What happens when others control your traffic?

Are the online gatekeepers becoming too aggressive?

Quartz magazine is held up as one of the most innovative news websites and one of the models for the future of online publishing however its president Jay Lauf suggested at the Digital Media Strategies conference in London yesterday that web users are increasingly shifting towards social sites to find their content.

This isn’t new, most sites have been dependent upon referrals from the popular social media services and companies like Buzzfeed have built their entire strategies upon traffic from Facebook.

Lauf suggests that sites like Quartz and Buzzfeed are increasingly losing control of their own audiences which raises risks for publishers and readers as they become dependent upon the social media gatekeepers.

Quartz’s traffic from LinkedIn is a good example of how a gatekeeper can control traffic with referrals falling away as the social site pivots into a publishing platform of its own.

It could turn out that control of traffic backfires however as people find those services deliver less value or relevant information.

Ultimately it may be the gatekeepers who suffer from restricting traffic as readers decide they aren’t getting the news they want.

Advertising and the mobile, digital consumer

Bigger smartphones are redefining media consumption, how does Google and traditional media companies respond to this?

Last week Google and Facebook announced their quarterly results with the search engine giant continuing its worrying slowing of advertising revenue. The respective changes of the two online services show how online advertising is changing.

While Google slows, Facebook is showing accelerating growth for its advertising, driven mainly by mobile users, illustrating the shift in internet usage from desktops to smartphones.

In its 2014 New Digital Consumer report, market research company Nielsen observed that US consumers in 2013 were spending more time accessing the internet on their smartphones than on personal computers; PC use had fallen seven percent to 27 hours a week while mobile use had surged 40% in 2013 to 34 hours.

Television still remained dominant with the combination of live and time shifted TV viewing making up 144 hours of the average American’s week, although it did fall slightly.

Nielsen-time-spent-per-device-2013

Those figures are a year out of date and there’s no doubt the numbers have accelerated since then. One of Tim Cook’s triumphs at Apple has been the release of the iPhone 6 and the larger form factors in the current generation of smartphones is a response to consumers’ demand to watch video on their devices.

Bigger Android, Windows and Apple smartphones will only seen even more people using their mobiles to watch video and surf the web.

Which puts Google’s predicament in sharp focus; we are definitely in the post-PC world yet their revenue still overwhelmingly comes in from desktop users while Facebook’s is increasingly coming from mobile consumers.

A strength Google has is that its revenues still dwarf the social media upstart’s – Google’s income is currently six times greater and its gross profit margin doubles that of Facebook’s – giving it plenty of leeway to change.

The question is where do the new revenues come from? Probably the biggest opportunity Google missed was in replacing the Yellow Pages franchises with their own local small business listings with Google Your Business (aka Google Place and Google Plus for Business) being lost in a confused and bureaucratic corporate strategy.

Compounding the problem for Google in the small business space is Apple’s entry and while Apple Maps is no contender against Google’s far superior product, an integration with Apple Pay would give Apple far more rich data to enhance listings with – not to mention more of an incentive for merchants to sign up.

With the changing web, Google are going to have to change as well. If advertising is going to remain the mainstay of their business then the company needs to find a way to capture smartphone users.

It could be worse however, a report from consulting firm Strategy Analytics estimates print media’s share of advertising revenue fell another seven percent this year. Time is running out for newspapers.

strategy-analytics-share-of-advertising-revenue

While print is ailing, the advertising battleground is mobile digital although TV still dwarfs the market. How this evolves in the next five years will define the next generation of media tycoons.

Happy mobile new year

With the holiday season over, there’s a couple of things all businesses should be reviewing to make the most of the mobile marketplace.

It’s a bit late in the month for New Year’s resolutions but with the work year now fully underway it’s not too late to do a quick health check of your company’s mobile presence.

Two years ago we passed the point where smartphone sales overtook those of personal computers and increasingly customers are expecting not only to find a business on their phone but also be able to read the company’s website on a mobile.

So the new years resolutions are simple; look at your company’s website on some smartphones and check the listings in Facebook and Google My Business are correct.

The Facebook and Google listings are simple and if it turns out they are out of date or wrong can be quickly and easily fixed. These are probably two of the most cost effective marketing things you can do for your business.

Should the website look dreadful on a smartphone then things are bit trickier and you may have to contact your web designer to enable a responsive function on your site. Responsive design detects the device a visitor is using and adapts to suit. Some older sites and platforms don’t support this and if that’s the case you need to start planning and budgeting for a redesign immediately.

If the site is based on modern platforms like WordPress or Drupal there are plugins that will do most of the work automatically while services such as Blogger and Wix have responsive features built in, although you may have to tweak the site’s template to give prominence to important information on a smaller screen.

That important information includes contact details, address, opening hours and a concise description of your business, the quicker customers can find these, the more likely you’ll win them. If you’re in hospitality then linking your location to Google Maps will help guests find you.

While these three tasks are simple things, and by no means a full digital strategy, they are probably the quickest, easiest and cheapest things you can do to get in front of customers in an increasingly demanding and crowded market that expects to find you on their smartphones.

Measuring Facebook’s network effect

Has Facebook really been responsible for creating over four million jobs?

It’s always best to treat a business’ or industry group’s claims of economic benefits with a grain of salt and the survey released yesterday by Deloitte on measuring Facebook’s effects on the global economy is a good example.

Facebook’s Global Economic Impact looks at what the social media service added to the world’s economy and finds the company created 4.5m jobs and $227 billion of value in 2014 outside of its own operations.

Deloitte’s analysis breaks down Facebook’s effects into three general categories; platform effects, connectivity effects and market effects.

In coming to their figures, Deloitte’s researchers further broke the numbers down into the direct revenues of businesses using Facebook, the indirect impact upon suppliers and the ‘induced effect’ of employee spending patterns.

The basic formula, although the methodology gets quite complex in extrapolating the value added, is described in this illustration.

deloitte-calculation-of-facebook-value-add

The main areas of contention are the employment multiplier effect, which Deloitte marks at 3.1 in Brazil down to 2.1 in the UK with the United States coming in at 2.7, and the valuation of individual Facebook actions.

For example here is the description of how companies’  page engagement is valued;

Sales from Page engagement are estimated as
a product of the total sales of businesses with
Pages and the sales uplift estimated due to their engagement on Pages (see section A3 for how elasticities are estimated by econometric methods). The total sales of the businesses that have a Facebook Page are estimated using the revenues of the private sector in the economy based on national statistics. Survey evidence is then used on the percentage of businesses with a Page in the US and the UK.

For the rest of the world, the value of a liking action of a Page is estimated using relative GDP per capita of each country to the UK and USA to reflect the local economic conditions.

The gross revenue supported by Pages is then the product of the number of Pages liked and the value of a liking action of a Page.

The key here is the word estimated, there’s no doubt it’s in the interests of Facebook, the marketing agencies and the staff employed to manage social media to overstate this effect; it’s an arbitrary at best measure.

Marketing is claimed to be the most valuable aspect of Facebook, accounting for about two thirds of the service’s claimed economic value with a $148 billion contribution. Deloitte defines marketing effects as “the impact from businesses’ use of Facebook marketing tools to drive online and offline sales, and to increase awareness of their brand.”

Again this is subject to a number of arbitrary definitions and guesstimates which take us into the tricky area on measuring social media’s Return On Investment.

The reason why the numbers don’t pass the smell test is because of the sheer size; in Australia for instance the company’s effects are valued at $5.7 billion and employment generated at 63,000 workers. If we fully apply the 2.6 multiplier Deloitte attributes to the country this would suggest over 17,000 Australian workers are directly employed full time in running Facebook related tasks.

While it’s hard not to be sceptical of Deloitte’s numbers, it certainly is true that social media platforms have opened new roles for administrators, developers and other staff. We just need to be a touch cautious of overstating the benefits.

For businesses, probably the best lesson from Deloitte’s survey is to measure the genuine effects of social media on a business there have to be properly thought out measures and objectives. Guesstimates are not good enough.

Daily links – Twitter founder on social media, teenagers online and tech employment

Why social media numbers don’t matter, what are teenagers doing on Twitter and why tech companies are firing, not hiring.

Links today have a bit of a social media theme with Twitter co-founder Ev Williams explaining his view that Instagram’s numbers don’t really matter to his business while researcher Danah Boyd explains the complexities of teenagers’ social media use.

Apple’s patents and why the tech industry is firing, not hiring, round out today’s stories.

Feel the width, not the quality

Twitter co-founder Ev Williams attracted attention last month with his comment that he couldn’t care about Instagram’s user numbers, in A Mile Wide, An Inch Deep he explains exactly what he meant at the time and why online companies need to focus more on content and value.

Apple gets patent, GoPro shares drop

One of the frustrations with following the modern tech industry is how patents are used to stifle innovation. How an Apple patent for something that seems obvious caused camera vendor GoPro’s shares to fall is a good example.

Why is the tech industry shedding jobs?

Despite the tech industry’s growth, the industry’s giants are shedding jobs. This Bloomberg article describes some of the struggles facing the tech industry’s old dinosaurs.

An old fogey’s view of teenagers’ social media use

Researcher Danah Boyd provides a rebuttal of the story about young peoples’ use of social media. “Teens’ use of social media is significantly shaped by race and class, geography and cultural background,” she says. Sometimes it’s necessary to state the obvious.

Daily links – the future of Google, Silicon Valley’s name and how startups die

The future of Goodle,,how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.

On many measures Google are in trouble, but one analyst thinks we’re panicking and his view is the lead of today’s links of the day. We also look at how the name ‘Silicon Valley’ came about, why solar power is getting cheaper and how some startups die.

Does Google’s future lie in R&D?

“Google is down but it’s not out” is the warning of this analyst’s report on the company’s earnings and strategy. Interestingly Google outspends Apple by $4bn a year on research and development, but both of them are dwarfed by Microsoft’s spending, which indicates R&D investment doesn’t guarantee success.

The origins of the name ‘Silicon Valley’

Last Sunday marked the 44th anniversary of the first time the label ‘Silicon Valley’ appeared in print. The US Computer History Museum looks at how the name came about and no-one will be surprised it was a marketing person who coined it.

Why does solar power keep getting cheaper

A few years ago putting solar cells on a building was expensive, now in many parts of the world the price of PV panels is becoming competitive with mains power. Vox Magazine looks at the factors driving the price drops and finds that economies of scale are now the main factor affecting the falling cost of installed solar power systems.

RIP Urbanspoon

One of the earliest food review platforms was Urbanspoon which was founded on the basis it would only grow as a bootstrapped company. In 2009 the founders sold out to a larger company who have now sold it onto an Indian business who is going to shut the name down.

Startups who’ve fallen off the map

Business Insider lists 17 formerly hot businesses who’ve fallen out of the public view this year, while some of them haven’t disappeared, it’s a list that reminds us that most new businesses, particularly tech startups, fail.

Daily links

Apple extends its lead over Android in smartphone activations, a teenager’s view on social media and Google’s declining market share.

Today’s links are somewhat more upbeat; starting with Apple extending its lead over Android in smartphone activations, a teenager’s view on social media and Google’s declining market share.

Apple takes the lead in smartphone activations

In their regular survey of mobile phone activations, research company Kantor found that Apple have taken the lead back from Android phones.  The Kantar Worldpanel ComTech global consumer panel monitors the brands of phones being connected through selected apps to give them an idea of what’s going on in the smartphone marketplace.

While not an absolute numbers, and one that was inflated by the new range of Apple iPhones released late in the year, it’s clear Apple are by no means out for the count when it comes to the smartphone market.

What teenagers think of social media

I’m not sure how accurate or scientific this story is, but it illustrates how complex the social media industry is and how dangerous assumptions are with what age groups use new media channels for.

How boring can driverless cars be?

Another story points out driverless cars are actually quite boring to ride in. Maybe we’ll all catch the train insead.

Google loses market share

Since signing an agreement with Firefox to be the default search engine provider, Yahoo! sees its share of the marketplace spike upwards. Should Google be worried?

So you thought a tech job was safe?

Document service Evernote cuts jobs proving that even a job in the hottest parts of the tech sector isn’t safe. Notable in this story is the concentration of employment in two locations which shows Silicon Valley isn’t keen on remote working at all.

Has Facebook peaked?

Facebook is losing marketshare and trust among younger social media users, is this a trend?

Could Facebook have reached its peak? A report in Bloomberg Businessweek suggests the service may have passed it maximum popularity.

In a survey by consulting firm Frank N. Magid Associates, the proportion of 13- to 17-year-old social-media users in the U.S. on Facebook slipped to 88 percent this year from 94 percent in 2013 and 95 percent in 2012.

What would really concern Facebook are concerns that the service is not safe, “One reason for the decline in teen Facebook usage is due to concerns that the service may not be trustworthy. Just 9 percent of those surveyed described the website as “safe” or “trustworthy,” while almost 30 percent of people said they would use those words to describe Pinterest.”

For Facebook that loss of trust among younger users is it’s biggest threat. Once you lose the trust of a generation, you’ve lost your business. This trend is one that Facebook will need to address quickly.

Facebook goes places

Facebook Places gives the service an advantage over other local search platforms

The relaunch of local discovery service Facebook Places was low key and remained un-noted until picked up by a German blogger this week.

Facebook’s local service is, on first look, quite impressive with it pulling together various features and data sources to give a quick guide to what’s on and what’s attractive in a city based on a user’s history.

In that respect it’s a clear threat to Yelp!, Tripadvisor and Google; particularly given the convenience of using a single app and getting recommendations based on the service most people spend the bulk of their online time upon.

At this stage it doesn’t appear the service is doing too much with the local business feature but it’s only a matter of time before those details start being fed into the algorithm as well.

Once again it shows why listings are important for local businesses. It may also be that Facebook is cracking the largely untapped local business market.

Fiddling with the feeds

Twitter hopes their changes will grow the social media service and beat the curse of Facebook

Finally Twitter have announced the changes they will be making in an effort to attract more users.

The changes are risky, and controversial, as messing with people’s feed risks alienating loyal users. If the changes prove unpopular it may make Twitter’s problems worse.

Whether the changes are enough to justify Twitter’s sky high stock market valuation and can attract the numbers of users the company needs to keep the faith of investors remains to be seen.

Zuckerberg’s Curse is biting Twitter hard and the company needs to figure out whether frantically trying to entice uninterested users and meet high, and possibly impossible, benchmarks is the best course for the service’s future.

When the virtual mob comes calling

Businesses have to be prepared for the online lynch mob in a time of intolerence.

In China, the human flesh search engines track down people who have offended the herd sensibility.

As Australia becomes more conservative and reactionary, the same phenomena is developing Down Under. Aussie businesses now have to be prepared for when they come to the attention of an online lynch mob.

Last weekend a South Australian dairy company, the Fleurieu Milk and Yoghurt Company, announced it would not be seeking Halal certification for its yoghurts following concerted harassment from bigots, a decision that will cost it a $50,000 contract with Emirates Airlines.

Fleurieu was not the first company to be targeted by groups of online bigots, a few weeks earlier Maleny Dairies from the Queensland Sunshine Coast announced it would not seek Halal certification for after being deluged with queries from similar groups.

For a company of any size, a wave of abuse from online hate groups is difficult to handle but for smaller businesses like rural dairy companies it’s particularly hard as there’s little training for dealing with obnoxious and ill informed virtual lynch mobs and the resulting drop in morale can affect the entire workforce.

Many managers would draw the conclusion that social media is a dangerous place that only exposes staff and the business to these vile individuals, however withdrawing totally from online channels might actually magnify the effects of being targeted as companies don’t see the internet campaigns developing.

Reacting to a hate campaign is difficult however and much of how a company deals with being the target of one comes down to the owners’ and managers’ appetite for dealing with such a crisis.

Submit to the mob

The quickest way of defusing the situation is to agree to the mob’s demands, as Maleny and Fleurieu did, which has the advantage of relieving the stress on staff and management distractions.

Submission though is not without its risks; the mob may not be happy or agreeing to their demands may upset other customers who actually spend money with the business.

This latter point is something Australia’s agricultural industry and governments should be paying attention to as Middle East nations takes over ten percent of the nation’s food exports.

Agreeing to one group’s demands may also irritate other equally other vocal groups which could actually make the problem worse. Ultimately though it comes down to what a company’s management is most comfortable doing.

Should you decide to go along with the mob, don’t equivocate. Be absolutely clear about what you are doing and why you are doing it. This is something both Fleurieu and Maleny diaries have done.

Don’t engage

If the choice is not to submit, either on principle or for commercial reasons, then it’s necessary to be prepared for continued criticism with staff and management coming under further stress. It’s important everyone is supported by the team in the face of often vile and crude behaviour.

One of the key tenants of online marketing and community management is to engage with your critics, however there is a point where trying to engage with irrational people is pointless and possibly even counterproductive.

When that point has been reached, then there is no need to reply to them and any inflammatory or provocative posts should be deleted. The saying of “don’t feed the trolls” applies.

Should commenters become too strident or silly then they should be blocked and, if they are misbehaving on a social media site, their actions reported to the service’s management. Any threats of violence should be immediately documented and a complaint made to the police.

Don’t provoke

Provoking these groups is also a mistake, descending to their level of behaviour will only encourage them and their friends along with risking alienating your own supporters. Keep things professional and straight forward.

Not being a dill yourself is something that could have heeded by one of the other businesses that found itself on the receiving end of an online lynch mob this week. Mark Clews, the proprietor of Tuk Tuk Hunter Valley, was on the receiving end of an online campaign after a snarky post about a vegetarian who visited his hamburger bar in the wine country north of Sydney.

Reading the Tuk Tuk Facebook page quickly gives one the impression Clews enjoys an online fight and he certainly got one which led to his business receiving dozens of poor reviews and at least one critic set up a Facebook page, later taken down after legal threats, highlighting the business’ poor reviews.

In a heated environment — be it vegetarianism, Halal certification or any sort of politics — it’s worthwhile business owners keeping their own personal views separate from their company’s online presence.

The moral of all three of these stories is the internet is a tough place and in today’s increasingly intolerant society one not without its risks. While every business needs to have an online presence, it’s necessary to be prepared for when the online mob appears with virtual torches at your door.

Zuckerburg’s curse

Zuckerburg’s curse — Twitter is not Facebook and nor are most startups

Twitter yesterday released its third quarter 2014 results which saw the stock drop a stunning thirteen percent in the half hour after the announcement.

For Twitter’s management and shareholders the worrying thing about the stock drop is the result was in line with analyst’s expectations, the shares fell because its clear the service isn’t getting the traction investors believe is necessary to succeed online.

Investors however have only themselves to blame; as a business Twitter is simply not worth it’s thirty billion dollar stock market capitalisation; it may be worth five billion, it may be worth ten but it’s desperately overpriced at its current prices.

Zuckerberg’s curse

Almost all social media services, and many tech startups, are suffering the curse of Mark Zuckerburg — Facebook’s success has led investors to believe that all online businesses should be valued in the ten of billions.

Making matters worse, Facebook’s billion dollar purchases of Instagram, Oculus VR and WhatsApp have baked the expectation of huge valuations into the startup community. Now every service with a modest user base believes it’s worth something similar to WhatsApp’s $19 billion.

The worry is that companies like Twitter carry out dumb and ill advised things to emulate Facebook and maintain its overvalued stockprice which will damage both their brands and customer base.

For many of these social media services it might be worthwhile admitting that they aren’t Facebook and accept they are a niche product.

It may well be those niches are more profitable than being a mass market product and the idea that online success involves huge takeup is just another relic of the Twentieth Century broadcast model.

Unfortunately while Facebook dominates the social media market and Google continues to draw most of its revenue from online advertising, the wild over valuations and flawed business models will continue.