Categories: Life

Google and Facebook Diversifying Away from Advertising

Rick Webb wrote an article last year on how Google and Facebook will eventually suffer from a massive devaluation. This is because while they dominate the digital advertising market, they cannot displace TV advertising easily.

There’s an interesting comparison to traditional media companies, Disney, Time Warner, and Viacom:

Disney made $55 billion in revenue last year. Of that revenue, just $8.5 billion of it came from advertising, or just 15 percent. This includes all the revenue from ABC, the various Disney channels, ESPN, and A&E.

A full 17 percent of Time Warner’s revenues come from HBO alone, making its ad-to-non-ad ratio better than either Facebook or Google. In total, just 43 percent of Time Warner’s revenue comes from advertising. For Viacom, it’s 38 percent.

“Google’s $350 billion haircut”, Rick Webb

Google and Facebook are heavily reliant on digital advertising for their revenue and this puts them at a disadvantage unless they start to diversify their income streams. Right now, if you are trying to get your product or service in front of consumers on the internet, you’re going to use Google or Facebook to advertise. This makes them powerful, but also vulnerable as they extend their reach into other marketplaces and try to dismantle TV’s dominance for brand advertisement.

According to the article, tech companies do not have an inherent advantage when it comes to content production. Disney, Time Warner, etc. already make a lot of content and own the equipment, spaces, software, and hire a huge number of script writers and actors and producers to create their content.

Tech companies, like Facebook and Google and Netflix and Amazon, who try to produce content will basically be cloning the processes that Disney and others already have in place. They will be running behind in the marathon race to create more content that can be bundled with ads (and specifically brand advertising).

Traditional Content Production vs. User Generated Content

However…what the article forgets is that Google and Facebook are sitting on possibly the largest amount of UGC (User Generated Content) in comparison to all other companies.

Google has YouTube, which has a massive amount of user-generated content, over 5 billion videos uploaded with over 1.9 billion MAU (Monthly Active Users). Facebook has Instagram which has 1 billion MAU and over 100 million photos and videos uploaded.

There is absolutely no way that Disney and other media companies can come close to that amount of content production. The traditional process is to hire producers, script writers, actors, wardrobe and makeup artists, and a whole set of staff to produce many 30 minute episodes or 1 to 2 hour movies. While it’s possible to make this process very efficient, it can never match the scale that Google and Facebook have.

Platforms that produce user generated content (UGC) vs TV/movie production studios. UGC scales in ways that the traditional TV/movie production process cannot.

Instead of relying on producing hit after hit, Google and Facebook can diversify and rely on their users/creators to produce content and let the users worry about producing hit after hit. Netflix and Amazon do not have that option, they have very little user-generated content which is why they are going down the same path as traditional media companies and why they do not have an inherent advantage.

YouTube and Instagram are the content production places of the future. If Google and Facebook double-down on making it easier for users/creators to create new content, and making it easier to produce higher quality content that can compete with the highest quality content from Disney, HBO and traditional media companies, then Google and Facebook will own the future and disrupt TV advertising.

Also, I mentioned Amazon above. They actually do have a way to get a lot of user-generated content and rely on their users/creators to produce lots of content: Twitch.tv. Right now it’s for gamers and video game streaming, but Twitch has roots in Justin.tv which was made for life/selfie streaming which means it’s possible for more content like talk shows and selfie streams to start appearing on Twitch, which would put it directly in competition with YouTube and Instagram.

Future of Digital Ads and Content Production

This is why Google and Facebook have such high valuations. As long as they treat users/creators with respect (fewer privacy scandals, better content production tools) and shower them in advertising dollars and give good ROI to advertisers, they will continue to dominate the digital advertising platform and eventually pose a significant threat to TV advertising and gain lots of market share in brand advertising. I think brands will have to start getting used to going niche though and finding their true fans and followers instead of massively advertising to everyone.

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Categories: Life

How NOT to do Social Media Marketing (and 5 ways to get better at it!)

Haven’t posted about marketing in a while so here’s a good one: Someone spent thousands of dollars on buying things just to be able to post about them on Instagram.

Invest in your business, consider the ROI

Calveiro would treat herself to monthly $200 shopping sprees so she wouldn’t be seen on Instagram wearing the same outfit twice.

Imagine spending $200 a month on Facebook ads, Google ads or a LinkedIn Premium Sales Navigator ($65/month for individual account, $100/month for a team of 10+) to get more sales leads for your business.

That’s more worthwhile than spending $200 on a shopping spree just to take a few photos on Instagram.

Collectible marketing, badges, gamification

Then there was the desire to look like a jet-setter, traveling to a new location — such as Las Vegas, the Bahamas and Los Angeles — every month for a year.

“Snapchat had these [geo-]filters [like digital passport stamps] and I wanted to collect at least 12,” Calveiro said.

It looks like the marketing around collecting badges and gamification works! If you run an ecommerce site, you could have your own set of collectibles such as t-shirts, cups, stickers, buttons or some other small bit of swag that’s part of a limited-time collection (for example: orders over $100 get a free t-shirt, each order gets you a different t-shirt, collect them all!)

Usually you’ll see this kind of gamification and collectibles marketing strategy work at lower price points where it’s easier to spend, things like branded cups that come with a fast food meal or Beanie Babies or trading cards in an exclusive, limited time set.

Accept when you’re doing things for your business versus just to have fun

Although she traveled some for work, Calveiro said, “If you break it down, a lot of the travel I was doing in 2016 was strictly for Instagram.”

This is what David Allen talks about in Getting Things Done. When you’re in the moment you want to be doing the right things and enjoying yourself and not feeling regretful later on. For example, working after hours instead of spending time with family. Plan your time and know that you’re doing the right things at the right moment.

In this case, it’s traveling with a focus on Instagram marketing instead of just traveling to have fun and see the world. Be clear about why you’re doing things and be in the moment.

Don’t have the resources for social media marketing?
Use your time instead & focus on impactful strategies.

1. Reply and converse on social networks to boost your brand’s visibility

If you’re a solopreneur or a one-person business, you may not have the resources to buy advertising on Instagram or Facebook to find leads. You may have more time than money to spend and that’s what you should do. Maximize and improve your social media skills to draw in more people to your product or services.

Simple actions such as replying to someone who asks a question related to your product on Twitter improves your brand recognition. That costs you time and a little bit of thought but it is free in terms of money and other resources. It can have a huge impact because you’ll be creating conversations with potential customers and potential business contacts.

2. Recycle your content, show your existing content to new audiences

“A lot of it was recycled content,” Calveiro said of her posts.

Another good option is to recycle your content. I mentioned it on the Rudolf Podcast; you can post content you wrote years ago on to a new platform such as Medium or Pinterest, or you can create new smaller pieces of content from a larger article or video or podcast. You can also easily automate this and have Buffer or HootSuite or MeetEdgar send out tweets, Facebook status updates, and more with your previous content. Remember, that the audience you have today may not have ever seen your back catalog of great content, they may not know you wrote an amazing article years ago that’s relevant to them today.

3. Considering rentals/subscriptions/leases instead of buying

In place of her old shopping sprees, she shells out $130 for a Rent the Runway monthly membership — so she can have a revolving door of new clothes for hire.

Instead of buying a car; rent one. Instead of buying a camera, rent one. Instead of building your own email servers, subscribe to GMail for Businesses; instead of buying Photoshop, subscribe to Canva.

There are a lot of ways for businesses to save money by going with a subscription or rental plan than outright buying something.

4. Entrepreneurs and small businesses: Watch your budget, there’s very little room for error

“I had a lot of opportunities to save,” she said. “I could’ve invested that money in something.”

Save and re-invest in your business when you’re starting out or growing your small business. Check the ROI.

5. Invest in Facebook Ads, Google Ads and LinkedIn Sales Navigator

The fifth way to get better at social media marketing is to invest in advertising on the dominant platforms. If your business is selling to consumers, use Facebook ads or Google ads. Their great tools and huge audiences make every dollar spent worthwhile, each dollar spent on Facebook or Google ads has far greater impact than the same dollar spent on TV, radio or billboards or leaflets. If your business is selling to businesses (or governments), consider LinkedIn Sales Navigator.

Here are some great guides on investing in advertising on Facebook, Google and LinkedIn:

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If you think this advice is interesting and want to discuss it further or you would like to talk about web development training and workshops or digital marketing and ecommerce, follow me on all the social networks: