By Adam Fraser
Why keep spending to ‘market to the world’, when you could invest in customer service and customer experience business processes and initiatives, to ensure your existing customers not only stay but also become advocates for the brand and do your marketing for you?
As the author of the book ‘Flip the Funnel’, Joseph Jaffe said: “retention is the new acquisition”. If the bath is leaking, perhaps it is time to put the plug in rather than turning the taps on faster.
The top 10 were telling:
- Amazon: Online Retail
- Google: Search Engines
- Apple: Tablets
- Netflix: Video Streaming
- Apple: Smartphones
- Amazon: Video Streaming
- Samsung: Smartphones
- Facebook: Social Networking
- Amazon: Tablets
- YouTube: Social Networking
The entire Top 10 were tech companies (noting Dunkin Donuts was 11 and Nike was 12). Interesting to see Amazon feature three times, showing its breadth of offering beyond pure online retail and Apple appearing twice for tablets and smartphones.
There are a number of factors – both emotional and practical – which drive premium customer experience and hence loyalty to a brand. However, the speed, reliability and affordability of Amazon’s deliveries and the Apple genius bar come to mind as key drivers here.
Honourable mentions in this Top 100 list for WhatsApp at 14th and iTunes at 15th.
An interesting view of brands based on a particular (and important) metric, with the dominance of tech businesses noteworthy.
By Adam Fraser
Snapchat continues to experience a very bumpy ride as a listed company.
I have previously written about its disappointing first quarter and second quarter numbers delivered post IPO. This pattern continued – and if anything accelerated – as it delivered its third set of quarterly numbers. The already pressured share price fell a further 17% in response and now sits well below the initial IPO price.
If you want to dive into the details, you can check the detailed financials, investor presentation and press release around the quarterly numbers. If you want a quick summary, the 10 key takeaways from the Q3 2017 results are below:
- Daily Active Users (DAUs) grew to 178m from 173m in the prior quarter (2.9% growth) and 153m a year ago (16.3% growth).
- Average revenue per user was US$1.17 compared to $1.05 last quarter and $0.84 a year ago – this is well below the levels achieved by Facebook of over $5.
- Revenue for the quarter was US$208m compared to $182m last quarter (14.3% increase) and $128m a year ago (62.5% increase).
- The user and revenue growth was significantly under the level expected by the market, leading to the negative response in the share price.
- Net loss was a staggering $443m for the quarter, identical to the prior quarter.
- Instagram stories and WhatsApp status now have 300m users, illustrating the impact competitors have had by imitating key aspects of Snapchats originally unique offering.
- USA DAUs were 77m, representing 43% of global users, a ratio that has been broadly consistent for the past 12 months. Whilst US users were growing slightly, flat user numbers in Europe will be a concern to Snapchat management.
- The USA, however, drove 80% of global revenues, showing the more rapid advertiser adoption in the company’s home location compared to the rest of the globe.
- Capital expenditure for the quarter was $26m, a significant increase on the $19m in the prior quarter – another concern for investors.
- Adjusted EBITDA (removing the impact of stock-based compensation) was a loss of US$179m for the quarter, slightly lower than the prior quarter.
A quote from one analyst summed up the mood – “This quarter was soft across basically every metric as it speaks to a business model which is in a state of major transition since going public.”
Snapchat is learning what Twitter has learned over recent years – it’s no longer about performance in absolute terms, but performance relative to what the market expects and has “baked in” to the share price.
One reason flagged by management for the revenue miss vs. expectations was the shift from a direct advertising sales model to an auction-based bidding system (a la Google) for selling advertising. While Snap hopes this will make it easier to cheaply scale its ad business in the future, this caused a massive 60 percent drop in the cost per ad impression year-over-year.
Still valued at circa US$16bn while significantly loss-making, Snap Inc is learning that when investors price perfection, even small disappointments will lead to the harshest of share price responses.
Snapchat is growing its user and revenue base. But its losses are significant and consistent, while the glare of the public markets can be an uncomfortable environment to innovate, evolve and pivot whilst also attempting to drive profitability.
Snapchat has by no means completely lost its lustre while it’s loyal and engaged millennial audience remains highly attractive to marketers. However, competition from Facebook and Instagram is fierce and much of it’s IP has been easily imitated. The road ahead does not look to be an easy one as Snapchat attempts to justify what remains a massive valuation relative to its actual financial performance.
By Adam Fraser
Twitter has delivered it’s Q3 2017 results and its another set of patchy results.
User growth was moderately encouraging, adding 4m users after adjusting for a prior quarter calculation error of 2m users (the company admitted it has misstated user numbers since the end of 2014 – never a good look). However, the company again posted a loss, and the dramatic growth evident at Facebook and Instagram, quarter after quarter, remains elusive for Twitter – even in a world where the US President is very publicly using the platform regularly. Revenue actually declined by 4% compared to the same quarter a year ago.
Having baked in a lot of bad news, the share price actually rallied on the results announcement, based on expectations of profitability in the coming quarters.
If you want to dive into all of the detail, you can check the financials, investor presentation, shareholder letter and investor conference call. If you want the key highlights here are the 10 key takeaways:
- Monthly active user (MAU) numbers were 330m, from 326m last quarter (1.2% growth) and 317m a year ago (4.1% growth).
- 21% of Twitter’s MAUs (69m) are based in the USA; this is an increase from 68m in the prior quarter, noting most of the user growth is coming internationally (261m v 258m in the prior quarter).
- Attempts to drive greater engagement and more regular usage of the platform are working, with Daily Active Users growing at 14% on prior year v 12% last quarter and 7% a year ago (interestingly the company does not reveal the absolute number of DAUs and actively refused again to release this in the face of formal queries).
- Ad metrics were encouraging: cost per engagement declined by 54% and overall ad engagements increased by 99% on a year-over-year basis. CTRs on a year-over-year basis are up across all major ad types.
- Historically, a significant Achilles heel for Twitter has been trolls and abuse on the platform. The company noted they had further refined their machine-learning algorithms in order to better identify and act on accounts demonstrating abusive behaviours. The company also noted, “we’ll be taking a more aggressive stance on our abuse rules and on how we enforce them”.
- Revenue at $590m was up 3.0% on the prior quarter of US$573m and, more significantly, 4.2% lower than a year ago when ad revenue was $545m. The revenue trends are clearly not convincing.
- The breakdown of revenue for the quarter showed 85% of revenue coming from advertising and 15% (consistent with the prior quarter) coming from data licensing/other (the ‘big data’ aspect still offers great potential for Twitter).
- Twitter made a loss of US$21m for the quarter (its smallest ever reported quarterly loss) but also discloses “adjusted EBITDA which showed a profit of US$207m after adjusting for stock-based compensation, depreciation and amortisation Twitter ended the quarter with US$4.3bn in cash so despite the frequent “Twitter is dying” headlines, the business is solidly funded.
- Live video remains a key focus. In Q3 Twitter announced approximately 30 live-streaming partnerships, including 10 international deals and two with leading consumer brands (Converse and Tommy Hilfiger). In Q3, Twitter streamed more than 830 events.
- Twitter streamed 96 million hours of live user-generated content via Periscope in the quarter.
Jack Dorsey, Twitter’s CEO said, “This quarter we made progress in three key areas of our business; we grew our audience and engagement, made progress on a return to revenue growth, and achieved record profitability”.
Jack has certainly had a positive impact since returning as CEO, delivering a tighter strategy and a more communicative approach to market updates. The absence of strong monthly user growth remains a key negative (especially in the context of the massive earned media from the US President), whilst continuing quarterly losses are always a concern. Twitter has undoubted public utility and societal importance – whether this means it can remain long term as a viable, independent listed company is a more difficult question.
By Adam Fraser
Another very strong set of quarterly results from Facebook. The juggernaut powers on based on pretty almost any metric you can look at.
If you want to dive into detail, you can find the detailed financials, investor presentation and management conference call. For those without the time to digest all of this, here are 10 key soundbites from the results:
- Monthly active users reached 2.07bn from 2.01bn last quarter (3.3% growth) and 1.78bn a year earlier (15.9% growth).
- Daily active users hit 1.37bn from 1.32bn last quarter (3.2% growth) and 1.18bn a year earlier (16.0% growth).
- The CFO confirmed expenses will rise faster than revenue next year based on an increased focus on security. A fascinating quote from Mark Zuckerberg: “I want to be clear about what our priority is: protecting our community is more important than maximizing our profits”.
- Facebook has more than 6m advertisers, while Instagram has more than 2m.
- Video continues to increase its importance as a medium. Instagram Stories and WhatsApp Status each have more than 300m daily active users.
- Total revenue was $10.3bn (exceeding market expectations) versus $9.3bn in the prior quarter (a material 11% increase) and $7.0bn a year earlier (47.3% growth) – generating a net profit of $4.7bn (reminder – in a single quarter!).
- Facebook has reasonably balanced global spread with just under 50% of revenue coming from USA and Canada, a ratio that has remained reasonably consistent over the past 4 quarters.
- Average revenue per user increased by over 7% in one quarter, hitting $5.07 from $4.73 last quarter and $4.01 a year ago; note revenue per user is significantly higher in the USA/Canada ($19.38) compared to Europe ($21.20) and the Rest of World ($1.59).
- Facebook ended the quarter with a cool $38bn in cash – enough to buy Twitter and Snapchat!
- Some interesting random stats: Instagram has over 500m daily actives, Live videos generate 10x the number of interactions and comments as other videos, 20 million businesses are communicating with customers through Messenger, more than 550 million people are using Marketplace and Buy-and-Sell groups on Facebook to connect with other people for transactions.
Note that, mobile usage of Facebook has now become so prevalent Facebook no longer separately discloses mobile users. When it did, the number of users accessing via a mobile device was consistently over 90%.
With revenue growth, user growth, strong margins and consistent cash-flow, this is another powerful set of quarterly results.
Possible clouds on the horizon? Ad revenue is 98% of total revenue hence there is no diversity in income types. If ad blocking technology ever penetrated Facebook’s walled garden, this clearly would be a massive threat to Facebook’s earnings. There have even been recent signs of the cat and mouse arms race with ad blockers escalating.
Secondly, fake accounts (and fake news). As part of Senate enquiries in the USA, Facebook has been forced to admit that approximately 270 million (12%) of its user accounts are fake. Twitter has previously estimated that around 5% of its accounts are fake, hence this number exceeded previous expectations of fake account penetration on Facebook.
Privacy stoushes reuse of consumer data always loom large but never seem to bite.
For now, the blue skies remain.
By Adam Fraser
For the last couple of years, every quarter I blog about the listed company results from the main social media players – Facebook, Twitter, LinkedIn (before it was acquired) and now Snapchat.
Coming next week is my normal commercial analysis of Facebook’s quarterly results (spoiler alert – strong again…) but, in researching this, I found a number of interesting sound bites from the management presentation.
Here are 10 very interesting quotes direct from Mr Zuckerberg’s investor call, which paint an interesting picture around Facebook’s strategy going forward:
- “Our focus is on building community.”
- “I want to be clear about what our priority is: protecting our community is more important than maximizing our profits.”
- “We already have about 10,000 people working on safety and security, and we’re planning to double that to 20,000 in the next year to better enforce our Community Standards and review ads.”
- “Over the next three years, the biggest trend in our products will be the growth of video. This goes both for sharing, where we’ve seen Stories in Instagram and Status in WhatsApp grow very quickly, each with more than 300 million daily actives, and also for consuming video content.”
- “Research shows that interacting with friends and family on social media tends to be more meaningful and can be good for our well-being, and that’s time well spent.”
- “We’ve found that Live videos generate 10x the number of interactions and comments as other videos.”
- “In messaging, today already more than 20 million businesses are communicating with customers through Messenger.”
- “Today more than 550 million people are using Marketplace and Buy-and-Sell groups on Facebook to connect with other people for transactions.”
- “We’re also seeing good progress with Workplace, helping companies connect their own teams internally through their own versions of Facebook. It’s been less than a year since we launched Workplace, and today more than 30,000 companies are using it.”
- “I’m proud of the work we’re doing with AI. We’re now using machine learning in most of our integrity work to keep our community safe.”
The political scandal surrounding the US election has clearly had a profound impact on Facebook and it’s (previously) largely tech automated ad platform. Having long claimed to be a “tech platform” and not a “media company”, Facebook is starting to learn the hard way about the responsibilities which come with the territory of media ownership.
By Adam Fraser
Facebook changing its algorithm wouldn’t ordinarily be massively newsworthy; such is the frequency with which it happens.
Major changes such as “Reachgate” is 2014 – when organic reach first began to be materially choked -garnered a lot of attention and angst, as brands realised they, in essence, could no longer freely communicate with fans of their Facebook pages. Reach dropped below 5% and subsequently crept much lower to 2% or less, in the following years.
Thus the begrudging acceptance of most people in the marketing world that social media had become “pay-to-play”, learning the hard lessons about the risks of rented land.
Publishers, such as the New York Times, Washington Post, Wall Street Journal (and locally, of course, Fairfax Media) have endured a slightly different but equally painful bumpy ride. Initially unsure whether to entirely reject or fully embrace distribution via third party social platforms, Facebook has attempted to entice with media-specific products such via Instant Articles, offering advertising revenue share and closer collaboration. Ultimately none have been particularly successful and in a post-Trump, Fake News era, most publishers are realising now that the only long-term safety is via driving direct web traffic and digital subscriptions.
The latest announcement from Facebook, however, is deeply ominous for publishers, many of whom still rely heavily on Facebook referred traffic. While initially only a test in 6 countries, Facebook is looking at moving ALL publisher (and brand) content to a separate tab – out of the all-important main feed and into the “Explore Feed”.
The no-go zone. How often do you explore anything other than the main Facebook feed?
The best analogy I can think of relates to changes made by Gmail in mid-2013. All newsletter and sales type emails are automatically moved out of your main email inbox and into a separate tab called “promotions”. You can guess how often that gets looked at.
If Facebook proceeds to roll out this change more broadly, there will at least be no absence of clarity about a publishers relationship with Facebook. Pay to be seen or be sent to the wilderness.
Advertising, of course, remains a viable and often very effective option for many brands (and publishers). Whilst offering far better targeting and interactivity options, the challenges for advertising as a whole remain true as the growth in ad blockers demonstrates, and the cat and mouse game between Facebook and ad blockers continues.
Social media as a platform for brands is evolving to an inevitable conclusion for a medium of connection – like the phone system – infrastructure. We use social media to connect with people we care about. We only want to connect with brands on our terms and at a time of our choosing. Hence effective listening and real-time responses are essential components of a social strategy. Be where your customers want you to be and engage with them on their terms. Answer all of their questions at any time on any channel they wish. Beyond that, most people would prefer brands to stay out of their lives.
Check out PR warrior and friend of the show, Trevor Young’s interview with Brand Tales, here.
By Adam Fraser
I was lucky enough to visit London last week on a whistle-stop tour, primarily to attend Brandwatch’s 2017 “Now You Know” conference.
Attended by 400+ practitioners from insights teams within some of the worlds largest brands, it was short on sales pitches from Brandwatch and long on valuable information relating to the world of social media and consumer insights.
In addition to the obvious networking benefits of such a face to face event (we all love social and digital – but really no substitute for this!), it was a valuable learning experience.
Some key highlights from the conference were:
- Blending social listening insights with other data sources (whether traditional market research, CRM data or website analytics) can be more powerful than looking at social insights stand alone.
- Major retailer Coop used social listening to identify key consumer feedback around environmental issues and particular products, leading to significant change in the core business processes.
- Coop also discussed how they were notified of a fire in a store via a Brandwatch alert before the PR team had formally been informed, showing the real-time benefit of active social listening.
- 95% of social media updates don’t mention a brand or product. Read that one again! Brands are not that important in people’s lives (something I have blogged about previously) – showing the importance and massive opportunity of using social listening to understand consumer attitudes to broader market research themes (e.g. climate change, congestion, buying a home, millennials etc).
- Nestle presented on the role social media played in their broader digital transformation, with listening used to anticipate future consumer needs and increase competitor knowledge.
- Emoticons have moved beyond the gimmick to the mainstream – Brandwatch now can generate ‘Emoji clouds’ as well as ‘Topic Clouds’ to summarise the key emotions being conveyed in a brand conversation.
- Approximately 80% of the time a brand appears on Twitter, there is no accompanying text naming the brand in question; hence the increasing importance of ‘visual listening’ via logo recognition technology.
- An interesting view of the media landscape from an ex BBC and Channel 4 employee looked at the impact of media consumption now taking place via “the Stream” (in social) not “the Schedule” (on broadcast TV).
- Twitter presented a McKinsey stat that social recommendations are responsible for 26% of purchases, showing the power of word of mouth marketing.
Brandwatch runs the Now You Know conference twice a year – once in the USA and once in Europe. Highly recommended if you get a chance to attend a future event.
By Adam Fraser.
As founder of EchoJunction, a business operating at the intersection of the worlds of the CMO and CIO, I live and breathe the marketing technology landscape and a world of 5,000+ marketing technology vendors (the “Martech5000”).
EchoJunction works with enterprises on their social media strategy from a technology roadmap perspective and partners with global social media software specialist providers such as Brandwatch (social listening), Lithium (social service and community), Hootsuite and Spredfast (end to end enterprise social media platforms) to fulfil defined business requirements.
Hence I had more than a passing interest in two exciting announcements from Brandwatch this week – both as a local partner and analyst of the sector.
Firstly Brandwatch has acquired Buzz Sumo, the leading content marketing and influencer identification platform on the market. Two market leaders in synergistic market segments coming together is a powerful play, and it will be interesting to see if this merger is symptomatic of a broader consolidation in the crowded marketing technology landscape, something I have previously discussed with author of the MarTech landscape ideographic Scott Brinker on the EchoJunction podcast in both 2015 and 2017.
Secondly, Brandwatch announced on off the shelf integration between their Vizia large screen command centre product, and Hootsuite Insights, one of the most powerful analytics capabilities on the market. We now live in the world of the API where you need to ‘play nicely’ with other software partners – who can also potentially be competitors at times. No one tool can do everything, so best of breed specialists working together to stitch together end to end solutions via API connectors is a reality of today’s marketing technology sector. One of the reasons marketing and IT are working in a closer alliance.
Smart forward-thinking software companies embrace rather than resist this – one of the reasons I love the Brandwatch Vizia platform, which can display business insights not just from Brandwatch’s own social insights product, but also from a multitude of third party sources such as Google Analytics, CRM, Hootsuite and any other data feed.
I love the fast-moving, dynamic nature of the social media and marketing technology sectors, and working with enterprises and partners embracing these rapidly changing dynamics. Certainly never a dull moment!
By Adam Fraser
Yep, that one – the one you see at every marketing conference – packed with tiny logos of marketing technology vendors, which has grown from approximately 2,000 vendors in 2015, to 3,500 in 2016 and over 5,000 in 2017. The marketing technology landscape is broad, deep and complex, and simply refuses to consolidate.
With EchoJunction’s business operating at the intersection of marketing and IT, it’s clearly a world I live and breathe, and accordingly, it was appropriate that my very first guest on the EchoJunction podcast (almost 130 episodes ago), was the landscape author Scott Brinker. Scott has since been on the podcast two further times, latterly talking about the 2017 landscape, and a world of 5,000+ marketing technology vendors (the “Martech5000”).
Given my interest in this area, it was fascinating to see a further evolution of this thinking from Jeremy Epstein, one of the world’s leading experts in what Blockchain means for marketers, with his recent release of the Blockchain Marketing Technology Landscape.
Blockchain technology is in its relative infancy, but many see this as an uber trend (alongside Virtual Reality, AI and the Internet of Things) which will have a profound impact on not just marketing but society more broadly. Bitcoin was just the start.
Whilst the Blockchain marketing technology landscape is relatively sparse compared to its crowded martech landscape cousin, clearly, Jeremy is expecting to see profound growth in blockchain marketing technology platform offerings over the coming years. In 5 years time will the Blockchain version also contain thousands of tiny logos?
Interesting to see the display and programmatic as the most crowded area to date for Blockchain marketing tech, a segment with obvious operating inefficiencies and middlemen who can potentially be disintermediated.
In terms of technology trends, there is a lot for marketers to absorb at present, but Blockchain is a topic worthy of developing at least a basic understanding given its relative potential importance. For an intro – Jeremy’s high-quality ebook (and accompanying EchoJunction podcast discussion) represent a good starting point.