their business. It seemed every other week the company released a new mobile ad product, and by the end of 2012, mobile grew to represent 23 percent of Facebook’s ad business. And today this number has grown to 30 percent.

Why exactly have mobile ad dollars moved so quickly to Facebook? The answer is simple. Facebook and its Preferred Marketing Developer ecosystem are solving real challenges on behalf of marketers – challenges that center on the three core pillars of any successful ad campaign:

  • Targeting
  • Creative
  • Optimization

Combined, these driving forces of innovation have resulted in advertisers achieving 15 to 20 times higher clickthrough rates (CTRs) on Facebook mobile as compared to desktop and, most important, are revealing the true return on investment of mobile ad investments.

Targeting

Twenty-five percent of time spent in mobile apps is on Facebook, with the social network bringing a 750 million person audience to mobile. While this engagement and scale is impressive enough, what’s more compelling to marketers is that (finally) hundreds of millions of people on mobile have an identity. From demographics and psychographics to affinities and behaviors, marketers have a trove of targeting data and combinations to leverage with Facebook mobile.

One Facebook targeting innovation achieving broad, sustained success starts with a marketer’s known customer-relationship management (CRM) data. With custom audience targeting, advertisers can upload information from their CRM database such as e-mail and phone numbers, and Facebook will match this data with profiles containing the same information. The targetable audience created through this process has proven a lucrative strategy for marketers from retail to gaming, with results like increasing the ROI of campaigns by a factor of five and driving 100 percent same-day ROI multiple days in a row.

Mobile ad targeting lacked identity almost completely prior to Facebook — with targeting data either nonpersonal or inferred. Take gender targeting. When mobile ad networks tell marketers they’re targeting women, what they really mean is they’re delivering impressions on publisher sites and apps that cater to women audiences. Sure, the marketer’s message could reach women — but there’s a high probability it’s also reaching men. Ultimately this lack of identity resulted in an industry relying on spray and pray tactics, with marketers buying blindly and thinking opportunistically that those people they’re putting impressions in front of will actual convert into customers.


To learn more about mobile advertising, check out the “Mobile money: More money, more problems” track at VentureBeat’s MobileBeat conference, July 9-10.


Creative

When we think of mobile ads, we’re used to thinking of tiny, ugly banners that sit in the mobile apps we use and on the mobile web pages we browse.

Enter Facebook. The social network’s brought ads to mobile that take up the entire screen with strong calls to actions, providing the huge canvas and seamless conversion funnel the mobile marketing industry has been craving for years.

Facebook has also brought ads to mobile that act like content, sitting in the News Feed with the same look and feel of the content being shared by friends, family, and colleagues. These ads feature social engagement such as Likes, comments, and shares, making them even more relevant to end consumers.

Facebook mobile app install ads are a great example, providing advertisers with large creative, strong “install now” calls to action and social context. All of this has contributed to incredible campaign results on Facebook mobile, with advertisers achieving on average 1 percent click-through rates (CTRs).

Optimization

Facebook is no longer social marketing. It’s performance marketing. The reason for this is due to the media buying, tracking, and optimization innovations developed in the Facebook marketing ecosystem on desktop — which are now shifting to mobile.

Advertisers no longer need to buy on mobile based on proxy metrics like views or clicks or immediate actions. They can now buy and optimize their ad spend for true ROI. A brief summary of the evolution of mobile media buying is below:

  • CPM (cost per impression): cost to deliver one thousand ad views.
  • CPC (cost per click): cost to generate a click on an ad.
  • CPA (cost per action): cost to drive an immediate action, like an app install.
  • LTV (lifetime value): value you earn off a customer over time.
  • ROI (return on investment): how much greater your LTV is than your CPA.

The shift from CPM, CPC and CPA to LTV and ROI is significant, as marketers are able to accurately understand the true return generated from their mobile investment – that is, the purchase revenue generated from people the advertiser reaches with mobile ads.

To understand why optimizing on proxy metrics like CPA is dangerous for marketers, let’s take a basic example from retail. The retailer has two hypothetical customers, Steve and Mary. Both buy a $10 T-shirt immediately after engaging with the retailer’s ad. Steve (25, single) costs $9 to acquire, while Mary (35, with a family) costs $12 to acquire. Mary is 33 percent more expensive to acquire than Steve, so Steve appears to represent a more valuable segment for an advertiser.

But what happens after that immediate purchase? Who is a more valuable, lifelong customer over time?

Mary ends up making additional purchases for her family in the coming weeks ($50 worth), while Steve never returned after that first T-shirt purchase. While Mary was 33 percent more expensive to acquire, she purchased 400 percent more. Ultimately, this calculates out to Mary generating 28 times higher ROI than Steve.

Marketers focusing on lifetime value and optimizing based on true ROI by leveraging maturity curves and predicting purchase behavior over time are the ones profitably scaling budgets across desktop and mobile today.

Evolution

There’s no question there’s been a huge evolution in mobile advertising – all in an incredibly short period of time.

Targeting is no longer inferred or non-personal; instead, marketers have a vast and rich targeting set. Creative is no longer limited to tiny banner ads; instead, marketers have the opportunity to leverage large, engaging creative that acts just like content. And media buying and optimization no longer has to be based on proxy metrics like CPA; instead, marketers can measure and predict lifetime value to optimize for true ROI.

Welcome to the new world of mobile advertising, with thanks to the Facebook ecosystem.

Cheryl Morris

Cheryl Morris is director of marketing at Nanigans, the developer of the predictive lifetime value platform for performance marketing at scale. Prior to Nanigans, Morris was part of the early team that built BostInnovation into a venture-backed new media company, publishing nearly 1,000 articles about the Boston technology ecosystem. Before this she was in management consulting at Market Platform Dynamics and a payments analyst at the Federal Reserve Bank of Boston. Morris graduated from Babson College with a bachelor’s degree in business management and concentration in economics.


Filed under: Business, Mobile, Social
    


Tags: , , , , , , ,

The driving forces of change in mobile advertising

June 27th, 2013 No comments
MobileBeat 2013
July 9-10, 2013
San Francisco, CA
Tickets On Sale Now
Cheryl Morris is the director of marketing for Nanigans.

In less than a year, Facebook became the market leader in mobile display ads – outpacing giants like Google and Apple to control approximately a quarter of all mobile display revenues. What represented zero percent of Facebook’s ad revenues a year ago is on track to be a billion-dollar market this year in the United States alone.

Facebook broadly launched its first mobile ad product just weeks after its IPO. Fast-forward three months and mobile represented 14 percent of their business. It seemed every other week the company released a new mobile ad product, and by the end of 2012, mobile grew to represent 23 percent of Facebook’s ad business. And today this number has grown to 30 percent.

Why exactly have mobile ad dollars moved so quickly to Facebook? The answer is simple. Facebook and its Preferred Marketing Developer ecosystem are solving real challenges on behalf of marketers – challenges that center on the three core pillars of any successful ad campaign:

  • Targeting
  • Creative
  • Optimization

Combined, these driving forces of innovation have resulted in advertisers achieving 15 to 20 times higher clickthrough rates (CTRs) on Facebook mobile as compared to desktop and, most important, are revealing the true return on investment of mobile ad investments.

Targeting

Twenty-five percent of time spent in mobile apps is on Facebook, with the social network bringing a 750 million person audience to mobile. While this engagement and scale is impressive enough, what’s more compelling to marketers is that (finally) hundreds of millions of people on mobile have an identity. From demographics and psychographics to affinities and behaviors, marketers have a trove of targeting data and combinations to leverage with Facebook mobile.

One Facebook targeting innovation achieving broad, sustained success starts with a marketer’s known customer-relationship management (CRM) data. With custom audience targeting, advertisers can upload information from their CRM database such as e-mail and phone numbers, and Facebook will match this data with profiles containing the same information. The targetable audience created through this process has proven a lucrative strategy for marketers from retail to gaming, with results like increasing the ROI of campaigns by a factor of five and driving 100 percent same-day ROI multiple days in a row.

Mobile ad targeting lacked identity almost completely prior to Facebook — with targeting data either nonpersonal or inferred. Take gender targeting. When mobile ad networks tell marketers they’re targeting women, what they really mean is they’re delivering impressions on publisher sites and apps that cater to women audiences. Sure, the marketer’s message could reach women — but there’s a high probability it’s also reaching men. Ultimately this lack of identity resulted in an industry relying on spray and pray tactics, with marketers buying blindly and thinking opportunistically that those people they’re putting impressions in front of will actual convert into customers.


To learn more about mobile advertising, check out the “Mobile money: More money, more problems” track at VentureBeat’s MobileBeat conference, July 9-10.


Creative

When we think of mobile ads, we’re used to thinking of tiny, ugly banners that sit in the mobile apps we use and on the mobile web pages we browse.

Enter Facebook. The social network’s brought ads to mobile that take up the entire screen with strong calls to actions, providing the huge canvas and seamless conversion funnel the mobile marketing industry has been craving for years.

Facebook has also brought ads to mobile that act like content, sitting in the News Feed with the same look and feel of the content being shared by friends, family, and colleagues. These ads feature social engagement such as Likes, comments, and shares, making them even more relevant to end consumers.

Facebook mobile app install ads are a great example, providing advertisers with large creative, strong “install now” calls to action and social context. All of this has contributed to incredible campaign results on Facebook mobile, with advertisers achieving on average 1 percent click-through rates (CTRs).

Optimization

Facebook is no longer social marketing. It’s performance marketing. The reason for this is due to the media buying, tracking, and optimization innovations developed in the Facebook marketing ecosystem on desktop — which are now shifting to mobile.

Advertisers no longer need to buy on mobile based on proxy metrics like views or clicks or immediate actions. They can now buy and optimize their ad spend for true ROI. A brief summary of the evolution of mobile media buying is below:

  • CPM (cost per impression): cost to deliver one thousand ad views.
  • CPC (cost per click): cost to generate a click on an ad.
  • CPA (cost per action): cost to drive an immediate action, like an app install.
  • LTV (lifetime value): value you earn off a customer over time.
  • ROI (return on investment): how much greater your LTV is than your CPA.

The shift from CPM, CPC and CPA to LTV and ROI is significant, as marketers are able to accurately understand the true return generated from their mobile investment – that is, the purchase revenue generated from people the advertiser reaches with mobile ads.

To understand why optimizing on proxy metrics like CPA is dangerous for marketers, let’s take a basic example from retail. The retailer has two hypothetical customers, Steve and Mary. Both buy a $10 T-shirt immediately after engaging with the retailer’s ad. Steve (25, single) costs $9 to acquire, while Mary (35, with a family) costs $12 to acquire. Mary is 33 percent more expensive to acquire than Steve, so Steve appears to represent a more valuable segment for an advertiser.

But what happens after that immediate purchase? Who is a more valuable, lifelong customer over time?

Mary ends up making additional purchases for her family in the coming weeks ($50 worth), while Steve never returned after that first T-shirt purchase. While Mary was 33 percent more expensive to acquire, she purchased 400 percent more. Ultimately, this calculates out to Mary generating 28 times higher ROI than Steve.

Marketers focusing on lifetime value and optimizing based on true ROI by leveraging maturity curves and predicting purchase behavior over time are the ones profitably scaling budgets across desktop and mobile today.

Evolution

There’s no question there’s been a huge evolution in mobile advertising – all in an incredibly short period of time.

Targeting is no longer inferred or non-personal; instead, marketers have a vast and rich targeting set. Creative is no longer limited to tiny banner ads; instead, marketers have the opportunity to leverage large, engaging creative that acts just like content. And media buying and optimization no longer has to be based on proxy metrics like CPA; instead, marketers can measure and predict lifetime value to optimize for true ROI.

Welcome to the new world of mobile advertising, with thanks to the Facebook ecosystem.

Cheryl Morris

Cheryl Morris is director of marketing at Nanigans, the developer of the predictive lifetime value platform for performance marketing at scale. Prior to Nanigans, Morris was part of the early team that built BostInnovation into a venture-backed new media company, publishing nearly 1,000 articles about the Boston technology ecosystem. Before this she was in management consulting at Market Platform Dynamics and a payments analyst at the Federal Reserve Bank of Boston. Morris graduated from Babson College with a bachelor’s degree in business management and concentration in economics.


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