There is great hype in the market around the Facebook IPO looming this week. And the noise is deafening for those of us who work either deep in social media, in New York City or around a bunch of bankers. I hear a constant rumbling of doubters: is it really worth $100b? Can Facebook grow into this valuation? Is the market really there for them to capture the advertising dollars needed to justify the valuation? Do Facebook Ads actually work? What is the GM noise all about?

I am here to tell you that Facebook is real. I will disclose that I am a true believer having worked in digital media for the past 15 years and almost all of that time in Adverting Technology. I am also a customer, vendor and partner to Facebook (and also to Twitter and Linkedin and many more). From every vantage point, Facebook is the real deal: they have the network effects, they have the partner ecosystem, they have the platforms and APIs, they have the consumer and they have the advertisers. Facebook is not going away. If you want the details go read this article by Bob Peck (@BPeck) on Business Insider.

But let me share with you some more details focusing on the big data point that came out this week, that GM pulled their Facebook ads, and what that means to the market.

GM News is Positive to the Facebook IPO

This week the timely post by General Motors cutting their Facebook Ad Spend made lots of noise (Peter Kafka’s article was one of the best). Facebook doesn’t work for Madison Avenue! Their ad model doesn’t work! GM doesn’t know what it is doing!

These naysayers are missing the forest from the trees. GM is spending $30M on marketing on Facebook. They only cut $10M in paid spend. For every dollar spent on paid media, GM spent $3 on agencies, services and technology to market on Facebook. This money isn’t hitting Facebook’s bank account but it has a real economic impact.

If we assume that GM is a rational marketer and others brands are spending at the same ratio, 3:1, it has huge economic impacts on Facebook. So Facebook did a cool $1b in Q1, at this ratio there was another $3b spent by companies to market on the Facebook platform. At an annual basis that is $12b! If Facebook just does $4b this year make this market about 3 times as big as all the analysts have predicted.

This is a huge point. With this simple logic, the market for Facebook marketing solutions is $16b in 2012. And accelerating.

The really cool thing about this market sizing is that if true, Facebook has its customers spending real dollars to fund the Facebook ecosystem partners - $12b worth of agencies, services, technology and tools that make Facebook work better, faster and in alignment with Facebook’s goals. And Facebook at its whim can reshuffle the ecosystem to bring those dollars back home.

If you don’t think the GM ratio is rational, cut it in half. Oh wait that is $6b — still a huge market. Take a 25 percent haircut, that is $3b. That is a lot of investment in an ecosystem supporting Facebook.

In case you didn’t see it this morning, Peter Kafka at All Things D offered up the most interesting set of details on the Facebook-GM kerfuffle to date, noting a string of background events that could explain this week’s news, including multiple agency firings and a new marketing philosophy around social media. Kafka also notes that even though GM cut $10 million in media spend from Facebook, the auto manufacturer still plans to spend $30 million marketing on Facebook — a fact that Kafka finds astonishing: 

I’m totally amazed by the $3-to-$1 ratio, and am wondering if it’s not to late to pivot myself into a “Facebook content creation consultant.” Those numbers also remind me very much of the late 90s, when companies like Organic went public based on the fact that they knew how to build Web sites and their clients didn’t, and they could charge accordingly. That didn’t last long.

(Quick aside: should we be surprised that the same people that did Organic, Razorfish and Agency.com are doing companies like Dachis Group now? Probably not a coincidence?)

GM is spending $30M to engage and connect with their fans on Facebook. Some of the spend may have been inefficient such as spending on fads like tricking out their Facebook fan pages, but for those who do social media every day, seeing the amount that GM is investing in content development is hardly shocking. Building out that content and the systems to deliver it, along with the teams to monitor and respond to GM’s audience — all day, every day — is no small feat. As we’ve noted before, doing social media is not easy; it requires constant attention, herculean effort and intelligent tools — even more so at the scale of GM’s business.

And while the media that GM is using to communicate with customers on Facebook might be “free,” the people and tools to succeed aren’t. And as we are fond of saying, the Content is the Ad — it is your best digital branding vehicle.  Whether you pay for distribution or share it for free on your wall, the most important thing is what you share. Rich, timely and relevant content to your audience is the best ad you can create.  

If anything, seeing a brand as big as GM validating an owned media strategy — and demonstrating a willingness to invest in that strategy — is the clearest indication yet that digital marketing is changing yet again. Facebook and other social networks have created a disruptive shift in the way marketing is done. Ironically, in so doing, Facebook — at least in the short term, until they introduce a more attractive set of ad products to the likes of GM — may have created a situation where they’re not able to capture all of the value they’ve created. Facebook will need to figure out how to guarantee they continue to profit from marketing on their network, but it’s clear that there is going to be room in this ecosystem for other firms (agencies, technology providers, copywriters, video producers) to succeed and grow.

The content is the ad.

In a charmingly timed announcement just days before Facebook’s scheduled IPO, General Motors has decided to stop buying ads on Facebook. From the Wall Street Journal:

General Motors Co. plans to stop advertising on Facebook after the company’s marketing executives determined their paid ads had little impact on consumers, people familiar with the matter said, a move that comes as more companies question the effectiveness of advertising on the social networking site.

The largest U.S. auto maker will continue to expand its use of marketing through Facebook’s pages, in which markers can display content at no cost, these people said.

This announcement makes for a great headline, especially given the timing, but it’s important to note the distinctions drawn in even this thin of a report. General Motors hasn’t stopped marketing on Facebook. Far from it — they’ll go full-steam ahead on pushing their owned content through organic channels on their Pages. In fact, of the $40M they reportedly spend on Facebook Marketing, only $10M is on Paid Ads. They are still spending $30M to build their brand on Facebook.  They’ve just stopped spending on Facebook ads (at least temporarily). The more puzzling questions are (1) why stop now and (2) what is GM’s next move?  Our thoughts:

• Diminishing Return on Community Growth:  In a sense, you can see why this strategy could make sense for a certain category of marketer. If you’ve been buying Facebook ads primarily to build your community on Facebook, at a certain point the very largest advertisers will reach a point of diminishing returns on community growth. You have acquired the known universe of potential buyers or enthusiasts plus a generous helping of riff raff. Those riff raff are usually people that aren’t in your target market or have little influence on your objectives. The brand then looks to activate that community with organic participation. If you’re content with reaching 16 percent of your community with each post, then this strategy might be sufficient — you can focus exclusively on driving engagement with a deep investment in organic content. (Of course, it’s very clear that organic and earned results are much better in the presence of paid media on Facebook, but that’s a post for another day.)
• Performance: Citing poor performance is an easy conclusion to draw. Compared to some other flavors of digital ads, Facebook ads don’t perform: low CTR, no test drive sign-ups, no car configuration conversions, low engagement on site.  However, we assume that the folks at GM (and their agency) are smart enough to tell the difference between a direct-response ad at the bottom of the purchase funnel and the value of brand-focused placements (after all, few categories do branding as well as automotive). They’re not going to abandon Facebook’s audience because the CTRs aren’t as high as Google’s. My bet is they are holding out for a better way to reach that audience (one that isn’t built for self-serve DR marketers). That is, there may be an implicit challenge from GM to Facebook here to provide a richer set of advertising and branding vehicles on the network — one that goes beyond the existing ad products.  They are absolutely working on getting the $30M investment in owned right first before they bring on the paid distribution.   
• Strategic Alignment/ Too Many Hands in the Pot:  This is my favorite reason.  I am sure that GM is running hard and fast at Social Marketing, that they believe in the opportunity around Facebook but their goals and execution were not all aligned. They also have been learning a ton over the past few years as they’ve experimented and developed strategies in this space. It’s worth noting that GM has done massive Agency of Record (AOR) changes recently. The new Agency team has the opportunity to look at the missteps of the loosely connected group of agencies running the GM business last year and have a different point of view that brings together a more holistic solution that meets GM current needs (and budget!). This agency cleanup happens all the time as marketers need new fresh thinking and agents empowered and alligned against goals to help them drive their messaging to market. This is especially true when you have untested new mediums like digital.  These shakeups change everything — strategies and tactics.  I think this is the real reason for the shift now.  

For Facebook, the loss of a major customer (reportedly spending ~$40 million annually) is certainly chilling. And the accompanying announcement that GM planned to keep marketing on Facebook without buying media is especially troubling. That is, GM seems to believe that they can realize the marketing benefits of the Facebook network without actually paying Facebook for media. Can that work for every brand? Probably not, if only because you need to spend to build a truly significant audience. Still, it does force Facebook to think about how they’re monetizing their services for marketers, and the sort of ad products they’ll need to develop to continue to grow.  Some have speculated that making the Facebook ad ecosystem look more like display is the right answer.  I disagree. It is about making the facebook ad ecosystem work for the marketer’s goals — which means listen to the marketer on what they want to accomplish and how they can help with that.  That is the true ROI that the marketer wants.  

We look forward to hearing more details as they come in; with the IPO looming, this story will certainly linger. And while GM may be cutting their spend for now, we think it’s unlikely that they’re really done with advertising on Facebook for good. 

What’s the best way for brands to drive user engagement on Facebook? Should you ask conversational questions (“Who’s got a case of the Mondays?”)? Solicit specific actions (“Like this post if you’ve got a case of the Mondays!”)? Ask folks to predict the future (“It’s Monday — is this going to be a great week?”)?

Nope.

According to a monthlong study of 1,200 posts from 23 different brands discussed yesterday in Ad Age, the secret to driving user engagement is fairly straightforward: post content that’s relevant to your brand.

From the article:

“By far, the biggest predictor of engagement was that the post was on a topic relevant to the brand,” said Sean Bruich, head of measurement platforms and standards at Facebook. “It impacts everything, from lightweight likes to more invested shares. It’s actually one of the most important things a brand can do. People are seeing the content because they liked the brand, and it makes sense that content about the brand will get them engaged.”

And while Facebook isn’t going so far as to tell marketers to cut out the social media junk food altogether, they do recommend that you only use them as “a nice change of pace.”

The study also makes clear that there’s a pecking order to the types of engagement on Facebook posts — and Likes aren’t in the top spot:

Another important finding was that asking people to like a post indeed yielded more likes, but it didn’t do much for the other forms of engagement, including the all-important share action that sends a brand’s post into a users’ timelines for all of their followers to see. Compared with likes, shares represent a bigger investment from the consumer and occur less frequently. Thus, shares are often going to be more meaningful from a marketing perspective. After all, they suggest the brand is tapping into that friend-of-fan network that’s central to Facebook’s viral proposition. 

The message from Facebook HQ the past few months has been pretty clear: if marketers want to activate viral activity, they need to focus on sharing great, relevant content. Apps, contests, fan-gating, junk food: it’s all fine in small doses, but the biggest predictor of success for brands is relevant content. It’s that relevant content that will push a brand past a Like and into Shares, and will enable brands to take advantage of the unique attributes of Facebook — viral activity and earned media impressions.

The challenge, then, is figuring out how to do that on a consistent basis.

(Don’t worry, Rallyverse can help.)

Twitter’s announcement yesterday of an update to their content recommendations for users was the company’s latest attempt to address a long-standing problem: Twitter is really really hard to consume for many users. 

That is, Twitter offers users complete access to a non-stop stream of Tweets from all the folks the user follows. Unlike, Facebook, which curates each of our Newsfeeds based on what we click and who we talk to, Twitter gives us our full stream, uncut and unedited. If someone you follow said it, you’ll be able to find it.

The challenge for users is, of course, that once your start following enough people, your stream very quickly becomes unwieldy. Sure, it’s cool to get access to everything that everyone you follow said…it just turns out that it’s next to impossible to make sense of all of that information.

Some users address the issue with carefully managed lists, others use apps like Flipboard, Zite, or News.Me, while others just throw up their hands and make their peace with the fact that they can’t really deal with Twitter. 

Twitter understands the problem. And they’re trying to solve it. With this latest update to the “Discover” tab (rolling out to Twitter.com as well as the official mobile apps over the next few weeks), Twitter is refining the recommendations they make for each user. and is using the actions of the folks you follow as a relevance signal. Specifically, they’re planning to show the stories that are popular among “the people you follow as well as the folks they follow.”

The question remains: is this enough? Is a curated list of stories from Twitter enough to flip more casual users into heavy users? Will they continue to marginalize the Lists feature (full disclosure: as someone who works hard at my lists, I don’t appreciate how deeply they’re now buried in the mobile app experience)? Are all roads still leading to omnipresent curation (similar to Facebook), where the default view is headlines and you can only get to the full stream if you really dig for it? 

We’ll be curious to see if the tweaks to the Discover algorithm make a difference (and if Twitter will share any success metrics around the features). As we’ve noted before, as challenging as it is for marketers to figure out what to say on Twitter (ten times a day, no less), the more pressing issue for Twitter’s business is helping its audience consume the product — because it’s that audience that matters for Twitter’s sustained success. 

If you’ve had a job that’s paid you to manage social media for a brand or business, chances are you’ve heard a snarky remark or two about your chosen profession:

“So, you like play on Facebook all day?”

“Wait, so you “listen” and “monitor” social media? On your phone?”

“140 characters? That’s it? That’s all you do?”

The assumption inherent in all that snark is that since social media is so popular (and since you seem to like it so much), doing it for a living must be easy. To the casual observer, posting short comments on the internet and answering questions doesn’t sound particularly taxing or stimulating — I mean, isn’t that what the young people these days would be doing anyway?

And that couldn’t be any further from the truth. 

Because if you’re a community manager or a social media professional, you know the dirty secret about your job: it’s really really hard. Important for sure, but definitely extremely difficult, and not to be taken lightly as a task or a career.

Here’s why:

• You’ve Got To Say Something Every Day, Maybe Ten Times Every Day. With other forms of marketing (online and offline), your ad creative is labored over for weeks if not months before being shared with the world. And sure, you might come up with a small library of creative, but once it’s built, you can use it for months and months, if not a whole year. In social media, you need to generate enough creative for 5-10 posts every single day — with no breaks and no downtime. 
• When You Say Those 5-10 Things, You Need To Sound Like You’re Listening. Every marketer has their own calendar and plan for what they want to say and when — when a new product will be released, when a campaign will launch, etc. But you also need to stay connected to the pulse of discussion among your fans and followers, and say and share things that connect with that discussion. And that’s a lot of work. 
• You Need To Have A Voice For Your Business Or Brand. For some companies, figuring out their voice is easy — they either have a long history and heritage around a particular voice, and/ or they have an agency or employee who’s very comfortable inhabiting that voice. For the other 98 percent of the world, figuring out that voice, developing it, and staying true to it, is a challenge, and one that isn’t casually overcome. You’re going to use that voice in every outbound tweet or Facebook post, and in every response to a mention or comment. It matters. 
• Your Voice Needs To Be Distinct. Some businesses develop a voice in social media, only to find out that their voice sounds a lot like everyone else’s. Typically, the voice that sounds like everyone else’s sounds a lot like someone in their mid-twenties who lives in a major city and likes to go out for libations after a long week at work. That is, “It’s Friday, Like if you’re ready for happy hour” doesn’t really work for every brand. 
• Your Fans and Followers Don’t Sleep. Being a community manager isn’t a 9-to-5 job. Your company’s social media presence needs to be staffed around the clock. While you may not be expected to immediately generate a response to a question posed at 3 am (your time), you’ll sure need to get an answer out first thing the following morning. And certainly you can’t claim that 9 pm on a school night is too late for attention. Nope — you (or you and and tag-team partner) need to be on the case every hour you’re awake.

I think a very compelling argument can be made that there is no more exciting marketing job right now — at a brand or agency — than being a community manager. But that’s for another day and another post. In the meantime, if you’re managing a social presence for a business, understand that the folks here at Rallyverse appreciate the challenges you face every day.

Oh, and one other thing. Rallyverse can help.  

As noted yesterday, South By was awesome. We had an exhilarating and very informative weekend — essentially, it was delicious cocktail with two parts social media and one part speed dating. The Rallyverse team had a great showing, crashing some of the coolest parties, hanging with clients and investors and being just social.  

But, in between tacos and drinks, we also learned some things: 

(1) The Content is the Ad  

We heard it two weeks ago at #fMC where Facebook set the social world on its ear with all its new gear. And it reverberated into South by. Most sessions talked about engagement, but they started by talking about the importance of sharing great content.  That the content you share has to be relevant and interesting to your consumers right now. That it needs to (a) Inform them (give them some utility or value) or (b) Entertain them (make the laugh or cry). We heard loud and clear that brands need to curate content. It isn’t enough to talk about the content you create; you need to talk about what others create as well. And don’t talk about your brand. Go beyond it by talking about your customers and the benefit they get from you and your product: “How do you make your customers day better?”

(2) Likes (Still) Matter

We sat through a panel where some of the panelists were Like haters, and were especially dismissive of brands who have more than 10M Likes. I say don’t be a “Like Hater.” The “Like Hater” position is as follows: most brands with millions of Likes have a low-quality Like audience and that their community isn’t really worth what they think it is.  Fair enough. But that’s the price of being an early adopter. If you are building communities now, you have to be especially careful to target appropriately and build a community of people that want to connect with you and your brand — it’s the best path to healthy engagement. Oh, and compound interest still matters.  

(3) Engagement Engagement Engagement!

Everyone is talking about engagement. We are beyond the go-get-Likes stage and we need to move to the engagement stage of social-media marketing. I agree that Engagement is job one. It’s how you build your brand and activate word-of-mouth activity. But you also need scale of audience — Likes Matter! — to make engagement really work. And your content will be engaging if you think of it as an ad (Point #1). You need to understand that you are selling something, either your brand’s value or your product.

(4) Paid Owned and Earned 

The level of understanding of what these three words mean — and where they sit within a marketing organization — appears to be inversely proportional to the number of times said words are casually dropped on panels and in cocktail parties. We have fragmented our teams and put up walls to keep the learning from what we do in Paid Media away from what we do in Owned Media — while the Earned Media is a jump ball. We expect this to start to get sorted out between marketers, agencies and vendors this year, but it likely won’t be quick (or pretty). 

(5) Audience Insights And Interests Matter  

The Open Graph is awesome — thanks, Facebook! And the openess of the Twitter API is fantastic — thanks, Twitter! But 70 percent of marketers don’t know or store the interests or preferences of their customers. If you don’t know them, you can’t use them.  As a data-driven brand marketer, this is shocking to me but very much a reality in today’s world. I think this will be a big trend that will start slowly this year and be huge in 2013 — and no I don’t think this is Social CRM. CRM is a term that gets over used in all the wrong situations. This is simply about knowing the interestes and preferences that define the people in your social community. Exciting things can start once you know this data.  

Whew! 

We’re finally back in New York after a great couple days in Austin for SXSW Interactive 2012. The conference definitely exceeded our expectations on a number of fronts. We’ll have a few more posts about what we learned and how it relates to our business here at Rallyverse (things that have us very excited), but we’ll kick off our post-conference coverage with some musings on the conference itself and how to survive a couple days in Hipster Nerd Utopia. 

(1) Dude, It’s “South By” 

It took us only a few minutes to figure out that we’d sound like total noobs if we took the time to actually say “South” “By” “South” “West” aloud. It’s a busy conference filled with busy, high energy people. No one has time for those extra two syllables. 

Also, one of the founders here at Rallyverse (who shall remain nameless) developed a nasty habit of then pronouncing “South By” with the lilt of a teenaged mallrat. This is not recommended. I mean, sure, you won’t sound like a noob, but you will sound like a jerk.

(2) 5-Hour Energy, Aspirin and Motrin

South By is an endurance event. This was not a stroll-the-trade-floor-attend-one-party-and-slink-back-to-your-hotel kind of event. You need to be ready for a lean-forward, high-engagement environment.  Besides having great comfortable shoes, you need to be physically ready for 12 hours on your feet, selling, being interesting and drinking. It turns out that it takes a lot of energy to make smalltalk with strangers for an entire day. If you work in advertising/ media, you’re probably ready for this. To help you through you will need some caffiene (coffee for us, 5-Hour Energy if you’re into that sort of thing), aspirin for the hangover and Motrin to keep the swelling in your feet down.  

(3) Promiscuity That Won’t Get You In Trouble

You’re at a conference that is all about networking. You need to embrace that you (a) should and (b) will talk to dozens if not hundreds of strangers over the course of four days. Rest assured that everyone else is there for the same thing: either business or money or both (inasmuch as these are different things). Strangers will shamelessly approach and interrogate you. You’ll do the same to them. So remember to be interesting but quick; if there isn’t a good fit, exchange cards and pleasantries and move on.  If there is fit, push for how you work together.  Get details and follow up quickly either at the conference or right after.  Also, there’s no need to be anything but nice; if anything, South By should remind you just how small a world it can be — no room for jerks. 

(4) This Is A Young Person’s Conference

Note 1-3, if you are approaching 40 or above, you will feel noticeably out of place.  Don’t worry — embrace it! Inhale the energy and excitement of the event. Lean into the differences, and I think you’ll be pleased to discover that a lot of the young people are just as interested in you (though some might just think you’ll be able to fund them…or buy them beer).  

(5) Don’t Do Dinner. Or Lunch. Or Really Anything But Cocktail Party Snacks and Food Truck Vittles

Don’t plan long dinners at South By — just not worth it. Everyone is overbooked and has ten other parties they want to go to or crash. No one can afford to stay in one place for two hours. Plus, we have been walking, talking and drinking for the past six hours, if you make us sit down we may fall asleep. Don’t sweat being hungry, though — turns out you can make it all the way through your day subsisting exclusively on cocktail party snacks (I had a meal of an asparagus and french fries one day, no joke) or treats from food trucks (hello, Coreanos and MMMpanadas!) 

(6) It Only Counts As Crashing If There’s A Line

There are many many parties at South By. You will be invited to some of them. A friend or colleague will be invited to others (and will graciously help you enter). And then there  will be the ones where you really don’t know anyone at all, but “it’s at a barbecue place and maybe they’ll have awesome free barbecue — whaddya say we go?” And you know what? So long as there’s room inside, and you’re bringing something to the table — some energy and a positive, outgoing vibe — there’s going to be room for you there. Sure, there are uptight folks with clipboards lurking at some places, but for the most part, there was plenty of fun on offer. 

(7) Don’t Sweat The Hassles

From everything we’ve mentioned so far, it sure sounds like South By = Life Is Meadows At Last. Well of course it isn’t perfect. You have to show up early if you want a seat for a session. It’s hard to find a place to stay ($792/ night for the Super 8 Motel!). Your phone will definitely run out of juice. The wi-fi will be slow. It will be impossible to get a cab at times. But you know what? The good definitely outweighs the bad, and you quickly learn to work around the challenges. You show up a little earlier for sessions. You rent a chill house a few miles north of downtown on AirBNB. You don’t fiddle aimlessly with your phone. You put your computer down and listen a bit more. And, in a pinch, you can just take the bus (Editor’s note: I rode the Austin bus twice more this weekend than I did in the 18 months I actually lived in Austin).

Great new Infographic on The Social Networks and their demo breakdown.  I believe the numbers but when we look at how our customers data, what really matters is not who in in the network but who is active in sharing and connecting.  They are the people that amplify your voice and your brand.  But great data none the less.

http://www.searchenginejournal.com/social-media-demographics-infographic/41185/

Making the call on who to hire and train as a Community or Social Media Manager.  Here is a quick infographic on the topic.    

Whatever you decide, Rallyverse can help.  We can help your Community Manager in doing a great job growing and engaging your community with brand relevant content in a simple easy to use interface.