With the release of Facebook’s first ever quarterly earnings report, as well as the significant amount of coverage about their partner Zynga’s disappointing report, we’ve decided to keep the focus this week on the heavyweights in the native advertising space.
For the first time Facebook broke out individual revenues for its marquee ad product, Sponsored Stories, reporting that they are now on a $1 million a day annual run rate. Out of that total, half comes from NewsFeed Sponsored Stories on mobile; not bad for a company constantly bashed for not being able to monetize mobile. As a little background on the evolution of Sponsored Stories, they originally only appeared within the right column of the page, where a standard display ad unit would sit, but shifted their strategy in 2012 they decided to place these ad units within the native content experience of the site, the newsfeed. This bodes well for their success on mobile, as the mobile layout strips away much of the right rail of the desktop Facebook page.
What may be even more interesting than Facebook’s Sponsored Stories run-rate is their willingness to run outside of their guarded walls. With last month’s announcement that they were now advertising on Zynga.com, Facebook made a bet that their ad units are appealing enough that individuals will click on them outside of the platform. This may work well on Zynga, where the general layout and feel is similar to Facebook, but any future expansion should take into consideration how well the ad unit can integrate with the native user experience.
Twitter, still basking in the luxury of being a private company, stirred up news this week with rumors about its discussions with Hollywood producers about an in-stream video option. This theoretically would place short films in the Tweet stream and would allow companies to buy advertising within the films. While standard interruptive advertising within a film is not native, this would open up numerous video advertising possibilities that could uniquely integrate promoted Twitter hashtags, accounts and trends.
In other news, FourSquare launched a new native ad product and BuzzFeed released an internal memo from their CEO that discussed the company’s strategy and vision. Lots to catch up on, get going:
While investors are concerned about Facebook, their advertising strategy does not seem to be the problem. With the ability to show ads to 543 million monthly users via Sponsored Stories, the potential for increased revenue is extremely high. In fact, CPM grew by more than 20% overall due to the new Sponsored Story format. It will be interesting to see how additional targeting and contextualization will fit into Facebook’s overall ad model over the coming quarter and year.
The New York Times – Facebook Efforts on Advertising Face a Day of Judgment
Leading up to Facebook’s Q2 earnings, the New York Times discussed Facebook’s ad strategy and talked about their recent hiring of Gokul Rajaram. Rajaram, as some of you may know, ran Google’s AdSense engine. He brings with him a sophisticated understanding of native. As he recently stated, ““You would much rather hear a message from your friend than hear a message from a brand.”
When a study last week showed that Facebook mobile ads badly outperformed Twitter ads, it raised eyebrows. Spurred by a flurry of questions around the study, the firm reassessed their results and confirmed that the original results only took Promoted Accounts into account, not Promoted Tweets. When the firm looked again, they found that for Promoted Tweets in stream, the CTR was close to 3 percent, which is higher than Facebook’s Sponsored Stories. Regardless of which company has higher rates of engagement, the most interesting takeaway is something we probably already knew: in-feed ads produce better results than banners or those outside of the main news feed.
Foursquare has been focused on finding a successful monetization strategy for a while now. Finally, they seem to be on to something (guess what, it’s native). Their new Promoted Updates, which contextually promotes businesses to people who are looking for places nearby, has the potential to impact for both small businesses and larger chains. While their Local Updates only targeted people who checked-in at similar locations, this new strategy appears in the “Explore” tab, where users go to find locations close to them. The ability to target people when they are in the act of searching is extremely important and gets to the heart of what native is: choice-based interaction.
One of the most interesting rumors out there is that Twitter is pitching in-feed video shows to Hollywood movie and TV studios. The fact that they are talking to these types of individuals shows that they are focused on content, not ads. While there is talk that this content would have ads running throughout it (not native, since the user is being interrupted), the ability to embed video into Twitter could lead to eventual video sharing, which brands could leverage in order to share content. That would be a huge step, albeit one that brings up new questions about Twitter’s overall business strategy.
BuzzFeed, along with Digg and Reddit, has helped shepherd in a new era of content discovery. Not only has BuzzFeed discovered a successful way to package and share content, but they have also embraced a completely native ad strategy. This article discusses some of the practices that BuzzFeed does so well; one of them being advertising.
We hope you enjoyed this week’s edition. Now go sign on Facebook and click on some Sponsored Stories!