Is Facebook Worth $33 Billion Dollars? Who is Smoking Dope?

There was an article from the NY Times by Andrew Ross Sorkin about the Value of Facebook

LINK

There was also two competing blog posts one from GigaOm and one from Hacker News. Links are in the article. Without going into a drawn out discussion, and forget the two Blog Posts written by people with no financial experience, I will make this easy. Yesterday's post discussed the potential for misleading numbers from Facebook. I also had posted recently why Social is not in the C-Suite showing the ridiculously pitiful Facebook Fan Page performance for Big Brands.

I can use a myriad of stocks for comparison but since I used Apple yesterday let me use them.

If you had money to invest who would you invest in if you had to choose one:

Apple: 

Market Cap: 262Bil      - total value of all shares outstanding

P/E:  21.63                  - Price per $1 in earnings

EPS: 13.29                  - Earnings per Outstanding Share

Apples cost per dollar of revenue is $4.36 This company had $42bil in revenue for it's last fiscal year ending Sept 2009. It is on a $60bil revenue run rate as of last quarter ending Jun 26.

LINK

In fact they are on pace for $11bil in NET PROFITS. That is Microsoft and WalMart Territory!

Facebook:

Market Cap: $33bil
$1.5 bil in revenue

Profits? Unknown.

At $33bil you pay $22 per $1 in revenue

P/E ratio is unknown. Lets be generous and say that 33% is NET profit so $500mil

That would make the P/E ratio of 66 which would make it one of the Riskiest Investments in the Stock Market (Higher the P/E the higher the risk)

Who do you invest in?

Should We Believe the Facebook or DoubleClick Numbers.....

I have a Finance Degree. I analyze stocks all the time because I enjoy it. I can look at the fortune 500 stats for hours and find glee. One purpose Sky Pulse Media serves is to help Clients value the various Advertising and Marketing platforms and channels properly to maximize ROI. Everything has a value.

We also know the last Private Investor in Facebook gave a $23bil value. If Facebook goes public at less than that the investors lose money on paper and in reality. For example if I bought a 10% share in Facebook for $2.3 bil expecting the value of the stock to reach $40bil at IPO and instead it goes public at $11.5bil I lost half my investment.

Some numbers recently have me very perplexed:

A recent Ad Week article cited Facebook having 146mil unique visitors in July, while DoubleClick claims 540mil. Which one is correct? This is HUGE. Because 70% of Facebook users per their Stats Page are not in the US. So either there are 43mil monthly US users or 162mil. Which is it?

Secondly DopubleClick Claims 690Bil Page views in July for Facebook.  Is this possible even if 540mil users are accurate? That comes out to 42 page views per user each day assuming all 540mil log in each day. Since Facebook claims only 200mil+ that means everyone who logs in each day averages over 100 page views per day. That seems absolutely impossible.

Also Facebook claims 55mins per day per user, Nielsen claims 6hrs per user per month!

This means something is either being measured differently for Facebook because of the way the website is structured. Or the measurements are completely untrue. The big issue is Wall Street will see the exact same thing and completely discount the value of Facebook because they won't know what to believe.

One last measure. If you buy Apple stock the cost is $6 per $1 of Apple Revenue. At the same valuation Facebook is worth $9bil. Would you pay $15 per $1 of revenue for Facebook instead of buying Apple. Apple makes Computers, MP3 Players, Tablets, Phones and has revenue streams with ITunes and the APP store. Facebook could go the way of Myspace in 3 years. Do you feel Facebook has the dedicated loyalty Apple has?

Something to think about. My next post will discuss why Traffic Numbers might be (or can be) fudged.

Why Social Media is a threat to Digital Cameras

Not sure if you saw this article in the Wall Street Journal. Kodak and I am sure the rest of the Camera makers are freaking out.

LINK

The article doesn't state this. But I started pondering since I just ended my phone shame a month ago with my first real smart phone a Droid2 from Motorola. Social is destroying the low end of the camera market. Low end cameras have gotten so inexpensive your basic camera in your phone takes great photos, and with a smart phone you can upload directly to Twitter or Facebook among other options like Picasa and even to send to a retail printer!

The camera industry has gone through more convulsions than even the Newspaper Industry in my opinion. First came disposable cameras, then for Kodak cheaper imports via Fuji for Film, then digital and mobile via phones, and now social.

Yesterday I went to the Hudson Valley Garlic Festival in Saugerties, NY www.hvgf.org

Granted there is a lack of organizing them, but for simply sharing my phone rocks, and I can transfer from my phone to my laptop hard drive very easily via media sharing using WiFi or USB connection.

All of these photos I took via my Droid2 and uploaded to Twitter, enjoy:

http://twitpic.com/photos/skypulsemedia

Myers-Briggs and Why Your Customer Can't Understand You

If you are in Marketing/Advertising and you do not know of Myers-Briggs, have not learned more about personality types, you are doing yourself and your clients a huge disfavor.

http://www.myersbriggs.org/

I am an I/E N F P , you should take the test and learn what you are. Instead of getting into a very long and boring discourse I will give a few points:

N stands for Abstract Communicator vs S which is Sensate Communicator

This has nothing to do with understanding Abstract Concepts.

Abstract people are only 25% of the Population (Nature not Nurture). We tend to use analogies when we talk. Its not just Red. Its Red as a Brick. A Sensate communicator will just say it is red.

P stands for Perceiver. Perceivers take in new information and constantly update their view of the world. The opposite is Judgers. They tend to be traditionalists and never question things. George Bush was a Judger. In the face of new facts you could not change his view on anything. Once created its almost permanent.

45% of the world population is Sensate Judgers. It is very hard to change this Demographic's viewpoints. They were the ones who claimed the Earth was flat even after Columbus came back safely.

F is for Feeler. Vs T for Technical. The two types utilize tools differently.

I is for Introvert, E is for Extrovert. This is self explanatory.

So when you create, when you copyright, when you strategize this is hugely challenging. You might have a damaged brand, that a large portion of people will never give a second chance.  You possibly have large groups of people who will not understand your pitch just due to language. You will have large groups that won't grasp a concept that to you seems simple. I don't have a uniform answer. But you should be aware this exists.

Big Brands should Think Local with Social Media!

Yesterday I showed why Social Media has not made it into the C-Suite of Consciousness in big Brands because it is not driving sales on a large scale. But that can change. Some Brands can do this easier than others. But all can do it, even if it is by Proxy.

THINK LOCAL

I view the benefits of Social Media being the intimacy it can bring via technology between people. People don't want to talk to Brands. They want to talk to people. I have had good experiences with some Brands. Namely Vans and McDonald's where I have had personal contact by real people via Twitter. Nikki S(@Vans_66) helped me me find sources for my trademark bright Orange Laces for my new Black Suede Vans. And Katy at McDonald's (@ktymcd) answered an Australian Prank via @wisey asking what is in the Filet-o-Fish (only works in a McDonalds!). That is easy when you have a small pool of followers to deal with vs millions.

If you are Pepsi and there are 7,000 Tweets about you today, no way even with a full team of workers in Corp HQ can you make all those people feel valued in a personal way. You can automate responses etc. But that is like talking to an automated phone system. Pepsi has 800m-1b customers. You can not talk to all those people!

But what if you had local points of contact. Like Starbucks or McDonalds. Wouldn't it be better to have a strategy for the people working at those locations to engage in social with the local patrons to build relationships? I used to have a Starbucks 3/4 block from my apartment in Redondo Beach, Ca. It was faster for me to get coffee there than make it. I spent $5 a day 5 days a week at Starbucks. $1300 a year just for mornings! Even when I worked from home! Sometimes I went back in the afternoon. But I always had the same order and the minute I walked in they started making it. That earned them my devoted stupid blind spending.

Now most people have a choice. They can visit numerous places for similar things. You are going to choose the places with best product, service, and people. Wouldn't Social give you a leg up? Couldn't a local employee who sees me do a better job than someone at HQ. Think of my Starbucks story. What if I could get 50 more people to behave like I did. Just 50. That is $65,000 increase in revenues for that location. Over 500 Locations that is $32.5 mil and now someone in the C-Suite might start paying a bit more attention.

You might think $65,000 is small beans. But think of the Baristas or McDonald's workers and how much they get paid. That easily covers better pay all around, higher morale, and an impact on sales and customer retention.

On this note of going local, the esteemed Aaron Strout (@aaronstrout) - CMO of Powered (www.powered.com) and co-host of the Quick-n-Dirty Podcast (see links to your left) was promoting his Colleague and VP of Strategy Greg Verdino's new book about MicroMarketing. I have not read the book. Greg has been on the Beancast (see links to your left) in the past and is a very smart fellow. 

http://blog.stroutmeister.com/2010/09/next-big-thing-lots-of-little-things.html

Why Social Media is not in the C Suite of Big Brands

Last week I helped you as a marketer figure out the reality in terms of how many people are active on Twitter and Facebook, vs the number the networks want you to believe.

Today it's time for a different angle. I have stated that Social Media is an Interpersonal Communications Technology Revolution connecting people all over the world. And yes it has empowered the people to mobilize, thus making listening skills important to ensure your Brand keeps it's image up. But why so little caring and spending from CMO's and thus acceptance by CFO/CEO's when it comes to marketing/selling?

If you are in the C-Suite of a Fortune 1000 company you make a lot of money. Your money is enhanced by the stock price. The stock price is moved by sales. Big sales. Not small sales. You are going to focus on the big bang for your buck. Not whether Nancy in Iowa is a loyal Brand Ambassador.

So I am going to use Facebook which is viewed as the largest scalable network. Some Brands have upwards of 10mil fans. But I already proved that possibly up to 60% of users on Facebook are Ghosts. They either just browse or they do not exist. Now some case studies with my estimates of their actual customer base world wide. Engagement is the average number of people who either click Like or Comment on a Fan Page Post from the Brand:

Nabisco Cookies:

Customers: 600mil +

Fans:527,000= 0.08% of their Customers

Engagement:100-500= 0.02% to 0.09% of their Fans
Twitter Followers: 0 could not find a Nabisco or Oreo's account.

Not making money for the CEO

McDonalds:

Customers: 26mil per day! I estimate 1 bil customers

Fans: 3mil = 0.3% of their customers

Engagement:500-1500= 0.016% to 0.05% Engagement
Twitter Followers: 46,000

Not making money for the CEO

Starbucks: 

Customers: 400mil

Fans: 13mil = 0.325% of their customers

Engagement: 100-400 wall posts by Fans (Starbucks does not post to its wall)
Twitter Followers: 1mil- Starbucks does get a ton of mentions on Twitter due to FourSquare etc, but I posit that this is not adding to sales very much. Twitter is not drawing people into Starbucks, people are Tweeting they are there, or that they want Starbucks. This has nothing to do with what Starbucks is doing on Twitter. In fact the Official Starbucks Twitter Account averages only 1-10 Tweets per day.

Not making any money for the CEO.

I am not saying this will never change. What I am saying that until it does change the CEO doesn't give a flying f*ck about Social. In fact Vice Presidents might not either other than thinking its a cute new accessory for their image. And a caveat, the engagement numbers are actually better if 60% of Fans are Ghosts, but the percentage of world wide customers are much worse if this is true, or if I severely underestimate world wide customers.

My next post will be using Starbucks and McDonalds as a case study in what they can do to improve their Social Media impact and results.

I make movies! You can too with Xtranormal

Anyone can make their own movies. It is a Text to Voice Service. If you have never edited a movie before this will truly give you a taste of how hard it is for video and sound editors to get things just right.

www.xtranormal.com

Here are my first two tries. Both doing a take on two of my favorite Podcasts. And yes both are unofficial, unsanctioned, and meant to be funny. The real Podcasts are two you should be listening too every week if you are in Marketing, Technology, Advertising, or Social Media.

Adverve

Quick-n-Dirty

Both Official Versions can be found via Links to your left.

How to Cut Through the Social Media Start Up Bullshit and Get to the Meat

Marketers are gullible. It is in their nature. They are trained to often not tell the truth in order to sell product. Watch TV Ads. How many are truthful? Almost none of them. They all fib in some way. Talking Gecko's eh? I notice that the Journalists who cover Advertising/Media tend to also be of the same vein. It drives people like me who are Sales/Finance folks crazy. I see the same Bullshit regurgitated and tweeted and blogged and written about all the time. They want to cloud ROI so they don't have to be accountable for the fact they are snowing Brands and taking their money.

So I am here to help you understand what someone on Wall Street who crunches numbers would look at. This is important because its one thing to accept a lie or fib, it's another to pass this on to clients. The goal is being able to reach someone with an Ad or Pitch. 

Twitter:

Twitter has 100mil accounts. That is the number you hear over and over. WOW 100million! But I want to reach someone. That is the goal of a marketer (never mind a friend using it to communicate with another human). I look at number of Tweets/Day and divide by 4-10. That is the number on the network that day. I tweet from 4 accounts (3 personal, 1 client) about 40-50 Tweets in a day. But taking people who tweet once to balance things out I use 4-10 to give me a range. Which is 9m to 22mil people world wide. 60% of these people are outside the US. Which gives me 4mil to 9mil in the US using the network. (Currently they are running at 80mil-90mil Tweets per day)

Facebook:

Facebook has 500mil accounts. 500 MILLION! Holy baloney Batman. Isn't it in Facebook's best interest to focus on that? What if they created 100million of them just to ensure the Hype? How do we know they did not? So key metrics I would look at is actions/activity. In April I blogged about the metrics taking everything from their stats page. At the time they claimed 200mil Log Ins per day!

But the stats page since scrubbed clean of the damning info said this:

35 Million Updates per day.

65 Million Comments per day.

So let me get this straight. 200 mil Log Ins. 100 million actions. If each action was done by 1 person and no one took more than one action, that means half the log ins did NOTHING. I assume many people who do take an action do more than one. My estimate thus becomes 30mil-40mil Active Users Per Day. World Wide!

How can you reach someone via a Fan Page or an Ad if people are not Actively Engaging on the site?

Yesterday was the Coup De Grace: Ad Week in a Myspace Article said Facebook had 146mil unique Visitors in July. Now even the 200mil log ins seem very suspicious.

But now you have better parameters for discussion. You can tell clients the pool of users is bigger than an American Idol Audience but smaller than the Super Bowl. You can discuss how you can build small communities and develop loyalty. But in a framework of honesty so expectations are set properly.

My next blogpost will cover how to analyze Engagement Rates for Brands on Facebook from the context of their complete customer base.

What if tomorrow Facebook disappeared?

Anyone who has read my past blog know I am a big, no huge, champion of social media, but also one of privacy and ethics. That I rail against Facebook for it's weaselly treatment of its users and how they try so hard to exploit them for monetary gain, vs investing in them and charging them for use of a great network. I have also explained the horrible business model they have, and lastly the fact that another network will arise that takes them down eventually.

So I ask you. What if tomorrow everyone jumped ship to a private network that excluded brands? No fan pages. Nothing public. Every comment, photo etc is private within a network that is closed to even Google and Bing searches?

What would Brands do? Would it affect Brands in any way in terms of sales, customers etc? What would happen to Agencies that only do Social, and Community Building? What about all the Journalists? If Facebook was gone tomorrow what would you do? Not personally, I mean for Business. You? You just join the new network and get comfy with your friends and family again.

 

I have my thoughts I want yours.

The Agency of the Future? You are kidding correct?

I really am sick of hearing this. Been seeing people write blogs and articles about this for quite some time. The reason is because many Agency's tend to pick a specific advertising channel, become strong in it, then work hard to defend their vested interests in the face of technological and social change. There is also this 'BIG LIE' being told that the 'Agency of the Future' is supposed to be something concrete. Like one format is the only one that works.

Starting with the 70's in the face of dramatic and rapid change this discussion has gone on every day of the year. The problem today is that we have too many people with opinions at too many companies and individual businesses who all can blog, tweet etc. We also have too many people involved in providing news so that editors must justify salaries by finding filler for their print and web pages.

The Agency of the Future is TODAY. This Agency has the following 10 traits:

1]   Focuses on the Client's need first, second and third. Which is SELLING
      SOMETHING!

2]   Focuses on a Return on Investment for their Clients and spends the Clients
      money wisely.

3]   Has Talented People and Connections.

4]   Has the answers the Client seeks even if they have to go outside their

      Organization to find them.

5]   Constantly Evolves with the Times and Technologies.

6]   Is willing to cannibalize existing entrenched interests when it benefits the

      Client, and should look at this as paths that lead to new streams of    

      revenue.

7]   Is not tied down by location.

8]   Has the Cojones to tell the client the truth even if this means a reduction

      in their revenue bookings.

9]   Everyday thinks about what kind of Value to they bring to the
      Sales Channel.

10] Gives unbiased sound Advice and remembers without Customers for their
      Client, the Client does not exist!

Please note I have omitted the words: Creative. Social Media. Conversation.

Sunday Fun!

I got this from my friend's incredible blog which I HIGHLY recommend you follow if you enjoy Art, Art in NYC-LA-World, and Travel.

www.c-monster.net

Can Mobile Save Digital Advertising?

A little history. I like underdogs. I have no problem using Windows or Google. But whenever someone starts dominating I try to feed my business elsewhere. I use Open Office vs Microsoft Office. I use Fire Fox vs Chrome, IE, or Safari. I even use Bing now, but possibly moving back to Google. 

For many years prior to coming to the Ad Industry I used FireFox with Ad Blocker Plus. I also use No Scripts to protect from viruses from unknown web pages. When fully running all digital ad networks (and analytics) are blocked from my browser. Almost all digital advertising is also blocked. This includes Facebook Ads, Digital Ads, and even the Paid/Sponsored Search results on Google and Bing. So I would not see Ad Words results.

Safari and Chrome do not allow blocking of Ads. This is why Google invented Chrome. It was not to improve your user experience. It was to ensure they don't lose money.

Now I unlock many sites I get free content from out of my own feeling of ethics. But still have not enabled one Ad Network and most Web is still shut down. If I visit often and trust your site I unblock you.

I have a client who shares their web traffic with me. Slowly the share of FireFox has climbed over 30%. And as you can see almost 1mil people are downloading Ad Blocker each week.

So my question is will Mobile that has no such Ad Blocking yet be able to make up for potential lost Digital Ad Revenue. I now have a Droid2. I must say the little scrolling banner ads suck completely. So I have not clicked on a Mobile Ad yet. And while I know IPad doesn't allow FireFox, Netbooks do. It is unknown by me if the new Tablets all coming out will allow the open source web browser but don't be surprised if it happens. Would this mean a pure pay for content business model one day on the internet? And would that be a bad thing?

The Myth of Viral and Klout

Everyone wants Viral. The Social Media Industry in it's own best interest have created the Myth of Viral for Brands and Businesses. They talk about Influencers like they can help your Brand. But is this really the way to market and sell and engage via Social Networks?

First off I wish to give Kudos to Adverve: LINK They hosted an expert Josh Warner, who's company helps Brands with viral video views. Josh in his honesty claimed only 5 or 6 Viral successes out of over 120 Campaigns.All the campaigns met the view goals but only a handful went truly Viral.

Using Twitter as a better case study I was building a following for a client. Using HootSuite I could see very easily these metrics: Number of Followers. No. they are following. Klout Score (silly measurement no one should take seriously) and Tweets per day.

At first you are like a kid in a candy store. The feeling is the bigger the number of followers the more potential to spread my clients message. This turned out to be a false assumption. The two biggest metrics we should be looking at is how active they are on Twitter (No. of Tweets per day) and secondly the lower the number of people they follow the higher the chance they will see a Tweet from my client.

I came to this conclusion because we had a low number of Trivia Game players and that the players who had the smallest networks usually played and won. Why is this?

I use an average measure of 4 tweets per person on Twitter. This balances out the people who tweet once per day and those who Tweet a lot. The more accounts you follow the more Tweets that come into your feed, reducing the chance of you seeing a specific tweet that is not directed at that person.

Extreme example: @ChrisBrogan He has an 86 Klout and 150,000 followers. He also follows 140,000 accounts. So his stream should have about 560,000 tweets per day coming to him. GOOD LUCK 

GETTING YOUR TWEET SEEN! Never mind retweeted.

But someone who has a small network and is a heavy Tweeter means 1] They will see your tweet 2] They are using the service all day. Remember once a Tweet is missed it goes into the Twitter Afterlife Void of Nothingness.

The same holds for Facebook. Both Live Feeds are so filled with Clutter that it is impossible to get your message seen on a consistent basis. This doesn't make me negative on Social Media. In fact its a revolution in interpersonal communication. But to get heard as a Brand or for Engagement it is a pure crap shoot. Most Brand Fan Pages on Facebook have less than 0.1% Engagement levels.

Be Realistic - Have goals that are real. Don't be arrogant.

Bring Value - give your network a reason to WANT to engage with you.

Happiness

Social Media Random Pitfalls

I have written in the past about porn spam on Facebook similar to what Myspace had but instead of showing up in your email, they post to Major Brand Fan Pages (examples are Doritos, Dunkin Donuts).

For years one of the issues holding back monetization of Social Media is the randomness of user uploaded content that could be good or bad to associate with. It goes beyond advertising. This is a really funny example via good intentions. This company used a Facebook Widget to showcase it's Fans, but of course we can't Choose our Fan's on Facebook!

Live Feed from Burningman, Black Rock City, NV

If you have never been, it is very cool. The art and music and performances and theme camps and art cars and costumes are over the top. Best event I have ever attended.

http://www.ustream.tv/burningman