Archive for August 2nd, 2012
SAN FRANCISCO: If the millions of Olympics-related tweets flooding the Internet in recent days are a measure of Twitter’s popular appeal, the company’s big presence in London also signals something else: its arrival as a major player in the world of big-time brand advertising.
In sharp contrast to Google, which initially built its businesses mostly by persuading thousands of small companies to buy “direct response” ads, Twitter’s emerging strategy focuses on selling elaborate brand campaigns to major marketers such as Procter & Gamble Co and Verizon Communications.
The Olympics have presented a prime opportunity for Twitter to position itself as a new media channel that complements TV broadcasts – and carries the big-name ads to match.
“We can service the very biggest brands in the marketplace,” Adam Bain, the company’s president of revenue and key advertising strategist, said in a recent interview. “The conversation that’s happening on TV, or happening live is also happening on Twitter. That’s very valuable.”
Courting major brands is an unusual play for a six-year-old company that private investors value at more than $8 billion but has yet to prove its financial viability. It often takes years to persuade the biggest advertisers to try a new publication or TV show, much less a completely new medium that requires a different creative approach.
The challenge is evident in Facebook’s fitful efforts to woo marketers such as General Motors, which jolted the social network by pulling back from paid ads just before Facebook’s IPO in May.
GM and Facebook are now talking again, and Facebook recently began a boot camp at its Menlo Park campus where marketers can meet with engineers to collaborate on ad campaigns. But as of 2011, brand campaigns still accounted for less than 40 per cent of Facebook’s $3.7 billion in revenue, according to estimates by eMarketer.
Even Google, which revolutionized direct response ads by showing them next to search results and has reaped huge profits in the process, has not fully cracked the code when it comes to big brands.
But the advertising giants say their early experiments with Twitter have shown remarkable results.
Consider the case of PepsiCo, which spent $640 million in 2011 on marketing, according to Kantar Media. Beginning late last year, about a dozen Twitter staffers led by Bain flew to PepsiCo’s offices in Purchase, New York, for a series of brainstorming sessions.
Armed with data gleaned from Twitter chatter, the two companies drew up a plan to use Twitter as a centerpiece for a massive rebranding campaign, “Live for Now,” that tied the soft drink to pop music stars and played up its youth appeal.
As the campaign unfurled in June, Pepsi rolled out a series of music videos on its Twitter page based on which artists were most discussed on Twitter, and doled out downloads for hit songs. In late June, Pepsi threw a Katy Perry concert in Hollywood that was live-streamed within a tweet on Pepsi’s Twitter page.
The company also paid Twitter to boost the reach of select “promoted tweets,” which garnered 68 million impressions in one day.
About 24 per cent of users who saw Pepsi’s paid tweets clicked, replied to or helped broadcast the tweets – a rate that deeply impressed Pepsi.
“We saw some phenomenal results with those ad products,” said Shiv Singh, the global head of digital marketing for Pepsi Beverages. Singh said it was “extremely likely” that Pepsi will ramp up its spending on Twitter.
Where the big dollars lie
Twitter’s focus on brand marketing, which aims to create a positive association with a product rather than prompt an immediate purchase, underscores a long-standing issue in the online advertising world.
About 60 per cent of the total $150 billion spent on advertising in 2010 went toward brand marketing campaigns, according to comScore. But in the online world, the vast majority of the roughly $30 billion in ad spending went toward direct response ads that generate leads or drive sales directly.
Google’s search ads are the dominant form of online direct-response advertising, but traditional banner ads are also often judged on how many people click through and take action.
“The biggest bucket that’s untapped in digital advertising is brand marketing,” said Jonah Goodhart, the founder of advertising technology company Moat Inc.
What may enable Twitter to tap that bucket is its growing “second-screen” appeal. The Olympics deal with NBC is aimed at offering Twitter denizens tweets from athletes and other content that complement the TV broadcasts. Procter & Gamble, for one, has straddled the two media during the Olympics, using promoted tweets to solicit feedback about a TV ad shortly after it runs on NBC.
Meanwhile, Twitter has struck a similar deal with NASCAR, while Twitter’s Hollywood liaisons are pushing TV studios to create Twitter apps that accompany popular shows.
“If you have a service that naturally lends itself to being at the center of big media-event conversations, you go where the big money is,” said John Battelle, founder of Federated Media Publishing, an online ad network.
At the center of Twitter’s ad push has been Bain, a 38-year- old advertising and sales executive who rose through the ranks at News Corp beginning in 1999 and was eventually tapped to build an advertising network across all of News Corp’s digital properties, including MySpace.
Although MySpace faded amid competition from Facebook, Bain emerged with his reputation burnished and a deep Rolodex of Madison Avenue contacts.
“His singular strength was that he’s the perfect combination of a salesman and a tech person,” said Peter Chernin, the Hollywood film producer and the longtime No. 2 at News Corp. “The people who build technical products, usually none of them can sell.”
Bain has built a sales team that now accounts for nearly a quarter of Twitter’s roughly 1,000 employees. Rows of MacBook-toting advertising employees now occupy a swathe of the seventh floor in Twitter’s hulking new office building on San Francisco’s Market Street.
They are also dispersed in locations like Atlanta and Austin, where staffers watch over major accounts like Coca-Cola
and Dell Inc. Earlier this year, the company poached Shailesh Rao, who formerly oversaw Google’s Asia-Pacific business, to court overseas advertisers.
Bain also hired Joel Lunenfeld, an interactive advertising executive from Atlanta, to oversee creative and engineering teams who actively pitch ideas to Fortune 100 companies.
“Adam and Dick have been consistent and open about what works on Twitter and what doesn’t,” said Noah Mallin, vice president of social marketing at Digitas. “Advertisers trust them. That really goes a long way.”
Twitter’s transition from quirky tech start-up to glitzy media power has alienated some of its long-time fans in the tech world who would like the company to function more as a platform for independently developed social media services.
Its Olympic journey has had some bumps as well. The company came under fire again this week for banning a British journalist who was critical of NBC and tweeted an executive’s email address, leading commentators to question whether Twitter compromised its values to side with a business partner. Twitter later apologized and reinstated the account.
But from an advertising standpoint, Twitter’s priorities were perhaps most clearly displayed at a recent European event: the annual Cannes Lions advertising festival.
A massive banner hung over the festival’s main event hall, featuring the company’s blue bird logo and the hashtag: “#CannesLions,” Bain said.
The message to marketers was that all the festival’s chatter was “also happening on Twitter.”
Hotmail is set to be consigned to history, marking the end of the era when the electronic mail service introduced many people to Internet and thanks to its Indian inventor, Sabeer Bhatia, heralded the country’s prowess in technology.
Microsoft on Wednesday launched Outlook.com, which it said will replace Hotmail, a move that is seen to be aimed at taking on increasing competition from Gmail, Facebook and Yahoo.
This spells the death of the free Web-based email service that Microsoft had bought from Bhatia and his colleague at Apple, Jack Smith, in 1998 for about $400 million, probably the biggest sum earned by an enterprise started by an Indian at the time.
That was about a decade before the advent of Gmail and two years after Bhatia and Smith launched Hotmail. The Chandigarh-born Bhatia, who grew up in Bangalore and was educated at St Joseph’s Boys before moving to the Silicon Valley, immediately came to represent the rising Indian techie in global imagination. Nothing that he did thereafter came close to the adulation that he received with his first creation.
In Microsoft’s words, when the US was filling up theatres to see the Hollywood flick Independence Day on July 4, 1996, Bhatia and Smith quietly liberated the world from the era of the snail mail and the new chic avatar of email was born.
“Back then in 1996, it was novel to have a personal email address you could keep for life – one that was totally independent from your business or internet service provider,” said Chris Jones, Microsoft’s corporate vice-president of Windows Live services.
Hotmail quickly grew to 40 million users within three years. Currently, it commands over 370 million users, more than the size of the entire US population. But aggressive bundling of web search and email helped Google capture the top spot with Gmail, which has about 425 million accounts. Yahoo! Mail is still behind Hotmail, though, with about 310 million users.
“We think the time is right to reimagine personal email, from the data centre to the user experience,” said Jones.
Many Hotmail users have welcomed the decision. “It was a much-needed move by Microsoft. With all the various login IDs of Hotmail, Windows Live ID, Xbox Live or Windows Phone, Microsoft was just confusing the average user,” said Clinton Jeff, well-known technology and mobile blogger, while adding, “But with Hotmail being
rechristened Outlook, it may confuse the lay web users who use Outlook Express to configure emails offline.”
Faisal Farooqui, CEO of Mouthshut.com, was more nostalgic. “I created a Hotmail account in 1996, while I was in college. But somewhere after Y2k, Hotmail lost in speed and innovation to Rediffmail in India. I think Outlook.com is a strategy for Microsoft to consolidate everything into a single brand, which they should have done long ago.”
Farooqui said he switched to Gmail a few years ago because of its strategy of one single account to authenticate all Google usage.
Outlook.com is available to users in preview form, while Hotmail will continue for now.
“Not much has fundamentally changed in webmail over the last eight years – though yesterday’s frustrations about the small size of inboxes are now things of the past. At the same time, email is becoming less and less useful as inboxes become cluttered,” said Jones, explaining the reason for the new webmail from Microsoft, in his blog.
The new Outlook.com will integrate tweets, status updates and photos of contacts, some of which Sabeer Bhatia yearned to see. In a recent interview with ET, Bhatia said that if he was in charge he would have created features in Hotmail that Facebook had early on. Hotmail kind of missed that boat, he said.
Amazon.com Inc said on Wednesday it launched a video streaming and downloading application for Apple Inc’s iPad.