Over the weekend AllthingsD published a quality piece of analysis on the disruptive influence of Facebook on the rest of the web. The article also discusses how growth across the “desktop” web has stalled in 2010 as the users go mobile. The analysis confirmed what we have been saying here for some time. Firstly: Facebook is not disrupting Google but it is disrupting the established online media players. Secondly: The only medium under threat from mobile is the internet.
“When you exclude just Facebook from the rest of the Web, consumption in terms of minutes of use shrank by nearly nine percent between March 2010 and March 2011, according to data from comScore. And, even when you include Facebook usage, total non-mobile Internet consumption still dropped three percent over the same period.” – AllthingsD: The web is shrinking. Now what?
The article goes on to talk about the social web (i.e. Facebook) vs the searchable web (i.e. Google) when perhaps it would have been more logical to discuss the rise of the public social web (Facebook) vs the current state of the private social web (i.e. Email).
Anyway the article prompted me to go back and finish off that Facebook vs Email vs Google vs Twitter vs SMS study that I undertook earlier in the year.
In the original study I utilised the IAB stats for the email revenues. This time I have tracked down some estimated from the Direct Marketing industry. As you will see if you choose to track down the original study there is a marked difference between the two estimates. The IAB puts the value of email marketing across the USA in 2010 at $0.54 Billion. While email marketing reports puts the value at $$13.4 Billion. The variation one assumes is that the IAB figure accounts for the advertising spend with web mail platforms like Hotmail and GMail while the Email Marketing figures account for electronic DM.
In the graph below I have included all estimated email activity. If you wish to exclude spam from the analysis then the DAPU is closer to 15 or about one third of Facebook’s DAPU.
Once we remap these improved DM email revenue figures into the chart we discover that email is now the runaway advertising success story of the internet so far. This in turn raises the question is Facebook disrupting email?
The answer the question is yes and no.
Last year Morgan Stanley reported that Social Networking had overtaken Web Mail in July 2009 and Web Mail Usage in 11/07. (See Page 37 in the presentation below). So it would appear that Facebook is disruptive the email offerings of the web’s mega portals (i.e. Yahoo! Mail, Hotmail and GMail).
When it comes to email the story is very different.
Royal Pingdom reports that last year 480 Million new email users were added globally to the email network putting the number of email accounts up around 2.9 billion worldwide. Plus, as this chart below clearly illustrates, email is still the most popular daily activity on the internet.
In each case the charts clearly illustrate just how far Facebook has to evolve in terms of engagement, growth and revenue generation capabilities before it is in a position to challenge the incumbent (i.e. Email).
If we examine Facebook’s relative position in the advertising world compared to its immediate competition we discover that Google represents almost 11% of the total $269 Billion US advertising and marketing spend in 2010. Meanwhile Email holds 5% and Facebook just 0.7%.
So why all this excitement about Facebook as the next generation advertising platform? Surely all the hype being generated in the media and the advertising world is disproportional to its relative weight in the marketplace?
As I have said before the key to the Social Media revolution is it is the first online media channel since Yahoo! Circa 1997-2000 that provides the traditional advertising industry with an opportunity to become engaged with the internet in a way they at least think they understand. Put another way the race by the advertising community to support Facebook probably has more to do with the fact it’s not Google than any underlying merits of the platform as a 21st Century advertising and marketing channel.
This was confirmed of the weekend when Marc Ruxin, the Chief Innovation Officer at Universal McCann, announced in Fast Company that the message coming out of the Cannes Advertising Festival last week was Don Draper has been replaced by your user experience designer.
Needless to say you will be waiting a long time if you are waiting for a key player in the advertising game to announce Don Draper has been replaced by your data scientist.
For the moment Facebook keeps the myth alive that you can make the ”browse with us, but buy from them” media model work online.
Needless to say it didn’t work out that way for Yahoo! by 2005. So it will be interesting to see if it works out that way for Facebook in 2015.
July 26th, 2011 → 11:01 pm
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