Owning the conversation and understanding audience behaviour is key to revenues
Social networks revolutionised how brands interact with audiences, but is the state of today’s social revenue distribution sustainable for brands?
Brands fund the social ecosystem, spending $31Bn on ad campaigns last year, contributing audiences and content, in exchange for market reach and unrestricted monetisation of their audiences. Facebook’s boosted posts can be viewed as a euphemism for having to pay to interact with your own audience in order to bypass unfavourable display algorithms.
The disparity of social revenue distribution means global FMCG brand with an audience of 54m generated an estimated $656m in combined social revenues, returning reciprocal value of $1.1m. Even brands with more typical audience sizes of 3m, would generate $51.7m for social networks, with reciprocal values up to $0.51m.
Different sectors, common issue
Online ad-funded media receives the double whammy. Contributing content that drives traffic to Facebook and Google, who consume 77% of gross US online ad spending, resulting in well-documented unsustainable CPM margin pressure.
Mobile operators, possess in-built advantages to create propositions for brands, with 70% of brands admitting they can’t collect social media data, past debatable likes and shares, this could provide a great opportunity for mobile operators.
Fashion is one segment of retail dominated by mobile distribution. Boohoo has 66% of sessions originating via mobile, reporting stellar growth converting 4.4% of conversations into sales. The opportunity to maintain reach whilst operating live social business models to increase conversions and improve retention is compelling.
A shift to Direct-To-Consumer
Revenue-sharing deals make a crucial contribution for content providers, but operating in the context of variable agreements, its no surprise that Shane Smith, CEO of VICE, predicted a media ‘bloodbath’ in 2017, subsequently announcing Vice’s investment into direct-to-consumer to own the conversation.
Vice will not be alone. Speaking in confidence, some of the largest brands, whilst being fearful of risking current revenue-sharing agreements, are evaluating direct-to-consumer strategies.
The value of audience ownership
Owning the conversation changes the economics of social, delivering niche penetration for brands, to compliment today’s mass-market reach that social networks currently deliver.
Live social business offer the market potential to exceed ad-inventory values for brands, providing the tools to convert conversations into sales, improving retention, and completely reinventing online partnerships.
Easyjet’s well-documented 20-year celebratory campaign, created personalised campaigns based on owning audiences providing behavioural insights that impacted engagement to increase CTR by 25% with conversions reaching 7.5%. This was only possible with Easyjet owning the conversation, understanding who they were conversing with, and having the tools to convert.
Owning the conversation, understanding behaviour means revenues
Brands wishing to drive traffic from anonymous audiences and sell online ad inventory have a sustainable model. However, brands wishing to monetise social audiences will increasingly augment the reach of social networks and implement complimentary direct-to-consumer strategies with live social business models to regain control, revenues, and live audience.
Luke Newsum is a market executive at GLOBALDRUM.
 Hootsuite 2016
 Average revenue per user
 Facebook and Twitter annual reports
 Salesforce 2016
 GLOBALDRUM partner data
 IAB 2017
 DMA 2016
 Boohoo 2017
 Shane Smith – Vice Media, 2016
 Campaign, 2017