What happens when you survey 50 media buyers? You learn that media buyers have put a bit of social lipstick on their buys but they still don’t understand the potential of social media, the importance of content, and so much more.
About two weeks ago, two equity research analysts at Cowen & Co surveyed 50 ad buyers. 60% said Facebook delivers the best ROI, 25% picked LinkedIn and just 5% chose Twitter.
The analyst’s conclusion? Sell Twitter. They expect Twitter’s stock price to fall to $32 (it closed at $62.53 on 1/21).
My conclusion? The majority of media buyers are doomed. And Twitter will be just fine.
Why Media Buyers Don’t Like Twitter
According to Cowen & Co’s report, media buyers cited the following concerns about Twitter:
1. Twitter Has High Minimum Spends
Say what? Twitter has a very reasonable $15,000 minimum for their direct sales team, and anyone with an account has received emails promoting Twitter’s self-serve advertising platform where the minimum spend is less than you spend on your morning Americano from Starbucks. For ad buyers dealing with budgets that equity analysts should care about, that’s an effective minimum of zero.
2. Facebook Delivers Better ROI Than Twitter
Have you seen how cheap Facebook ads are? For many marketers, very little can beat Facebook, particularly when you consider that Facebook inventory is available through exchanges now, opening it up to agency trading desks and adding extremely cheap inventory options to targeting data marketers have been refining for years.
Far more notable: Twitter, despite being by far the newest and least traditional (more on that in a minute) of the three advertising platforms they compared, delivers ROI that’s just 9% below average. And this from folks saying the minimum spend for a platform with no minimum is too high.
What This Says About Media Buyers
I plan and buy media. I see this problem first hand: most media buyers are lazy and stuck in their traditional ways. Even digital media buyers. (If you are reading this, no, I don’t mean you. Well, maybe not.)
3. Buyers Want Lazy Targeting
Take a look at the ad interface in Facebook or LinkedIn. It maps perfectly to traditional consumer (Facebook) or B2B (LinkedIn) audience definitions.
- Do you want to reach Males 18 to 34 in the US? Three clicks and Facebook lets you know there are 42 million people who will meet your criteria and what it will cost to get them to your site.
- Do you want to reach senior executives at large manufacturing companies? LinkedIn is easier to deal with than any of the old trade publishers serving that market.
Sadly, most media buyers want it to be this easy. No, Twitter doesn’t make it this easy. But you don’t buy The Onion because you want to reach Males 18-34. You buy The Onion because you want to reach people with interests similar to the typical 18 to 34 year old male.
Online advertising faced a similar challenge in its early years. Marketers and traditional media buyers wanted to purchase against demographics. But those demographics were often extrapolations from descriptions of the real target audience (targeting mom’s with children in the home? That will be Women 25 to 44 please). But online, there were sites that drew moms! It didn’t matter if they were 22 or 48, and you didn’t need to worry about all of the 35 year old single women with no children, they weren’t on those sites!
You could reach your real target audience, but it required breaking your traditional ways of thinking and buyers were ready. Twitter requires breaking the traditional ways of thinking too, and again, most buyers today aren’t up for the challenge.
4. Media Buyers Don’t Understand Twitter
I’ve talked to multiple digital media sales reps over the last few years that joined Twitter as a way to stay connected with their early adopter, digital-savvy, media buyers. Almost every one has said that it has been a failure. Buyers readily connect with them on Facebook or LinkedIn, but they just aren’t there on Twitter.
Most of those rep accounts have since been abandoned. The lesson? Media buyers don’t understand the non-reciprocal following of Twitter, the way keywords are used (and not used) by their target audiences, even the experience of Promoted Tweets for people who use Twitter regularly.
Because they don’t understand Twitter and effective tools aren’t available, their programs aren’t effective yet. This shouldn’t surprise anyone!
5. Advertising People Still Don’t Grok Content
Yes, content as the context for an ad is important to media buyers. But advertising as a way to distribute content, not advertising messages, in order to increase purchase consideration? Most media buyers just aren’t there.
In B2B marketing, media buyers just want to put a lead generation form in front of content. The form and follow-up communications will get the sale, not the content. In B2C marketing, buyers distribute their own content, essentially using ads to drive distribution of more ads.
But distributing credible persuasive content that changes people’s perspectives? In their view, that’s not the way advertising works. There is no reach and frequency, no quintiles in planning and no new low-cost per point (or CPM for digital folks) that points to their efficiency. But its well past time for this to change.
According to a report from InPowered and Marketing Evolution, when compared to a baseline control group, people who read “expert earned media had a 58% lift in purchase consideration and a 68% lift in likeliness to share info about the product with others.” Those are eye-popping stats. (full report)
One of Twitter’s core strengths is distributing serious content. Despite an audience that is a fraction of Facebook’s, look at the visits in the chart below to WSJ.com from Twitter. The takeaway? If you want to distribute meaningful content (and media folks, you need to), Twitter deserves serious consideration.
6. Scale Is a Red Herring
Twitter, according to the report, has 232 million monthly active users. That’s no match for Facebook’s gazillion users, but does it really matter?
- This year’s season premiere of American Idol 15 million viewers and was the top drawing program of the day. (source)
- The 2013 Super Bowl drew 109 million viewers. (source)
Twitter draws more than twice as many people as the Super Bowl every month, all year long.
Twitter has recently opened up their platform to exchange buyers, similar to Facebook’s FBX introduction in 2012. Given today’s increasing investments in RTB, this bodes very well for Twitter, but doesn’t even warrant a mention in the summary of the analyst report.
Maybe the equity analysts are right about one thing: Twitter’s advertising platform hasn’t been well received by today’s media buyers and yes, that could be a drag on Twitter’s stock.
But they are completely discounting the opportunity of Twitter advertising and the impact that educating buyers will have. And with the investment Twitter appears to be making in both their product and ad sales teams, they will have an opportunity to educate buyers. It wasn’t very long ago that search was a speck on the advertising landscape and Facebook didn’t even have ads.
Interestingly, since Cowen & Co initiated coverage, the stock is up about 10%, from 57.05 (1/9) to 62.53 (1/21). During that time, Goldman Sachs raised their price target to $65 and another firm last week initiated coverage with a $75 price target.
So $32, $65 and $75 targets for the same company? Equity analysts might be as dated as media buyers.
What do you think of Twitter’s ad platform and today’s media buyers? Share your view in the comments below or with me on Twitter (@wittlake).