For all their popularity, social networks have turned out to be barren soil for advertisers. Facebook famously has 901 million users, but it only saw $4.12 in revenue from each of them last year. Twitter has taken even longer to implement a business plan for monetizing its 140 million users. But as it reveals its strategy, it’s starting to look like it may have an edge over Facebook in selling ads online.
The problem with social network ads is longstanding and simple: People don’t click on them. MySpace users clicked on 4 in every 10,000 ads, hardly enough to make the site a profit machine. Facebook took a shrewder approach: mining user data to target ads, enticing users to like brand pages so that brands showed up in their friends’ news feed and, more recently, putting as many as seven ads per Web page.
But Facebook’s revenue growth hasn’t come without irking both users and advertisers. The membership cries out every time the company makes a new effort to collect ad-targeting data on users or slip corporate brands into news feeds. And advertisers are growing disenchanted. Some are frustrated with Facebook’s push to raise ad rates. Others, like GM, feel the ads aren’t worth the investment.
Twitter, too, has sparked its share of criticism. It has drawn ridicule from some writers because of its apparent lack of a coherent business plan. But the site has vowed to prove itself an ad “juggernaut” this year. It expects revenue to reach $260 million in 2012, reaching $1 billion in 2014.
During the past year, as Peter Kafka noted, the company has made it easier to embed graphics and videos, giving advertisers opportunities beyond the original 140-character limit; offering brands their own dedicated pages; and building campaigns for brands such as Pepsi and ESPN.
And this weekend saw the introduction of the sponsored hashtag, when Twitter commercials that ran during a televised NASCAR race included the phrase “#NASCAR,” which redirected to a sponsored Twitter page. Most press coverage of the campaign focused on the commercials themselves, but the potential is in how Twitter is experimenting with its platform to get brands to engage with consumers.
Twitter’s path to advertising success doesn’t look radically different from the trail blazed by Facebook: Offer a rich-media experience on a branded page that invites user interaction. But there is a key difference in Twitter’s approach that in time could give it the edge over Facebook.
That difference lies in the structure of Twitter itself: Most Twitter accounts are as publicly accessible as anything published on the Web. Facebook, by contrast, is designed to allow users to share updates only with select friends – an environment structured to allow for private conversations (albeit conversations that will be data-mined by Facebook).
The difference is subtle but significant. On Twitter, we are broadcasting to anyone with ears to hear. On Facebook, it’s more like a conversation at a private party. We’re comfortable with advertisements and brands in a broadcast context, but few of us would welcome them into our private conversations.
So while users have rebelled against too many sponsored tweets in their Twitter streams, they may be more willing to welcome sponsored hashtags. Twitter’s new approach invites analogies to such Internet dinosaurs as the early Web domain names and the old AOL keywords. Again, a more contemporary analogy is branded pages on Facebook, but at a time when people are tiring of hearing “Like us on Facebook,” a branded hashtag carries a lot more cachet.
Twitter made a shrewd choice in selecting NASCAR as its first sponsored hashtag. NASCAR is a well-known brand with broad-based appeal, but it’s also a brand synonymous with a sporting event itself. Anyone tweeting about a NASCAR race will be directing followers to a branded page. But it’s unclear whether that approach will work as successfully for other brands.
Which is to say, Twitter still has its work cut out before it can make money from big brands on its social network. But perhaps the most encouraging sign that its business plan is working is the lack of outcry from users. The company is successfully experimenting with ways to incorporate ads and branded campaigns into its users’ feeds without alienating them. As long as it can pull off that trick, Twitter will have a clear edge over Facebook in monetizing its social network.
Entrepreneur aficionado extraordinaire Robert Scoble posited a question on his Rackspace blog yesterday asking if there is push back against HTML5 by the top mobile designers in San Francisco. He cited new apps Path, Storify and Foodspotting as prominent examples of great apps with acclaimed UX that were rendered native languages as opposed to HTML5. Are top developers really pushing back against HTML5 or is Scoble once again a little too deep in his fantasy world?
One thing that often worries me when thinking about the San Francisco-based developer community is the fact that it is one giant echo chamber. It feeds off itself to a crescendo of memes, themes and rumors until no other reasonable arguments can be broached.
Scoble is often the mouthpiece for these developers. To be fair, Scoble and I have met and are friendly and I find him to be a fine individual but the classic argument against him is that he is the living personification of the edge case. He knows everybody, talks to everybody and does a respectable job of eating his own dog food. Companies and developers, with good reason, respect his opinion. But, the way he inundates himself with all the great innovations of the ecosystem, he sometimes misses the reality of development and utilization in the rest of the world.
With respect to Scoble, this HTML5 argument is hogwash.
Path won a Crunchie for best design. For those not in the know, a Crunchie is an award show for best startups, design and innovation in the tech community hosted by TechCrunch, VentureBeat and GigaOm. It is the yearly culmination of the San Francisco echo chamber and, while interesting, is not really followed by many outside of Silicon Valley. That is not to discount what Path has created. We have noted the splendid design of Path at ReadWriteWeb as well and it is truly a very well made app.
Path is an edge case scenario in the world of mobile app development. It integrates social messaging, location check-ins, photography and music recommendations into a sophisticated timeline (a “path”) that is endlessly scrollable and visually appealing. Path is the quintessential native app.
It would also be impossible in HTML5.
The limitations of HTML5 at this point are that it does not allow device access (to objects like the camera and location services), scrolling is often limited and multi-layered sound is very difficult to implement. See our recent coverage of the “HTML5 Developers’ Wish List” for a fuller understanding to the limitations of the spec. All developers agree that HTML5 is still a work in progress and there is great hope that the standard will be advanced to a degree in 2012 that many of the problems that inhibit mobile developers will be solved. The key concept to remember with HTML5 is that it takes the one true “killer” app, the browser, and enhances its functionality.
To say that the best mobile developers and designers are pushing back against HTML5 is outrageous. It is like saying that Web developers and designers (by far the most robust group of Internet coders) are turning their backs on the standard that is taking the browser to the next generation. This is simply not true.
Like Scoble, I also talk to top developers on a daily basis. Some of the most talented coders and designers I know are working on creating dynamic experiences in HTML5 for mobile devices. That includes developers from Sencha, appMobi, Zynga and other games makers, mobile cloud developers and third-party Facebook developers. All see HTML5 as a great opportunity and are fully embracing the challenge. Look at Facebook in particular. Nobody would suppose that its developers are not some of the tops in Silicon Valley. The company is working towards progressing HTML5 and the apps ecosystem around it with innovative approaches to what the mobile Web can do.
For me to believe that the “best mobile app designers” are pushing back against HTML5, I am going to need more examples than three edge case native apps that have very specific functions. There is so much more to the mobile Web than a pretty native app.
Source: Google+ To End Real Names Policy