Of devices and desires

Attending an early morning session at the bustling AdTech conference and exhibition this week in Olympia I heard Theo Theodorou promoting the Apple iAd format.

His pitch was interesting and persuasive, full of data on how mobile apps generate far more engagement than online rich media or even (so he claimed) TV.

He started by saying that iPads were massively dominant in the world of tablet computers. And to prove this he asked how many people in the room had iPads. Everyone in the room, apart from me, put their hands up. Theo turned to me with a sad smile and admitted that iPad use wasn’t universal yet.

At that point I admitted that I did have a tablet, but that it was a Samsung Galaxy (bought because it fits nicely into my jacket pocket). And therein lies a moral or two, I think.

First of all, don’t assume that because almost all London media types have an iPad it means that everyone has one. While smart phone possession is on the way to becoming ubiquitous in the UK (although even that will take a few years yet), tablet possession is limited to a small minority: 7.5% of the adult population this autumn according to Kantar.

And second don’t assume that all tablets are iPads. While no doubt the iPad is dominant in the UK market with nearly 75% market share, the market is changing fast and Apple may well see a market share nearer 50% within the next year or two.

The marketplace for apps though is different. In the smart phone market, iOS is far less dominant and Android devices lead Apple strongly. That is reflected in app downloads with Ovum predicting that 2011 will see over 8 billion Android app downloads compared with 6 billion iOS app downloads. And that difference is only set to widen.

But back to Theo. His proposition was this. TV is a great medium for driving emotion, but it is a one way medium. Online is a two way medium, but poor at driving emotional story telling. But iPad apps take the best of both worlds being both emotionally engaging and two way.

Because of this, long form ads work well on the iPad – they show a 6% click through rate and indeed time spent on an iPad ad is on average 60 seconds compared with 9 seconds on a web based rich media ad. The examples Theo showed us, ads for a car and a camera, bore out the potential.

Those are powerful data to support using iPad apps (and I suppose apps on any tablet device) as an advertising vehicle. So why is it that tablet apps are so engaging?

Accurate targeting, said Theo. And because the ads are intuitive and fun. And because you can touch the ads.

I’m not convinced that accurate targeting would have such a massive effect although I am sure it has some. It probably does enhance click through rate (although those of us with long memories can remember the (brief) time that online ads had similar CTRs).

But I think perhaps it is the game like nature of the ads that generates that length of engagement. And that is of course helped by the fact that you can touch the screen, and also because you are holding the device in your hands so that it is physically closer to you.

So perhaps it isn’t surprising that game-like ads do work well on a tablet.

But creating good interaction is difficult, risky and expensive. And it is not going to be appropriate for every brand. So much digital advertising (especially as TV advertising isn’t going to disappear any day soon) will remain as long form video.

The question for Theo is, will video ads on a tablet drive engagement, or will advertisers who want to use this format be forced into using “advergaming”. If that is the case then the market for tablet advertising must surely be limited.

Valuing Facebook

Reports that Facebook has raised $500m from Goldman Sachs and a Russian investment company, in a deal that values the social networking company at $50 billion, take me back to the good old days of 1999 when Freeserve was valued at around $2 billion.

OK, it’s not quite as bad as that. Freeserve had around 1 million users, which meant that each one was valued at about $2000.

In contrast Facebook has well over 500 million Unique Visitors (according to Google), valuing each one at around $100.

At least Facebook has valid business model in terms of its advertising, even if it doesn’t yet necessarily justify such a robust valuation. According to the Guardian, Facebook is predicted by eMarketer to be heading for $2 billion ad revenues in 2011, making around $4 in ad revenues per user.

Given that it is hard to square $4 with $100, Goldman Sachs presumably feels that there is other value contained within the site. There might well be.

It is possible that the advertising could generate more value. At present the industry undervalues Facebook advertising because (in part at least) click through rates aren’t great. People are generally highly engaged when visiting Facebook and so less likely to escape to advertising.

Engagement doesn’t mean they don’t see the advertising, however. And highly engaged visitors may well be more highly swayed by advertising when they see it than they would be if they were less engaged. Certainly there is evidence to that effect from the world of TV.

And the data they collect means that Facebook can deliver some great ad targeting – by age and gender as well as by keyword association.

So if Facebook were successful in selling their site as a premium branding site rather than a commoditised cpc site, then they might generate a far higher yield from the advertising inventory.

It is hard to see where else they could generate revenue, though. A premium subscription service would surely be a very niche product.

And the data they collect may well be less robust, and less valuable, that they like to think (don’t tell me you have registered your real birthday with them, or that all your Facebook friends are people you engage with socially).

There are of course opportunities to make money out of e-commerce, but beyond that it’s hard to see where real opportunities lie.

So the $100 valuation per user does seem optimistic.

And of course it does assume that Facebook is going to be a leader in the social media space for a good while: remember MySpace, remember GeoCities…

Valuing brands through the customer experience

I was at the CASS business school Global Brand Forum earlier this week and heard a fascinating talk from David Haigh of Brand Finance on brand valuation and the new ISO standard in this area (ISO 10668).

Brand valuation needs financial and legal input of course. And it also needs a whole lot of market research such as market trends and consumer trends.

But, to get it right, it also needs a robust, quantified understanding of how consumers experience a brand.

Understanding the value of the consumer experience will involve measuring a number of “rational” and “emotional” parameters and these could include:

  • Benchmarking the utility of products
  • Benchmarking the usability of products
  • Evaluating emotional responses to brand imagery and language found in advertising, in retailers and on the products (and indeed in other touchpoints such as call centres and bills)
  • Measuring how forgiving people are when things go wrong
  • Identifying the extent to which consumers are loyal and further, are advocates for the brand
  • Identifying the extent to which the brand is enhanced by mimicking the functionality used by other leading brands (for instance does the brand imitate Amazon’s one-click purchasing or Google’s approach to search)
  • Identifying how engaged consumers are with the brand and any brand communications (including the website)
  • Quantifying the value of social media buzz (for instance are people kinder about your brand than they are about other brands?)

Not all of these are particularly easy to measure in absolute terms (although some are) but all should at least be relatively simple to measure  comparatively against competitor brands.

Companies like Amberlight (www.amber-light.co.uk) who evaluate customer experience are not generally asked to link this to brand valuation. But without this type of expertise the values attributed to brands will surely be flawed.

Lies, damned lies and internet statistics

Sitting in the Intellect Consumer Electronics conference I heard one speaker claim that most media usage was (still) TV and then another speaker claim that people used the internet more (I think he said that people at home used the internet for 3.4 hours a day and watched TV for 2.4 hours).

I have long been interested in some of the data claimed for internet usage: it has often seemed surprising how much people use (or claimed to use) the internet – especially in the days before the big social media sites.

I am not sure where the particular statistics I saw came from but there are a number of questions that need to be asked when considering such data. These  include:

  • Do the data compare internet users with the whole population or are they based on internet users only? This is important as around a third of the UK population don’t go online.
  • How is the data gathered – is it all self reported, all of it from the same panel, or is some of it self reported?
  • Does internet use actually mean PC use?
  • How much IPTV watching is included in the web usage figures? This time is really analogous to TV viewing so maybe should be taken from internet usage and added to TV usage.
  • Does internet use reflect the time that the internet is “on” – i.e. a PC is connected to the web, even if it is not being used?
  • Is it reasonable to include activities like email, chat and messaging (akin to letter writing or telephoning) when comparing internet use with TV use for media comparison purposes?
  • Do people overclaim internet usage in order to feel better about themselves?

I am pretty sure that internet use is still growing in popularity (!) but I am not sure anyone is helped by unrealiable statistics that paint a false picture. After all TV is a very important medium commercially and planning it  closely with the Web will generally have a synergistic effect.

De-fuzzing social media measurement

In the bath thinking, as one does, of social media it occurred to me that measuring the effectiveness of social media is potentially a very fuzzy activity.

Putting a little structure around it might therefore be of some value.

So I thought – well, there are three main types of measurement you can consider. There’s absolute data – data that measures size.  There is trend data – data that measures change. And there is comparative data – which you could use for benchmarking.

Absolute data is factual – I have 5000 Twitter followers (I wish), or 37 people have commented on this blog post (ditto). Or 6000 people viewed my video on YouTube. Or my brand was mentioned 5000 times in forums. Etc etc. Some of this can perhaps be assigned a value in media terms. And while it isn’t always easy to assign an appropriate value (what is a Facebook fan worth?) at least you can make a start.

Trend data is also factual – but as you are comparing two sets of data, as you can with tools like Alterian’s SM2, the important fact is the change in the data. Thus if there are 10,000 positive mentions of my brand through social media in August that may or may not be good: it’s hard to know. But if there were 9000 in July and 12,000 in September I can be pretty confident that I am going in the right direction and that the value of those mentions in September is 125% of the value in July. (There are some big assumptions being made here, but the principle is I think valid.)

And there is comparative data. I might have 12,000 positive brand mentions in September. But if my competitor got 50,000 that month I’m not looking so bright!

Then there are the results of the social media conversations: these may be conversations, actions or effects. I’ll explain.

Conversations are simply mentions of your brand or your competitors  in various places – forums, blogs, file shares etc. They can be good, bad or indifferent (and you should be measuring that). At its simplest it equates to your PR agency counting the press clips.

Next there are views. Sometimes it’s possible to measure the number of people who have seen some of your social media conversations – for instance by measuring visitor numbers to your blog. You won’t always be able to measure that – but where you can this may be a helpful metric. 

Often these numbers will be small – perhaps too small to be relevant in media terms. But they might not be. If Sony Bravia gets a couple of million views of its ad on YouTube then that’s worth something. Probably more in fact than 2 million OTSs on TV.

Then there are actions. This is when people have done something – taken an action of some kind, perhaps signing up to follow you on Twitter, or responding to a comment you have made in a forum.

Again often the numbers here will be very small – and the real value may not be in terms of media but in  terms of the opportunity they bring to engage with brand advocates.

And then we have effects. This is when you can see that social media activity has had an effect on something else you are doing. For instance, and at its simplest, you could measure the effect (or at least some of the effect) of social media on web traffic by tracking people from appropriate sources such as social networking sites. Some web analytics tools like Coremetrics are able to automate at least part of this.

Other effects might only be measurable through data analysis, for instance identifying links between social media campaigns and calls to a call centre or online sales. This is the sort of analysis that direct response media agencies do all the time for their clients.

Of course the effect might well be softer than a measurable and identifable action. It may be a shift in purchase propensity or brand favourability on the part of people exposed to your social media. That’s harder to measure although not impossible using standard quantitative research techniques. (The branding effects of online display are often measured this way.)

So there you have it. A little 3 by 4 matrix that should help you put some rigour into the process of evaluating social media. It isn’t perfect by any means. But at least it isn’t fuzzy!

Online advertising overtakes TV

At first glance the news that online advertising has overtaken TV  spend in the UK would appear to be good news for those of us who work in the industry.

The reverse might be true however.

Most – 60% – of online spend in the UK is for search marketing, which grew at around 7% despite the recession. (One can argue that search marketing isn’t really advertising at all but a different form of marketing more akin to point of sale or even yellow pages.)

And another 22% was made up by classified advertising, growing even faster by 11%.

But online display fell by 6% and now only accounts for 18% of online advertising.

For those of us who care about the health of broadcast and press media in the UK, this is bad news. Somehow the power of online display is not being communicated to advertisers. 

Advertisers are  in many cases seduced by search because they only count the “last click” in a consumer’s journey towards a purchase which is often a search listing.

It is essential if online advertising spend is to be allocated efficiently that advertisers understand that all online touchpoints – even banners that are seen but not clicked – have a value and that without these earlier touchpoints search volumes would decline and search prices rise.