Turning Advertisers off with visual Vomit

Posted on by Billy Tucker

As a user, Facebook is frustrating, and as an advertiser, it’s downright useless.

Humans are skilled at ignoring the visual vomit around them, and these are skills that have been perfected over many years of increasingly desperate advertising techniques – from the subliminal to the ridiculous.

Stealing 5 minutes to get critical updates on the latest cat meme is what Facebook is all about, and monetising that experience has mostly been limited to targeted advertising (selling your personal details to advertisers so that they can craft ads most likely to drive a response). But with just $10 of annual revenues from each of its 600m or so engaged users Facebook has a long way to go to satisfy its many Shareholders’ many expectations!

The real challenge for Facebook though is that economically it’s still a One Trick Pony with 8 out of every 10 dollars of revenue coming from advertising. So how does Facebook outgrow the rebounding economy in order to drive up shareholder returns?

I think they have three pillars of advertising growth ahead of them, each of which will likely trade off user experience for advertiser revenue:

More advertising inventory – as the rate of subscriber growth slows more inventory is required to avoid an overall slide in the supply of advertising space – meaning more of the Facebook page will be dedicated to paid media resulting in a poorer user experience

More personal advertising – Facebook will give as much data as it can to advertisers to make the advertising product more effective – meaning Facebook will go even further to leverage their users’ personal data

More interruptive advertising – as consumers get better at ignoring the Advertising Vomit, Facebook will push its products to become more interruptive, meaning you have to wait for them to finish or actively “push” them out of the way. A poorer experience but one that is likely to yield more clicks for the advertiser.

And yet, the real challenge here for Facebook is that it just isn’t a great place to advertise for most businesses. It’s neither a great Brand advertising platform, nor is it a great Performance advertising platform – and in this analytically informed world of Marketing, the investment required to evaluate the effectiveness of an advertising platform is lower than ever before – meaning most big advertising dollars have already come and gone.

Group Buying fortunes on the up?

Posted on by Billy Tucker

After bottoming out during the past few months, the fortunes of some Group Buying businesses seem to be on the up, albeit a significant number have collapsed or been acquired in the past six months and the outlook remains grave for many more!

The fact that the sector’s nose is slightly up is in part due to the weeding out of weaker and often less scrupulous competitors who often served only to undermine the reputation of the sector as a whole.

In fact out of the 50 largest Group Buying businesses assessed in April, only 29 remain intact just 6 months on. And given only 10% (5) of those businesses were acquired that supports the view that smaller Group Buying businesses are of limited real value. In such a crowded and undifferentiated market lifesaving investment is tricky too given a lack of brand equity, good will or asset strength (off the shelf web sites are common and subscriber base overlap with top-tier competitors is often well over 70%) resulting in the collapse of underperforming and debt laden Group Buying businesses.

A quick browse through the sites of the 29 still standing uncovered indicators of pending doom for some.

Here are the choking canaries of the Group Buying world:

  • A high degree of niche product deals, such as robotic vacuum cleaners or iPad accessories
  • No sign of “number purchased”, an essential component of Group Buying that is quickly discarded when numbers are low
  • Extended Deal deadlines, this industry was founded on deal a day for good reason!
  • A smorgasbord of deals on one page, suggesting desperate recycling of old offers

Group Buying remains a $1bn future industry in Australia, regardless if that industry seemed to lose its way and stall when it was only half way there. Regaining lost momentum will be down to the leading players showing the way once again with a combination of brilliant marketing and a commitment to helping consumers discover great business products.

The strongest already have their playbook (Living Social, Cudo and Ourdeal) and will extend their positions in the coming 6 months through a focus on back-to-basics Group Buying offers like quality restaurants, high value vacation offers and utility products such as Cudo’s Meat Merchant.

Although I suspect another 15 from April’s top 50 will be gone by April 2013, leaving only a dozen or so standing, I think I already know who they are, I wonder if they do?

Good commercial sense underpins sustainable philanthropy

Posted on by Billy Tucker

BC Logo new

In 1999 the ever cheery Brits (of which I’m one) were flabbergasted when their #1 Son Richard Branson lost a bid for the National Lottery. His manifesto for the People’s Lottery was based on it being run as a Not for Profit meaning that profits would be provided as donations to the lottery commission over and above the standard fun-raising efforts of the National Lottery. Even though these additional donations would exceed $1bn each year the Lottery Commission said no, instead they chose Camelot who had no such altruism in mind.

Surely something’s afoot, why would the Purpose driven Lottery Commission choose greedy toes Camelot over goody two shoes Branson? Isn’t that Greed before Good?

Not that simple.

The Lottery Commission figured that without the benefit of a Profit Engine behind Lottery Ticket sales, they’d be worse off taking the $1bn contribution from the Virgin effort. That their interests would be misaligned and the overall donation pool would be smaller as a result. A decision that has since been vindicated several times over.

If the collective interests are balanced, doing good doesn’t have to be unprofitable.

Recently I co-founded a business called BeyondCover. On one hand BeyondCover is an Insurance reseller for Global Underwriter QBE, selling CTP (The mandatory Motor cover in Australia), General Motor and Travel Insurance, on the other hand it raises money for causes by rewarding Cause partners when they introduce a new Insurance Customer.

The key to having the right incentives in place lies within the nature of Philanthropists. People who regularly support Good Causes are good people, they take fewer risks, cause fewer accidents and pay their bills on time. They make pretty good Insurance customers too!