Caitlin Fitzsimmons Online editor

Caitlin covers social media, marketing and technology and is BRW's social media editor. She has worked as a journalist in Sydney, London and San Francisco, writing for titles including The Guardian and The Australian Financial Review.

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Australia in focus for Facebook and Twitter as social media hunts for revenue

Published 13 June 2013 00:45, Updated 18 June 2013 14:01

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Australia in focus for Facebook and Twitter as social media hunts for revenue

Twitter’s Melissa Barnes says Australia’s Twitter users are “very sophisticated and very mobile savvy”. Photo: Rob Homer

The second great social media rush is on – but this time it’s advertisers and not users the big players are looking for. It’s a global hunt for revenue, and Australia is a focus as Facebook and Twitter try to get crucial tie-ups in place and their product ranges right.

Last week, Facebook announced it would axe more than halve its advertising formats to simplify its product range, while Twitter unveiled its second global partnership with an advertising/media agency network – this one with WPP, following a separate deal with Publicis-owned Starcom MediaVest a few weeks ago.

Twitter, which has until now relied on a reseller model in Australia, is establishing an office in Sydney and has advertised for a country director and other sales positions. Its head of brand and agency advocacy, Melissa Barnes, visited Australia last week.

Meanwhile, former Google executive William Easton joined Facebook as managing director for Australia and New Zealand in January, after the position was vacant for almost a year. He is now in hiring mode and recently appointed the company’s first head of agency sales.

There is good reason for Australia being seen as fertile ground for these global giants. Despite the hype about social media, it is a small part of the advertising mix Down Under. In 2012, paid ads on social media represented 4 per cent of the total amount spent by media agencies on display advertising, according to Standard Media Index figures, although there is a significant direct component too. To generate the revenue needed to justify their hefty valuations, social media companies need to attract big brands – but the challenges are considerable.

Recently, The New York Times reported Nissan and Unilever-owned Dove copped consumer backlash over their ads appearing on Facebook pages that promoted sexual assault. Nissan canned its Facebook advertising in response. Facebook says its ads are targeted towards people, not pages, though it is reviewing procedures to deal with hate speech pages.

Barnes says this has never come up as an issue for Twitter, probably because the ad format is different.

Chief digital officer for media agency MindShare Australia, Ciaran Norris, says advertisers will accept some level of risk, but Facebook needs to reduce the chance of a company’s advertisements being placed on objectionable pages.

“We take it very seriously. We work with Facebook, and we’re a member of the council they have out of New York,” Norris says. “We’re planning conversations with them at the next meeting to discuss issues around pages related to sexual assault, which are horrendous. If you think about the scale of content created on Facebook – terabytes of data every day – they have to find better ways of scaling systems that will understand what is inappropriate, without human intervention at every stage because that’s realistically not possible.”

There have also been questions about the effectiveness of advertising on Facebook. In March, Marketing magazine in the UK wrote that Unilever is scaling back its social media investment for most brands because of the lack of impact, while Advertising Age in the US quoted a top marketing executive at Coca-Cola as saying the company had seen little tangible benefit from “online buzz” despite more than 61 million Facebook fans.

Melbourne Business School associate professor Mark Ritson, a BRW columnist, says the problem is that social media was over-promoted as a marketing channel.

“It’s impossible to meet those expectations among big brands and that’s what we’re seeing now,” Ritson says. He believes Facebook has increased the amount of advertising as much as the audience will tolerate; it now needs to convince advertisers to pay more. “Facebook has amazing reach and good cost-per-thousand reach as well, it just has to play a very careful game in terms of how much it pushes out advertising.”

Twitter recently started collaborating with Nielsen on a new survey tool for advertisers to measure the impact of Twitter campaigns on brand metrics. Facebook has had a similar partnership for a few years.

The details of Twitter’s new agency partnerships are still under wraps but the chairman of media agency Starcom MediaVest Group in Australia, John Sintras, says his deal has a bigger scope than the WPP partnership and includes firsts and exclusives.

“It’s more than just pricing and data analytics, it’s new ad formats, and testing and incubating different ideas and formats using different sort of research techniques,” Sintras says. “There’s a number of things we’ve negotiated exclusively on behalf of our clients and we’re very excited about that.”

TV is Twitter’s companion

Twitter has 200 million users worldwide, compared with more than a billion for Facebook.

The company has not disclosed how many members are in Australia, but 70 per cent are outside the United States. Barnes’s visit to Australia was part of a global tour to understand how different markets work.

“The good news about Australia is you have a user base that is very sophisticated and very mobile savvy,” she said during her visit.

“When you look at the growth of Twitter, accelerating . . . we’re very excited about coming to Australia.”

Twitter has three main paid products for advertisers – promoted tweets (to pin a tweet to the top of the stream), promoted accounts (to list the account in the ‘who to follow’ box) and promoted trends (to list a hashtag in the trends box). The advertiser needs to tweet and attract followers but can pay to extend its reach using Twitter’s targeting tools.

Barnes says Twitter is capitalising on two key trends. The first is that given news stories frequently break on Twitter, brands find it’s a good way to “ignite” campaigns by reaching influencers before moving to other media.

“The second big trend that we’re seeing is the correlation between Twitter and television – we know that 95 per cent of the public conversation about TV happens on Twitter,” Barnes says. “In the US, we’ve just announced TV amplification products that allow brands to find people as they’re tweeting about a particular show.”

For example, when Justin Timberlake launched his album at the Grammy Awards, he also sent out a scheduled tweet sharing links to buy the music or watch extra video. Barnes adds that some brands are skipping the television advertising component altogether and solely targeting the audience of a particular show through Twitter.

One of the roles Twitter has advertised is for a head of media partnerships to work with television companies, but Australian advertisers are already naturally using Twitter this way. For example, Vodafone chief marketing officer Kim Clarke says Twitter enhanced Vodafone’s sponsorship of The Voice this year. Vodafone recruited three socially connected customers to tweet from behind the scenes of The Voice as part of #TeamVodafone to boost the brand’s organic reach. “Fifty per cent of Twitter users access Twitter while watching TV,” Clarke says. “Using advertising, such as Twitter’s promoted product suite gets the content to the engaged audiences in real time and it’s integrated into the show to further our reach again.”

MindShare’s Norris says Twitter’s positioning as a companion to television is a “smart move”. His agency is covered by the WPP partnership and he says it’s mostly centred on Twitter’s data. “We spend a lot of our clients’ money on really premium TV activations like American Express with MasterChef and Ford with The Voice and it’s about how we can really start to tie in the data Twitter has about what people talk about when TV shows are on air and how we can use that to bring our sponsorships to life across multiple screens,” Norris says.

Facebook’s product rationalisation

Facebook claims 12 million monthly active users in Australia – a figure that has stayed steady for six months. The site booked $10.2 million in agency advertising this year, says SMI data quoted in The Australian Financial Review. The vice-president of global marketing solutions at Facebook, Grady Burnett, visited Australia in May to meet with the teams, clients and agencies. He says the Australian market is strategically important for Facebook with “great room to grow”.

Facebook marketing VP Grady Burnett says the company looks to get am engaged body of users before moving on to advertising.Photo: Louise Kennerley

Easton, the managing director since January, says more than 16 of the top 20 advertisers have used Facebook in the past year, showing the “business is in great shape”.

Some of the big Australian brands using Facebook’s advertising suite include Telstra, David Jones and Harvey Norman.

One of Easton’s key hires was Ellie Rogers, formerly from media agency Ikon Communications, as Facebook’s first head of agency sales in Australia.

Rogers is well regarded in the industry and Easton would be aware of the importance of agency sales for a digital media business, given his background at Google. When Google first came to Australia, it focused on small businesses to compete with the Yellow Pages. The business took off once it set up an agency sales team to go after the $7.5 billion in ad revenue booked by agencies in Australia.

“We always focus on developing a strong body of people active and engaged on Facebook first and then look at the advertising and marketing product,” Burnett says. “So it’s been our more recent focus to talk more to agencies, large corporates and small businesses. It’s an important, growing market and we’ve hired more people this year.”

The new jobs are mostly in sales and marketing and include investment in vertical markets such as e-commerce, financial services and travel.

As part of the changes Facebook announced last week about its ad formats, it said it would end sponsored posts and instead include “social signals” in all advertising by default.

MindShare’s Norris says the move to simplify the product suite is sensible.

“You almost needed a doctorate in Facebook ad formats, I think they had 27, but it felt like more,” he says.

The audience growth for social media is starting to hit saturation point but the process of converting eyeballs to ad revenue is just beginning.

“It’s not even close to flattening out," Sintras says. “When you compare time spent with where the dollars are going, there’s a huge gap."

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