By Adam Fraser
Instagram is truly motoring. In stock markets they often say “the trend is your friend” and the momentum is absolutely with Instagram at the moment.
The platform recently announced it had exceeded 700m users. It has almost doubled its user base in only 2 years, and its rate of growth is actually increasing when looking at the time taken to add each incremental 100m users:
- October 6, 2010 – Launch
- February 26, 2013 – 100 million; 28 months
- March 25, 2014 – 200 million; 13 months
- December 10, 2014 – 300 million; 9 months
- September 22, 2015 – 400 million; 9 months
- June 21, 2016 – 500 million; 9 months
- December 15, 2016 – 600 million; 6 months
- April 26, 2017 – 700 million; 4 months
Its importance as a social network continues to grow as it evolves, regularly adds new features and further encroaches on Snapchat’s territory, whilst maintaining its original value proposition as an easy to use and creative, thoughtful, visual environment. Users of Instagram stories alone have surpassed 200m thus exceeding the total user base of Snapchat, whilst its direct messaging platform Instagram Direct has over 375m monthly users.
The growing interest and focus on influencer marketing is closely tied to the world of Instagram. Commercially the benefits are flowing through to Facebook, with Instagram having more than 1m active advertisers.
As a marketer, this is a platform not to be ignored. Always mobile first at its core, it seems to have balanced the focus on its core value proposition, whilst innovating enough to remain fresh and interesting. In the hurly-burly of the fast moving digital world, it has somehow remained a calmer, and higher quality, content environment in stark contrast to the ‘buy now’, neon flashing lights characterised by so many other digital properties,
Whether thinking about social listening, social customer service, building brand equity or executing paid campaigns, Instagram deserves active consideration.
By Adam Fraser
It’s that time of the year again – when Scott Brinker aka chiefmartec.com releases “that infographic”.
The one summarising the martech landscape packed with tiny logos that you see at every marketing conference on the planet.
And it keeps getting larger and more complex. From 2,000 tools in 2015 to 3,500 in 2016 up to an amazing 5000+ in 2017.
To be precise – the landscape shows 5,381 tools from 4,891 vendors. Wow. From social media to newsletter marketing, ecommerce to CRM, all the subsections continue to grow.
I was lucky enough to have Scott as my very first podcast guest back in April 2015. Even back then – in a world of “only” 2,000 tools – we discussed the complexity of the market and whether consolidation was imminent.
There are a number of drivers of this breadth and complexity in the marketing technology landscape – including (at a high level) low barriers to entry, media fragmentation in a post internet world, the rapidly changing consumer buyer journey and constant technology innovation (as just one example think AI and chat bots which weren’t a “thing” 2 years ago and now are very much in play).
If you are feeling utterly overwhelmed by this landscape and what it means for marketing and IT professionals please know you are not alone!
The basic premise remains – strategy first, technology second. Focus on your business objectives and your marketing strategy and execution. Then, and only then, start to think about how technology can enable and potentially turbo charge your business processes.
People, process and technology. A three legged stool. In almost all cases the technology decision should come last not first.
By Adam Fraser
We have seen this before.
“Hot” social network IPOs to great fanfare. “The next big thing” is unleashed to the market and investors price huge amounts of blue sky into the current share price.
Quarter one users come in and disappoint, analysts revise their models, share price gets hammered.
Hard to recall, but this happened to Facebook as well as Twitter. Of course Facebook recovered to quadruple its IPO value to a current market cap of over US$400bn while Twitter still languishes today at a value of $US14bn, around 20% below its value when it listed in 2013.
Two very divergent paths. So which road will Snap Inc (owner of Snapchat) follow?
One thing is for sure – it also disappointed the market with its first quarterly results as a listed company. Users grew, but at a lower rate than the analysts were expecting, and the headline loss of US$2.2bn for a single quarter was somewhat alarming. The share price fell 24% in a single hour.
If you want to dive into the details, you can check the detailed financials , investor presentation and press release around the quarterly numbers. The 10 key take-aways from the Q1 2017 results are below:
- Daily Active Users (DAUs) grew to 166m from 122m a year earlier
- The quarterly growth rate in DAUs was lower than it has been in every preceding quarter (this was the trend which most spooked the market)
- Average revenue per user was US$0.90 compared to $0.32 a year ago, but a higher $1.04 in Q4 2016.
- Revenue was US$149m compared to $38m a year ago
- Net loss was US$2.2bn compared to $104m a year ago – note this figure was inflated by the expense associated with stock issues related to the IPO
- 3 billion daily snaps were created in the quarter compared to 2.5bn per day 2 quarters previously
- USA DAUs were 71m, representing 43% of global users, a ratio that has been broadly consistent for the past 12 months
- USA however drove 86% 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 $18m, broadly consistent with the past 12m when the quarterly amount has varied between $16m and $20m.
- Adjusted EBITDA (removing the impact of stock based compensation) was a loss of US$188m for the quarter, the highest quarterly loss in the period reported (which went back to Q1 2016)
A tough start to life as a listed company for the newest social media kid on the block. As Twitter in particular has found, analysts will focus obsessively on short term user growth almost to the exclusion of every other metric, making long term strategic planning a challenge to execute in the public glare of the listed markets,
Still valued at US$26bn whilst significantly loss making, Snap Inc is learning that when investors price perfection, even the smallest disappointment will lead to the harshest of share price responses.
With Facebook continuing to openly copy and imitate many of Snapchat’s features, and Instagram in particular starting to eat its lunch as its version of Stories grows rapidly, the outlook is unquestionably challenging for Snap Inc.
Snapchat remains the cool nightclub to hang out in, and its loyal, engaged millennial audience is highly attractive to marketers. A pivot into camera products, retail products or AR may be coming, but right now Snapchat is looking more Twitter than Facebook as an investment opportunity.
By Adam Fraser
A surprising headline, I admit, from the founder of a marketing technology business!
Of course I believe in the power of data insights, automation (where it makes sense) and technology facilitated process improvement.
I would like to share 2 recent personal stories which will chill the bones of every marketer:
Story one. Approximately 8 months ago, I switched internet providers. Since that date,I have had repeated email offers for me to switch to that same internet provider and receive 2 months free.
So, having already acquired me as a customer, said telco is spending money promoting a service I already have at great expense! And telling me very clearly they don’t know who I am.
Aha! I hear you say – you must have used a different email address to purchase? Nope.
Different name, spelling, mobile? Nope.
I did most of my procurement to switch via social. Clearly the vision of social integrating to CRM, or any semblance of “one view of the customer” is some way off.
Story 2. My wife has just switched mobile providers as she wished to upgrade to an iPhone 7 plus. Her previous 2 year contract expired a few months ago and I had procrastinated about renewing.
So obviously we heard from the incumbent mobile provider in the weeks before the contract was about to expire? Nope.
Oh, so they reached out and made an upgrade offer just after contract expiry? Nope.
Checked you were happy to stay on the current plan and explained options? Nope.
Thanked you for your 8 years of loyal service? Nada.
Allow me to labour this point for one more paragraph – there is a 1-2 week period every 24-30 months when I want to hear from mobile phone providers. The rest of the time it goes in one ear and out the other. The incumbent provider has an incredible advantage to tailor a personalised message and make a targeted offer at the right time, factoring in loyalty, spending patterns and usage data.
This mobile provider in parallel is happy to spend millions advertising to “the world” to bring new customers into the funnel. Err what about the ones you already have?
Of course during this period I have had hundreds of marketing automation generated emails offering me services I have neither heard of nor have any interest in. And been chased around the web with cookie enabled banner ads (almost always wasteful and inappropriately targeted) based on historical searches performed.
So you can understand my skepticism when I hear about the amazing powers of big data and AI, VR and the internet of things.
When building a house you should focus on solid foundations before you worry about the style of the taps and the sheen of the paint.
Isn’t it time for marketers to focus less on shiny new toys and more on the somewhat boring but critically important business process of looking after their actual existing customers?
By Adam Fraser
Twitter has delivered its Q1 2017 results, and there are green shoots of hope for the first time in some time.
Whilst the financial results remain weak, most significantly user numbers shifted upwards by 9m users for quarter, faster growth than Twitter has seen for some time. The market liked what it saw, pushing the shares 10% higher as a result.
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 10 key takeaways:
- Monthly active user (MAU) numbers grew to 328m from v 319m last quarter (up 3.1%) and 310m a year ago (6.1% growth); this is the fastest total quarterly user growth Twitter has delivered since Q4 2015.
- 21% of Twitter’s MAUs (70m) are based in the USA; this is an increase from 67m in the prior quarter, noting most of the user growth is coming internationally.
- Attempts to drive greater engagement and more regular usage on the platform are working (constant tweaks to the algorithm which determines what you see in the timeline may not be popular but they seem to be effective), with Daily Active Users growing at 14% on prior year v 11% last quarter and 7% in Q3 (interestingly the company does not reveal the absolute number of DAUs).
- Total ad engagements increased 139% year-over-year, driven by a continuing mix shift toward video ad impressions and higher video view rates from product improvements such as video quality optimization and latency improvement.
- Historically, a significant Achilles heel for Twitter has been trolls and abuse on the platform. The company noted it had made meaningful progress toward identifying and removing accounts that demonstrate abusive behavior and, as a result, Twitter is seeing less abuse reported across the service. Important.
- Revenue at $554m was 22% down on the prior quarter of US$717m and, more significantly, 7% lower than a year ago when ad revenue was $595m. Notwithstanding the better user numbers, this absolute decline in revenue is a real concern.
- The breakdown of revenue for the quarter showed 86% of revenue coming from advertising and 14% (versus 11% in the prior quarter) coming from data licensing/other (the ‘big data’ aspect has huge potential for Twitter).
- Twitter made a loss of US62m for the quarter but also discloses “adjusted EBITDA which showed a profit of US$170m after adjusting for stock based compensation, depreciation and amortisation Twitter ended the quarter with US$3.9bn in cash so despite the regular “Twitter is dying” headlines we see, the business is solidly funded.
- In Q1 Twitter streamed more than 800 hours of live premium video from content partners across more than 450 events reaching 45 million unique viewers, an increase of 31% from Q4’16 (the first full quarter of live streaming premium content). Of these hours, 51% were sports, 35% were news and politics, and 14% were entertainment. Twitter is making a big bet on live streaming.
- Notwithstanding the encouraging user growth, Twitter informed the market it expects advertising revenue growth to continue to meaningfully lag that of audience growth in 2017, including in Q2.
“We’re proud to report accelerating growth in daily active usage for the fourth consecutive quarter, up 14% year-over-year,” said Jack Dorsey, Twitter’s CEO. “We’re delivering on our goal to build a service that people love to use, every day, and we’re encouraged by the audience growth momentum we saw in the first quarter. While we continue to face revenue headwinds, we believe that executing on our plan and growing our audience should result in positive revenue growth over the long term.”
There is no question that Jack has had a positive impact since returning as CEO, delivering a tighter strategy and a more communicative approach to market updates. User growth is undoubtedly encouraging, but there is no denying the importance of large, continuing quarterly losses. Whether Twitter can convert its undoubted public utility and societal importance into a viable profitable business remains to be seen.
By Adam Fraser
I have written a number of blog posts recently on brand content appearing next to highly distasteful and inappropriate content on digital platforms, the ensuing YouTube ban and a potential swing to traditional (human curated) media buying.
I came across a blog post from ClueTrain manifesto author and global thought leader in digital transformation Doc Searles. Appearing in the Harvard Business Review, it’s a long form piece of content which methodically (and quite brilliantly) steps through the underlying causes of the current problems in Adtech.
Spoiler alert for where his thinking takes him – the title of the article is “Brands need to fire adtech”.
Highly recommended reading on a critical topic facing the whole advertising sector. This issue is not going away and tracking based advertising is going to increasingly come under the regulatory microscope.
By Adam Fraser
The promise of digital was increased transparency and measurement, and a heightened ability to target the right message at the right time to the right person.
In some cases, the promise has been delivered – primarily via Facebook hyper targeted ads and SEO powered Google ads appearing alongside precisely targeted search terms.
However programmatic and the long tail of broader digital ad spend are coming under heightened scrutiny, and rightly so in the face of brand messaging appearing alongside highly inappropriate content. An advertiser YouTube ban remains in full swing.
Brand response is coming in many forms. US bank JP Morgan Chase lowered the number of sites it advertises on from 400,000 to just 5,000. Interestingly it noted very little impact in terms of cost and overall performance – an astonishing outcome.
Chase had unintentionally shone a light on the effectiveness of ads in the long tail, the nooks and crannies of the web, and the results were not favourable for ad networks powered by automation and AI driven ad tech.
The agencies are also responding. Omnicom – one of the worlds largest agency holding companies – is introducing human review across thousands of YouTube videos to ensure brand safety for their clients’ media buys.
Looming in the background is the landmark speech from one of the worlds biggest advertisers, the CMO of P&G, threatening to pull digital spend if transparency didn’t improve.
The business world often works in cycles – are we about to shift back to a marketing world with an increased emphasis on human curated traditional media buying, even across digital platforms?
As the risks of digital brand safety become more apparent I would suspect so.
By Adam Fraser
Interesting times for the big guns in the digital media world.
As we entered 2017, Google and Facebook were increasingly dominant to the point of being labeled a duopoly in terms of digital advertising market share. It seemed they were untouchable.
Suddenly a few bumps are appearing in the road.
Google is in the midst of an advertiser backlash, as brands push back on their ads appearing alongside extremely distasteful content.
Suddenly the risks of programmatic and algorithmic decision making are becoming all too clear to brands – the low cost and ease of process comes with a lack of control and high brand risk that your ad may appear alongside inappropriate context.
Then one of the world’s biggest spenders, the CMO of Proctor and Gamble, sets an open measurement challenge to the big digital “walled gardens” – show us the metrics or we will pull our ads.
An industry-standard audience measurement by year end for the digital universe is a big goal, but if the major platforms don’t play ball, the risks of advertiser backlash grows.
As with the major colonial empires in history, is it at the peak of your powers that a dominant force becomes complacent and vulnerable? It’s always hard to see at the time, but perhaps the first signs of some very faint cracks are appearing for Google and Facebook.
The transparency and measurement issues for the digital publishing sector are certainly not going away.