ImaginativePRO Blog

PETER SHANKMAN ON FACEBOOK MARKETING, "LESS IS BETTER" AND "SHARING FOR THE SAKE OF JUST HEARING YOURSELF TALK IS POINTLESS"

So, what’s the best way to market your brand on Facebook? According to Peter Shankman, an entrepreneur and venture capitalist with a hearty background of marketing and consulting under his belt, the answer is actually pretty easy:

“Sharing for the sake of just hearing yourself talk is pointless.”

Yes, the key to doing more is doing it with less. With all of the changes that have been implemented among Facebook Brand Pages within the last year, from the end of Facebook Discussions and Reviews in October to the roll-out of Timeline for Brands this spring, it’s hard to keep track of what’s actually working for brands on Facebook. The most recent numbers actually indicate fan growth slowed with the Brand Timeline switch. But thinking smart transcends those changes — and never goes out of style.

Peter Shankman

Shankman explains.

“You want to engage your audience and make sure that they feel like they’re apart of something — not just being marketed to.  Then they will do your PR for you.”

Shankman’s experience with brands runs deep. The former journalist and founder of Help A Reporter Out has written two books on marketing and customer service in the social media world — Customer Service: New Rules for a Social Media World and Can We Do That?! Outrageous PR Stunts That Work — and Why Your Company Needs Them. He’s also frequently globetrotting to consult and speak on PR and social media, and has worked with major companies, such as American Express and Disney. through his company, The Geek Factory.

Mashable spoke with Shankman about the inner workings of Facebook marketing and what users really want to see on your brand page.

Want to Lose Followers? Be Repetitive

It’s really true that in life, one size does not fit all. The same can be said about your social media networks, too. Shankman says that nothing bothers him more than seeing brands post repetitive content on every social platform available — including their Facebook Brand Timeline.

He says.  

“If you’re pushing the same crap onto your Facebook, you deserve to get your ass kicked.”

Instead, Shankman advises to place special content onto your Timeline that can engage users in a unique way — not just spamming the same information over every platform available. That way, when fans know what kind of content to expect from your page, they will know to return to your brand site for specific engagement instead of clicking the back button.

Shankman explains.  

“Let it be something your audience wants to see, that they’re excited about.   When you have those kinds of things, that’s when you want to share.”

Nothing Smart to Say? Don’t Say It at All

Shankman says that the best way to produce smart content is to engage in a conversation with your fans. Asking questions about the quality of the brand or polling users about what they want to see from a service are always more engaging than just pumping out promotional material.

Shankman says.

“You have to engage and you have to respond.  It can’t just be about posting ‘Hey! 10% off for the next five minutes!’”

But even a careful and thoughtful dialogue on a Brand Page won’t yield rainbows and sunshine all the time.   Shankman admits that every brand will have its haters or vocal fans who have had a bad experience with a service or product. But, don’t just ignore and delete the complaints of your naysayers just because your Timeline is a finite medium. He says that mistakes are often best received by fans when they’re approached head-on — and with transparency.

He advises.  

“Work with them.  Be honest and say, ‘Hey! We didn’t do this right and we’re trying to make it better.’”

Keep it Simple, Stupid

So what content actually works for brands? Shankman advises that content should be tailored to your audience, not just the things that you find interesting about your own brand. He adds that it’s also unwise to attempt to treat your Brand Page simply as a satellite to your company’s blog or website.

He says.

“Facebook is an entirely different animal.  You can’t just repopulate your entire website onto it.”

So if promotional material can fail and the copy you already have can fail, what do you have left? Shankman says that no two brands are alike, so there’s no panacea for every Brand Page on Facebook. In fact, the easiest way to find out what does work on your company’s Brand Page is to ask the fans that frequent it.

Shankman says.

“The best way to give information to your audience is to find out how your audience wants it.  You’ll never go wrong with that.”

Conclusion

Shankman says that, in short: It’s not about you, it’s about your audience. Shankman says the biggest mistake that brands make is self-absorption — if you make your content for yourself and not for your fans, you’re going to motivate them to click the back button and maybe remove you from their feed entirely. Instead, treating Facebook like the unique medium it is can help your brand’s social media reputation in the long run — and perhaps motivate your fans to evangelize your product and influence their own circles. As Shankman says, “Give them reasons to want to be there and to want to talk to other people.”

COMMENTARY:  If I were to add anything to what Peter Shankman said, it is that Facebook is the wrong platform for selling anything.  If you've followed my blog posts, I have been pretty vocal about about social media platforms and their failure in generating sales, and very critical of the ad-supported revenue model utilized by Facebook and other social networks.  The viability of Facebook commerce or F-commerce is also being questioned with several large retailers closing down their Facebook stores abruptly.  However, for engaging and sharing with your fans, creating brand awareness, conducting promotions, contests and sweepstakes, creating buzz and word-of-mouth, providing customer service feedback, conducting marketing research, and offering social games (Zynga has built its entire business on Facebook), then Facebook is pretty good.

Courtesy of an article dated April 26, 2012 appearing in Mashable    

19-YEAR OLD SAHIL LAVINGIA, A FORMER PINTEREST DESIGNER, LAUNCHES GUMROAD, WHERE YOU CAN "SELL ANYTHING YOU CAN SHARE"

At 19, Sahil Lavingia has already designed scores of apps and worked at one of the hottest startups in the world--but he's only getting started.

At 18, Sahil Lavingia helped design the massively successful Pinterest, currently the third most popular social network, behind Twitter and Facebook. The Wall Street Journal has a Pinterest board. Barack Obama has one.

Sahil Lavingia, 19-year 0ld founder and CEO of Gumroad (Click Image To Enlarge)

Then, a year in, Lavingia left. Now he's starting Gumroad, a new service which he says will revolutionize social shopping and e-commerce--and maybe even alter the way people create. Here’s how it works: Say you’ve made something--a song, a blog post, an app, etc.--and you want to make a little money from it. Just upload it, price it, then Gumroad, whose slogan is, “Sell anything you can share,” provides you with a custom product URL that is easily shareable across your existing social networks. Gumroad makes money by taking a 5% cut out of each purchase.

 

Lavingia says. 

“I was at home on a Friday night in Palo Alto and I really wanted to learn realistic icon design.  So I sat down at my computer and worked on this photorealistic pencil I’d designed in Photoshop. It took me around four hours and I thought, 'Wait a sec--if I follow a bunch of designers on Twitter, a bunch of designers probably follow me, and I should try to sell this. I could just put it up for a buck, and if you buy it, I’m gonna do it again.”

Gumroad homepage (Click Image To Enlarge)

Gumroad - How It Works (Click Image To Enlarge)

The trouble was, Lavingia couldn’t find an online marketplace that fit his needs. Most services charged a monthly subscription fee, which doesn't make a lot of sense to pay if you’re only selling something for a dollar. So by the following Monday, after a marathon weekend during which Lavingia did little more than code and sleep, Gumroad was born.

Lavingia is the latest poster boy for the new young, Flux-y breed of serial entrepreneurs. He started designing iPhone apps at age 14 and dropped out of his first semester at USC to join Pinterest. He says.  

“I only want to work on things that solve my own problems.”  

The lessons he learned at Pinterest loom large over his work at Gumroad. Mostly important, he says, he's learned not to settle into too specific of a niche. Instead, he's casting a wide net.

Lavingia says the same principle holds true for Gumroad. 

“At Pinterest, even though we approached the design and functionality of it from a shopping perspective, it could be used for all sorts of stuff. And there’s no messaging in it that says, ‘You should use this for social shopping.’ I would never say ‘Gumroad is for musicians’ or ‘Gumroad is for authors.’ I think the best products totally surprise you because users are doing things that you have no idea about.”

One of Lavingia’s favorite examples comes from a user who printed Gumroad URLs on sack lunches. Hungry customers could visit the URL, pay $5, then grab a sandwich.

It may seem counterintuitive in 2012 to launch a website with the primary purpose of making people pay for art. Many consumers today expect their music and movies to be free, either through illicit means like online piracy, or legitimate sources like Spotify or Pandora. But Lavingia says this assumption is shortsighted.

“People need a way to pay rent. It’s not, ‘Aw, I had to pay 10 bucks for this album when I could’ve gotten it for free.’ It’s, ‘I get to give this artist that I really like 10 dollars. And if enough people do it, this person might just create way more stuff for people.’ It should be win-win for everybody.”

In fact, his biggest worry isn’t that people won’t be willing to buy creative material, Lavingia says.

“I think one of the biggest challenges is that a lot of people don’t like selling stuff. They’re afraid of putting a price on the stuff they create.”

While Gumroad focuses on amateurs, Lavingia says he would love to court bigger artists in the future. In fact, it wouldn't be altogether surprising if Gumroad became the go-to platform for comedians like Louis C.K. and Aziz Ansari, who are already experimenting with alternative distribution and pricing models. But Lavingia also stresses the importance of making Gumroad's experience just as enjoyable whether you’re a platinum-selling musician or kid designing clip art in his bedroom.

“Twitter is the best example (of that). Twitter is the same product if you have one follower or 15 million followers. Lady Gaga’s font size isn’t bigger because she’s a cooler person than I am. And I really want to transfer that over to Gumroad. And I spend every day thinking about how to do that better and better and better.”

COMMENTARY:   What I like about Gumroad is the overall simplicity and seamless buying experience.  Gumroad handles all the hosting, delivery, and payments, so users can focus on continuously creating cool stuff to sell.   Gumroad allows users talk directly with their customers and to dynamically price their creations.   They also allow "pay-what-you-want pricing", so users can let their customers decide what something is worth.  Once a payment has gone through, Gumroad instantly emails customers with a fast, secure download link.  Gumroad's FAQ's describe its services

1. What can I sell?  Most people use Gumroad to sell things that they've made. These include songs, albums, videos, photos, and other things. Even T-shirts! You can sell anything that you can upload or link to.
2. What can I price a link?   You can price a link for as little as $1, and as much as $1000. We also support pricing links in £, €, and ¥.
3. How can people pay?  We support all major credit cards. That includes Visa, MasterCard, American Express, Discover, JCB, and Diners Club cards.
4. I'm not in the US. Can I use Gumroad?  Yes. We support deposits to accounts in over 190 countries.
5. What is Gumroad's cut?  Simple. We take 5% + 25¢ of each transaction. For example: If you sell a digital video for $10, we get $0.75 and $9.25 is deposited into your account.
6. What does Gumroad charge its users?   There are no setup fees, monthly fees, bandwidth fees, or withdrawal fees.
7. How do I get paid?  A deposit to your linked account at the end of every month.
8. Why is this FAQ so short?   We believe that with simple products come short FAQs. Please send us an email if you have a question that isn't answered here.

Sahil represents part of a growing trend of college dropouts becoming entrepreneurs at at very early age.  While little data on the phenomenon exists, venture-capitalists say they are funding more chief executives under age 21 than ever before.

Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz says.  

“At a certain point, they can’t get much younger or we’re going to be invested in preschool.”

Andreessen and other venture-capitalists say the entrepreneurs they fund at 18 or 19 typically have been prepping for years — learning computer code, taking on ambitious freelance projects and educating themselves on the Internet.   Sahil definitely fits that mold.

Some are self-consciously molding themselves in the image of Facebook founder Mark Zuckerberg, 27, who created computer games as a child and was taking a graduate-level computer course by his early teens.

Sahil Lavingia recalls a day during the summer of 2011 when he had several meetings scheduled on Sand Hill Road — home to many of the nation’s leading venture-capital firms — and no car to get there.  The journey of just a few miles took hours by the time Lavingia rode a local train a couple of stops, caught a bus to Stanford University and then hopped a shuttle bus to the Stanford Linear Accelerator Center, which is on Sand Hill Road.

Another time, dreading the combination of a hot day and a sweaty walk around Palo Alto, he pulled on a pair of shorts, even though he was heading to a meeting with blue-chip VC Accel Partners. The outfit — casual even by laid-back Silicon Valley standards — didn’t stop Accel from investing. Lavingia, an alumnus of hot online bulletin-board company Pinterest, raised $1.1 million for his payments startup, Gumroad.   Not bad.

In March 2012, TechCrunch's Alexia Tsotsis interviewed Sahil Lavingia.

 

TechCrunch's Alexia Tsotsis interviews 19-year old Sahil Lavingia, founder of Gumroad, who talks about Pinterest and Gumroad, the social media marketplace.

 

After listening to Sahil Lavingia, you can tell that he is not only intelligent, but a sharp, albeit young entrepreneur who just beams with confidence.   He believes that Gumroad can scale into something big.  The next Facebook, perhaps?  

I see Gumroad as the prototype of the first social ecommerce site.  If you have a large number of followers or fans within your social network, whether on Facebook, Twitter or Google+, they are more likely to trust you because you share something in common with them.  Therefore, if you have something valuable to sell them, something they might value because you created it, why not sell it directly to them.  If Facebook were smart, they should adopt Gumroad's business model and allow their users to sell things in the same way.  Better yet, why not acquire Gumroad.  That's my two bits and prediction.  We will just have to wait and see if Facebook takes me up on it.       

Courtesy of an article dated April 25, 2012 appearing in Fast Company

STUDY FINDS THAT MOST BRANDS PARTICIPATING IN FACEBOOK TIMELINE FOR BRANDS ARE SEEING 46% HIGHER ENGAGEMENT

Study finds that most brands who have been participating in Facebook Timeline for brands are seeing early success

While the average Facebook user may still not have made the switch to the social network’s new Timeline format, as of March 30, 2012, all brand pages were required to do so, and some brands have been seeing increased engagement as a result.

Social media measurement company Simply Measured looked at 15 brand pages that were early adopters of the Timeline format and found that average engagement on brand posts (i.e., comments and “likes”) rose 46% in the three weeks after the switch compared to the three weeks before. Prior to the Timeline introduction, the 15 brand pages saw an average of 1,672 points of engagement per post, rising to 2,441 after switching to Timeline.

However, when Simply Measured looked at individual brands, several companies, including Old Spice, Target, AT&T and Ford, saw less engagement with brand posts, which is in line with March data from Wildfire Interactive. The social media marketing software company looked at 43 brand pages, also in the three weeks before and after the Timeline introduction, and found that brands with more “likes” overall were often negatively affected by Timeline.

Coca-Cola's Facebook timeline page (Click Image To Enlarge)

According to Wildfire Interactive, for brands with less than 1 million “likes,” comments per brand post grew 40% and “likes” per post rose 60.3%. The “People Talking About This” metric also increased, up 67.4%. For brands with between 1 million and 10 million fans, comments per brand post dipped 17.43%, while “likes” per post and “People Talking About This” both increased, by 13.56% and 28.58%, respectively. For brands with more than 10 million fans, all metrics declined, with “People Talking About This” down 13.72%, comments down 16.72% and “likes” down 11.57%.

Even more recently, in April, EdgeRank Checker, a Facebook analytics tool, released its own analysis of Facebook pages before and after their switch to Timeline, looking at 3,500 pages that both had and had not converted to Timeline. Of those pages that had converted to Timeline, 41% saw increased engagement and fans, while 38% of those pages that had not converted also saw increased engagement and fans, suggesting no substantive difference.

The company said in a blog post about the findings. 

“A vast majority of all engagement takes place within the News Feed…[and] Timeline has no direct impact on content within the News Feed.”

EdgeRank Checker attributed the changes in fans and engagement to the buzz and media coverage surrounding Facebook and, in particular, the switch to Timeline.

It is a bit too early to determine exactly how Timeline will affect brand outreach on Facebook going forward. For now, it seems users are still participating and engaging on Facebook and are curious about the new format when it comes to brand pages. But whether or not Timeline can maintain their curiosity will be an ongoing question.

COMMENTARY:    On Friday, March 30, 2012, all brand pages were automatically ported over to the new Timeline setup.  

The announcement that Time would come to all brand pages was made in late February and gave all businesses 30 days to start thinking about how they would like to design their pages with the multimedia focus.

In order to help companies, Facebook built a guide to the structure for companies to make the switch as smoothly as possible. 

This means that all the companies that once enjoyed the welcome page that could be set for fan pages is now no more. Many brands were drawn to the welcome page setup because it allowed them to promoted contests, sales, games or other campaigns. Now the biggest element on a brand page is the cover photo.

But all of those companies worried that their Facebook traffic numbers might suffer from the change could ease that fret with word is that the new Timeline set-up is boosting user engagement by 46% according to social media measurement company Simply Measured.

The study conducted by Simply Measured, has reduced the fears that many companies had about changing their social networking pages.

The study found that when it looked at the user engagement of 15 brand pages, the shift from the old Facebook layout to the new Timeline structure resulted in a jump in various types of user engagement. Some companies, such as Livestrong and Toyota experienced a 161% and 156% pop in engagement, respectively.

Whether this the bump in user engagement unveiled by Simply Measured is just a temporary bump in engagement caused by user curiosity over Facebook timeline remains to be seen.  I am sure that Facebook will continue to keep a close eye on Timeline for any trends affecting user engagement.  

When Facebook first announced Timeline, I like many social media scientists felt that it was much ado about nothing, and that it would only bore the hell out of users.  If a brand's homepage does not connect with users within 30 seconds after they visit that brands page, chances pretty good that they will move on to something more interesting.   

If you are already a brand fan, I could see where Tmeline might drive user engagement, especially if you don't visit all that often and interested in knowing what went on with your favorite brands since you last logged in or visited their Facebook page.

Courtesy of an article dated April 25, 2012 appearing in eMarketer 

FOUR THINGS SOCIAL TV CAN ACTUALLY DO AND THE TECHNOLOGY THAT'S DRIVING BRAND ENGAGEMENT IN REAL-TIME

 

A Lot of People Are Gathered Around The Digital Water Cooler Talking About TV Shows. Here's Why It Matters

Within the broadcast and social-media-analytics worlds, as well as the broadcast-obsessed precincts of the agency and marketer universe, the term "social TV" is uttered and heard endlessly these days. But two recent conversations I had with high-level media executives -- one in the glossy print world, and one in a digital business not directly connected to broadcast -- reminded me that not everyone understands the term of art.

Both execs basically asked me,

"What do you mean, exactly, when you say 'social TV'?"

The short answer:

Millions of people are now partaking of the "dual-screen" experience -- watching TV while using a smartphone (or tablet) to share (primarily on Twitter and Facebook) their thoughts about what they're viewing and to "check in" to shows (on services like GetGlue and Viggle). The result: a massive and rapidly expanding real-time focus group (and promotional force).

So a lot of people are gathered around the digital water cooler talking about TV shows. What's the big deal? Some of the hype is overblown, sure, but there are a bunch of very good reasons why social TV actually matters. For starters:

Social TV can increase ratings

At the Social TV Summit in San Francisco a couple weeks back, Deirdre Bannon, VP-media analytics at Nielsen, shared the result of research the company has been conducting during the past year. (It began releasing research on the social-TV-to-ratings connection last October and continues to cross-reference live data.) The main takeaway: For key demos, social buzz surrounding shows can goose ratings -- a bit.   Below is the video recording of the live video stream during the keynote speech during the Social TV Summit in San Francisco.

For instance, Nielsen says a 9% to 14% increase in buzz volume (depending on where a particular show is in its season) correlates to a 1% increase in ratings in the 18-to-34 demo. That's obviously not enough to make or break a show, but it's enough to matter. It's also worth noting that ratings seem to be most susceptible to social influence when it comes to season premieres and finales -- i.e., the pivot points that are heavily marketed in traditional, nonsocial media (especially network promos).

Social TV can make TV better

Chris Stephenson is both a hard-charging new-media executive as president of Viggle -- the "loyalty program for TV" that launched in January -- and a pop-culture addict who takes naked delight in making what's fun TV even ... funner. Stephenson told me over coffee in San Francisco,

"People talk a lot about 'social TV,' but we don't think that way at Viggle. We think more about 'better TV.'  We want to add a layer of enjoyment to television-watching which enhances the experience and rewards people for their loyalty and engagement. While many of the social-TV apps rely on the basic principle of 'sharing my check-ins,' we think about deep engagement, polls, trivia, mood-o-meters, etc."

Truth is, he was preaching to the converted. I confessed to Stephenson that on Oscar night in February I happened to be stuck in a Boston hotel room (on the eve of yet another social-TV conference, Hill Holliday's excellent TV Next Summit) and I watched -- and enjoyed -- the whole damn show, thanks to Viggle.

After checking into the Oscars on Viggle's iPhone app, I was served a steady stream of trivia questions (in a Viggle Live engagement sponsored by Bing that actually got me to use Bing for the first time on my phone) and got to vote on who I thought would win what. I felt a stupid amount of pleasure when I guessed correctly and earned bonus points. (Viggle points can be redeemed for gift cards from the likes of Starbucks and Best Buy.) And I even felt oddly validated when I guessed wrong -- if Viggle's poll results told me that most other Vigglers got it wrong, too. I really can't imagine having watched the entire Oscar telecast if Viggle Live hadn't added an extra layer of entertainment value to keep me glued to the screen across the room and to the one in my hand.

Social TV can get consumers to engage with shows (and brands) far beyond the broadcast window

USA Network senior VP-Digital Jesse Redniss, speaking of the various social-TV programs he and his team have devised over the past few years said.

"We provide custom metrics depending on what our sponsors are looking for.  Nobody is really saying, 'We want to get clicks.' Nobody cares about the click anymore; the click is pretty much dead. Marketers really want engagement over time: 'People viewed our vehicle for X amount of time.' Or, 'We want people to experience all the cool attributes of what our brand represents.'"

In the case of its hit show "Burn Notice," for instance, USA Network produced two "seasons" of the "Burn Notice: A New Day" digital graphic novel (aka tablet comic book), sponsored by Hyundai, whose vehicles are featured in beautifully drawn, interactive storylines that have baked-in Twitter and Facebook connections.  Fans of "Burn Notice" might watch every episode -- hardcore fans might even watch reruns, too, to catch nuances they missed on first viewing. But that's about it. Through TV alone, USA and its sponsors have a hold on viewer attention for a finite set of hour-long chunks for its dramas. But done right, social-TV initiatives like the "Burn Notice" comic book can strengthen engagement by deepening the narrative pre- and post-broadcast.

Social TV can provide tons of new 'hooks' for marketers

Earlier this month in his company's light-filled loft headquarters in SoMa (San Francisco's semi-sketchy/semi-hip South of Market neighborhood), Watchwith CEO and co-founder Zane Vella showed me the system his company has developed to provide what he calls a "time-based metadata" platform to power social-TV apps.

He said, sounding every bit the on-pitch evangelist.

"We're creating a world where every frame of TV is rich in possibilities."  

But the proof is in the pop-ups -- the visual manifestation in Watchwith's back end (not visible to viewers) that creates second-by-second data bubbles that display what the database "knows" about every given scene. In an episode of social-TV (and ratings) hit "The Big Bang Theory," for instance, a character walks into a room and the Watchwith database serves up information (which in turn feeds into social-TV apps) about exactly which model of Jansport backpack he's carrying.

Consider that Watchwith -- which just rebranded from its nerdy previous incarnation, Related Content Database -- has been working with major broadcast and cable networks, social-TV startups and e-commerce players including eBay.

Now consider what can happen when such product-smart metadata gets synced with the crowdsourced data that more and more TV viewers are producing themselves during every scene of all their favorite shows. You can begin to understand where the whole social-TV phenomenon, and media engagement in general, is going.

COMMENTARY:  A couple hundred execs gathered in San Francisco for the Social TV Summit, and LostRemote pulled together the following highlights from the event.  Social TV technology is making a huge impact on how viewers experience their television programming, and can offer brands a powerful way to connect and engage with their viewers in real-time.  You can glean information about Social TV technologies by viewing the highlight clips provided by Snappy.tv (well worth watching).

• One of the biggest reoccurring themes at social TV events is how early we are in the product development process, and how second screen experiences are something entirely new. Yahoo/IntoNow’s Adam Cahan summed up the social TV product challenge in a “post-PC world” this way:  He said.  “Television has been an incredible medium for brands to tell their story, but transferring that into a direct response environment or bringing that to a device is a fundamentally different proposition. It’s a very different set of consumer interactions.”
• Microsoft’s Pete Thompson shared that the new Sky TV application on Xbox Live — which offers up to 32 live channels for subscribers — features one of the first truly social TV experiences on Xbox.  He explained.  “You can be on Xbox Live and see where all your friends are watching TV, and their avatars pop up as you go through the program guide.  You can join them and have your streams be connected at the same time, so you can be watching and talking and interacting at the same time.” Thompson said Xbox is also thinking about “reach clients” — second screen devices — and how to connect those to the Xbox Live experience, as well.
• AOL’s Janet Balis said they’re quickly ramping up for the launch of Huffington Post Streaming Network in Q2 of this year.  She said, offering a little insight into the 12-hour-day streaming service.  “We’re literally building studios.  Imagine pulling reporters right off the newsroom floor… [and] bringing the audience into the dialogue, where normally comments and social activity happens on a page, suddenly those people have a place on the screen and are as vital as a source and contributor as the content itself.” She explained how HPSN (as it’s called) will balance a real-time social experience with a shareable on-demand experience — a big bet that “social can make great TV.”
• Surprising factoid from SocialGuide’s Sean Casey: “Our data shows that live sports events constitute somewhere between one and three percent of all TV programming, but about 50 percent of all social activity (around TV) is being driven by sports events.” Which includes regional sports events, too.
• Google’s Chee Chew (pictured) talked about “Google Hangouts on Air,” Google+’s ongoing effort to extend Hangouts to TV broadcasts and everyone else on YouTube, both live and on-demand. In other words, a live streaming service tied to YouTube, not just video chats. “The value that we bring with real-time and hangouts and that interaction is to transform what we think of as entertainment,” he said. “Our vision is for everyone on the planet to have access to On Air.” For more, Chee spoke with GigaOm after the event.
• TVGuide’s Christy Tanner revealed a new social TV survey, which we broke out as a separate story.
• Shazam’s David Jones announced the launch of a new “lightning fast” version of the app.  He explained.  “Literally in as little as one second we can match the content you’re hearing.” We gave the new app a try and it’s about twice as fast as the old version: some content took 5 seconds to “listen” and identify, others as quickly as a second. This goes a long way to address our earlier concerns about Shazam for TV: that whipping out the app to tag a :30 second commercial is quite the challenge. The new app carves a few precious seconds off the task.
• ConnecTV’s Ian Aaron shared some engagement metrics from the second-screen app’s first couple months in the wild: 42% of users have liked something, 31% have invited people, 28% participated in polls, 37% have chatted and another 39% go back in the timeline to see something they missed. Aaron says they’ve surpassed the 1 million check-in mark, and a TV promotion campaign (both in local markets and nationally) is poised to roll out soon.
• TV Plus’ AJ Shaw had an interesting pitch for his second-screen platform product. “The important thing to do is to learn and understand what types of engagement work for different content experiences,” he said, positioning TVPlus as “a platform to make it cheap and easy” for content creators to experiment quickly in the early-stage social TV industry. Great advice, regardless of platform.

If you haven't already done so, I highly recommend that you read my previous blog posts about social TV including those dated January 11, 2012, January 12, 2012, November 29, 2011, November 1, 2011, October 29, 2011, October 15, 2011, July 23, 2011, and October 27, 2010

Courtesy of an article dated April 13, 2012 appearing in AdAge Media News and an article dated April 4, 2012 appearing in LostRemote -- The Home of Social TV

FACEBOOK REPORTS Q1 2012 REVENUES AND EARNINGS, REVENUES AND PROFITS DOWN 6% AND 32% RESPECTIVELY FROM Q4 2011, EXPENSES DOUBLED

Facebook’s first-quarter revenue increased 45% from a year ago to more than $1 billion, but both sales and earnings dipped from the fourth quarter on higher marketing and other costs during the period. 

A month before its expected IPO, Facebook reported quarterly revenue of $1.06 billion, down 6% from the prior quarter despite a gain in monthly active users to 901 million from 845 million at the end of 2011.

Advertising sales, which make up the bulk of Facebook’s revenue, slipped to $872 million from $934 million in the fourth quarter.

In its regulatory filing Monday, the company said the fall-off reflects a seasonal pattern of typically strong growth in the third and fourth quarters to a slowdown or decline in the first quarter. It stated.  

“The rapid growth in our business may have partially masked these seasonal trends to date and the seasonal impacts may be more pronounced in the future.” 

Net income in the first quarter dropped to $205 million from $302 million in the fourth quarter and from $233 million in the year-earlier period. That translates to a decline to 9 cents from 11 cents per share.

Facebook’s total expenses for the quarter nearly doubled to $677 million from $343 million a year ago, and $583 million in the fourth quarter, on higher spending on operations, marketing and sales, research and development costs. The company said the higher overhead also reflected significant increases tied to share-based compensation expenses in 2012.

Earlier this month, Facebook agreed to acquire Instagram -- maker of the popular photo-sharing app of the same name -- for $1 billion in cash and stock. In its filing, the social network revealed that $300 million would be paid in cash and the balance in 23 million shares of common stock. If the deal fails to win government approval, Facebook has agreed to pay Instagram a $200 million termination fee.

Just today, Facebook announced it would agree to pay Microsoft $550 million for its rights to 650 patents and patent applications that the software giant recently acquired from AOL. That deal, along with its recent acquisition of other patents from IBM, is aimed at helping the company gear up for its patent battle with Yahoo.

Facebook payments and other fee-based revenue on Facebook nearly doubled to $186 million from a year ago. App maker Zynga alone accounted for 11% of total Facebook revenue from processing fees related to its sale of virtual goods and from advertising directly purchased. That proportion is down from 13% a year ago, suggesting that the social network is slightly less dependent on Zynga games like "CityVille" and "FarmVille" for revenue.

When it comes to mobile use, Facebook said monthly active mobile users in the first quarter had increased to 488 million from 288 million a year ago. (The most recent publicly stated figure had been 400 million). Despite adding Sponsored Stories ads to users’ news feeds in March, Facebook acknowledged that it still generates no meaningful revenue from its mobile products.

COMMENTARY:   The first quarter is typically one of the slowest for advertisers, so I didn't find it too unusual that Facebook's revenues dropped by 6% between Q1 2012 and Q4 2011.  I would like to review Zynga's Q1 2012 revenues and earnings to see if there is any negative trends that might negatively impact Facebook's future earnings from the sales of virtual goods.  

I am not too surprised that Facebook's expenses doubled between Q1 2012 and Q4 2011.  The company is incuring substantial legal, accounting and syndication fees related to the IPO. Facebook also moved from Palo Alto to its new headquarters in Menlo Park in December.  It is probably still incurring substantial expenses related to that relocation.  I have been through several corporate moves, and they are costly and there can be a lot of overflow between quarters.  

Still, I don't find any significant signs that things are going sour for Facebook on the eve of its IPO, which is now scheduled for May 1012.   

Courtesy of an article dated April 23, 2012 appearing in MediaPost Publications Online Media Daily

APPLE REPORTS STELLAR Q2 2012 REVENUES AND EARNINGS, iPHONE AND IPAD UNIT SALES SET NEW RECORDS, CHINA IS HUGE

Apple today announced financial results for its fiscal 2012 second quarter ended March 31, 2012, and the results were in one word:  INCREDIBLE.  

Apple posted quarterly revenue of $39.2 billion and quarterly net profit of $11.6 billion, or $12.30 per diluted share. These results compare to revenue of $24.7 billion and net profit of $6.0 billion, or $6.40 per diluted share, in the year-ago quarter. Gross margin was 47.4 percent compared to 41.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

The Company announced the following unit sales of iPhones, iPads, Macs and iPods:

•  35.1 million iPhones in the quarter, representing 88 percent unit growth over the year-ago quarter.  

•  11.8 million iPads during the quarter, a 151 percent unit increase over the year-ago quarter.

•  4 million Macs during the quarter, a 7 percent unit increase over the year-ago quarter.

•  7.7 million iPods, a 15 percent unit decline from the year-ago quarter.

Tim Cook, Apple’s CEO said. 

“We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter.  The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.”

Peter Oppenheimer, Apple’s CFO said. 

“Our record March quarter results drove $14 billion in cash flow from operations.  Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.” 

Apple Earnings Call for Q2 2012

Below is the full transcript of Apple's Earnings Call for Q2 2012 (March 31, 2012) courtesy of Seeking Alpha.

Apple Earnings Call for Q2 2012

View more documents from turk5555. 

Catalyst For Apple's Stock Price 

Bears have been beating the stock up for a week, with the shares tumbling from $644 to $556 earlier today.   Investors need to keep their eyes on the ball and invest for long-term with Apple, and take the stock dips as gifts and buy the stock.  This may be the last time we see Apple in the $500s.  Herein I highlight points from Apple’s earnings outside the usual earnings reports.

Earnings expectations were $10.07 per share, and Apple outdelivered with $12.30 in earnings on $39.2B in revenues.   Please note that this Q2 is Apple’s seasonally worst quarter, yet Apple delivered its second best quarter in history (with last quarter being the best).   Apple’s first quarter this year (December 31, 2011) raised the bar on results both in terms of revenue levels and gross margin.  Q1 FY12 was the highest gross margin quarter at 44.7% only to be bested this quarter by a gross margin of 47.4%.  How can Apple continue to deliver outsized margins?  Apple does so by focusing relentlessly on its supply chain and, for the last couple of product releases, by keeping its form factors consistent so that it can continue to improve manufacturing efficiencies.

The stock was hit over the past week for three reasons: 

1. Analysts read between the lines on earnings reports from Verizon and AT&T and extrapolated lower iPhones unit sales; Rumors are circulating that carriers will cut back on subsidies on the Apple iPhone thereby bringing down the gross margin, and Supply shortages emanating from Qualcomm will impact Apple.  First, Verizon and AT&T are not the only distribution channels for iPhones.  Analysts should not have extrapolated iPhone unit sales based upon the historical proportional contribution of AT&T and Verizon, given the breadth and expanding distribution network for iPhones.
2. Carriers would like to reduce subsidies, obviously, but they don’t have the power or incentive to do so.  The iPhone draws in customers (just recall the jump in AT&T subscriber numbers when AT&T exclusively introduced the iPhone in the US) and it draws in customers who use the higher margin data packages.  Over time, in theory, what carriers lose in subsidies they should make up in data margins.  Moreover, Apple claims that the iPhones are the most data efficient of the smartphones making it even more attractive to broadband-constrained carriers.    Carriers report to Apple that they have the lowest churn on the iPhones of the phones they offer.  Happy customers are loyal customers.  So while carriers would like to eke out more profits, it is doubtful that they are going to bite the hand that feeds them, or that brings them higher margin loyal customers.
3. Supply constraints at Qualcomm are an issue, but probably for Apple competitors.  As was previously reported when Apple was dipping down, it is most conceivable that Apple has locked up its required supply and, when demand for Apple products exceeds supply, customers simply wait creating pent-up demand for the successive quarter.

There are three other important points to highlight from the call, which are long-term catalysts to the stock.

1. Apple has historically been weak in the enterprise and has been considered a consumer technology, but that story has changed.   Apple has 95% support within the Fortune 500 and 75% support within the Global 500 for the iPad, released less than two years ago.  Moreover, Apple has an iOS enterprise developer program whereby in-house tech teams can develop to iOS devices.  This is important because development equates to adoption, usage and entrenchment.  On the call, Apple mentioned that the iPad had the strongest product adoption into the enterprise of any, ever.  The iPad’s features of mobility and screen size make it convenient and appropriate for sales tools (ie Bechtel) and for guides (the Air Force).
2. China is huge and will be even larger.  Revenues in this past quarter to China were $7.9B up over three-fold year over year.  It was the biggest quarter for China ever in Apple’s history, and over half of the $13.3B revenues of the entire last FY.  The enormous growth has been largely due to the iPhone and The New iPad has not yet been released there.  Apple only has four stores on mainland China plus one in Hong Kong.  The potential for China remains large, and I highlighted the interest in China for luxury goods such as Apple products.
3. Focus on the powerful distribution of Apple’s own stores.  The entire buying experience for an iPhone is much more pleasurable at an Apple store than at a carrier store or big-box retailer, given the displays of iPads, iMacs, headphones, etc and given the level of expertise on the Apple products by the sales people at an Apple store.  If you have bought an iPhone, you know what I mean.  Simply put, the best buying experience for an Apple product is at an Apple store.  And, clearly, consumers think so too.  Sales per store increased from $9.9M a year ago to $12.2M in this past quarter.  85M people visited an Apple store in the past quarter, up 19% from the year before.  And consistent with historical trends, over half of the Mac buyers were a first time Mac buyer.  Consider this:  Apple provides an excellent user experience, which is why people buy their products.  Apple also provides an excellent buying experience, which is why people come to their stores.

Apple continues to be an attractively valued stock.  It now has over $110B in cash, or $117 per share.  With today’s earnings factored into the earnings estimates for FY12 (meaning adding in the extra $2.30 in earning for the quarter to annual estimate), Apple, trading at $600 after hours, is 10.4x FY12 earnings of $46.53 (excluding cash) and 9.5x FY13 earnings of $50.94.  But expect earnings estimates to go up, making the stock an even more attractive buy for long-term investors.  Ignore the intermediary noise and focus on the results, the products, and the lack of competition on the landscape.  For now, Apple remains a long-term holding, and an attractive buy at these levels.

Apple Takes Larger Share of Smartphone Market

Android and Apple’s iOS platform both gained share of the North American smartphone market at the expense of BlackBerry, according to the latest data from mobile ad network InMobi. iOS maintained its narrow lead over Android in the first quarter, with as 36.8% share, up from 33.1% in the fourth quarter of 2011. Android came in at 34.1%, up from 32.5% in the prior quarter.

By contrast, Research in Motion’s BlackBerry OS dropped from a nearly 12% share in the fourth quarter to 7.3% in the first three months of 2012. The quarterly drop-off signals the troubled handset maker’s continuing decline as a result of Apple and Google’s growing dominance of smartphone operating systems.

RIM last month reported sales plummeted 25% in the fourth quarter. 

Globally, Android was the top smartphone platform in Q1, however, with 22.2% of impressions compared to 18.2% for iOS.

The iPhone, iPad and iPod alone accounted for 37% of impressions on InMobi’s network in North America, with the BlackBerry 8520 a distant third among individual devices, generating almost 2% of impressions. Among phone manufacturers, Nokia was second behind Apple, with 14% share of impressions, followed by Samsung and HTC (both 9%), RIM (7%), LG (6%) and Motorola (5%).

Ann Frisbie, vice president and managing director, North America, at InMobi said. 

"Apple maintained its lead over Android and further increased its share of impressions and handset dominance; the new iPad certainly helped its overall position.  However, we know that fierce competition is created across the operating systems when new devices enter the market and this time last year Android surpassed iOS globally.”

Sales of the Apple tablet during Q2 2012 won’t reflect the full impact of the new iPad model, which was only launched last month.  Frisbie suggested Apple could see heightened challenges in the U.S. market later this year with a rumored launch of an Android-based smartphone from Amazon and a 7-inch Google-branded tablet.

Microsoft is also expected to introduce a much-anticipated Windows 8 during the latter half of 2012.

InMobi’s North American network grew impressions 18% in the first quarter to 52.6 million, the vast majority of which (84%) came from smartphones.

COMMENTARY:    There was never any doubt in my mind that Apple's sales and earnings for Q2 2012 would not be spectacular.  The New iPad was impressive and the superior tablet of any introduced so far, bar none.   There, I said it, to satisfy all Apple evangelists.  

For those of you wondering what's with the Apple logo covered in blood, you'll just have to visit my blog more often and read what I say about Apple.   HINT:  Select my blog posts under the "Mobile" category and you will find out.

Courtesy of Apple's press release of April 24, 2012, an article dated April 24, 2012 appearing in Forbes and an article dated April 23, 2012 appearing in MediaPost Publications Online Media Daily and an article dated April 24, 2012 appearing in Seeking Alpha

 

9 PRINCIPLES FOR GREAT BRANDING BY THREE OF THE WORLD'S BEST PRODUCT DESIGNERS

We all know great design has a critical role to play in building a great brand. But how do we go about making that happen? I recently had the opportunity to speak to three top designers about that very question: Robert Brunner, founder of the design shop Ammunition and author of Do You Matter: How Great Design Will Make People Love Your Company; Joe Doucet, founder of Joe Doucet Studio and David Hill, vice president of design at Lenovo and author of the Design Matters blog.

Through these conversations, it became clear that the link between design and branding is important, and that having a top design team is to crucial to having a winning brand.

Here's what I learned:

1. Branding and design are, to a large extent, inseparable.  Brunner says.  "A brand is not your logo or ID system.  It's a gut feeling people have about you. When two or more people have the same feeling, you have a brand. You get that feeling via smart design, which creates the experiences people have with the brand. Everything you do creates the brand experience, ergo design IS your brand."
2. If design is the brand, stop thinking of branding and design as distinct disciplines.  Doucet says.  "It's all about integrating design and brand.  We need to cease thinking of them as different disciplines. The essence of the Apple brand comes through its design. Take the logo off a BMW and you still know it's a BMW."
3. Brands need to create an emotional relationship with people.  Brunner says.  "We are all emotional beings and we have emotional relationships with brands we trust. Designers need to make that happen. A designer must take the values and assets of a company and transform them in a special way that connects with people emotionally."
4. Designers need to "get" the essence of the brand.   Hill points out.  "For designers to build a great brand, they have to understand it.  You need to understand its history, its values, and what it means to people. Can you imagine designing the latent Jeep without understanding the brand archetype of what it means for a product to be a Jeep?"
5. Design needs to be strategic from the outset.   Hill said.  "For design to have a major impact, it's got to get involved at the strategic level.  It can't be an afterthought or superficial trappings to be put on post product creation. Samsung's brand became powerful only after they put a Chief Design Officer in place and made it a priority for the company."
6. Integrate design early in the process to drive innovation and create solutions. Doucet says.  "Good designers approach design as an opportunity to ask questions.  Solution generation starts by questioning initial assumptions. Rather than ask myself 'How should I design Widget X?' I need to be asking 'Do we really need Widget X or is there a better solution to this customer problem? So a designer needs be there at the beginning and be connected to the decision-makers. For example, at Braun, Dieter Rams sat across from the owner of the company."
7. Don't overdesign.   Hill says.  "With the increasing emphasis on design in the world today, it's important to avoid the 'over-designed syndrome.  A simple, well-thought-through, authentic design is often the best. Everything doesn't need to be redesigned; sometimes what we have in hand is better than what we seek. It's not all about being different; it's about being better. If Levi Strauss wanted me to redesign the patch on the back of their jeans, I would look in their archives for the original."
8. Use design to continually reinvent the brand.  Doucet says.  "Some folks think they know branding.  Figured it out long ago. 'Hi. I'm someone you'll like. You'll know it's me because I always wear a red polo shirt (pantone 185 to be exact) with blue pants and a yellow belt.' You can't think that way today. Brands need to allow themselves to constantly update, and be much more fluid. Look at Google; they morph their logo for special occasions. Constant change is a big part of who they are."
9. Use design to make a difference.  Brunner says.  "Design can make a difference in how we live.  Take sustainability. A lot of what is done in that area is 'making bad, better.' We're taking wasteful things and seeing how we can make them not so bad. We need to start thinking about how we can use our design tools to encourage people to change. You do that by making 'doing better' also be fun, interesting and (importantly) the path of least resistance. And you do it in an encouraging, not controlling, way. Design needs to do that in order to reach a larger audience than just the small group that is socially driven."

While these steps may require a new way of thinking about design for some, they're key steps to the path for those who want to build a great brand and make life better for those who experience them.

COMMENTARY:   In order for a brand to be successful, it must make a powerful emotional connection with the consumer.  When branding is executed to perfection, the brand and the product become one and the same.  In commodity industries some brands have developed such strong emotional ties that they become brand loyalists or evangelists.  They live and breath that brand.  If you say tablets, an Apple brand loyalist will say 'iPad'.  If you say smartphone, an Apple brand loyalist will say "iPhone."  When emotional connection with a brand has become that strong, you have a landmark.   A lovemark is the brand that comes to mind immediately and foremost when you mention a product.  Whether its a tablet soft drink, those brand loyalists will almost universally say, "iPad" and "Coke."  If you are No 2 or No 3, it no longer matters how much you spend on branding.   I think this is what you are seeing with Apple products.  All of them have become lovemarks.  They have become inseparable from the brand and the product. To the consumer they are one and the same, and that is the strongest type of branding that can be attained.  

Courtesy of an article dated Aprilo 16, 2012 appearing in Fast Company

ALTAEROS ENERGIES' HIGH ALTITUDE AIRBORNE WIND TURBINE TEST SHOWS COMMERCIAL POTENTIAL

Altaeros Energies employs aerospace technologies to lift a small wind turbine to 1,000 feet off the ground where the wind is stronger. The power produced by the airborne wind turbine (AWT) is sent to the ground via conductors with the unit tethered to the earth.  

The MIT-, Harvard-, and Air Force-trained team at Altaeros just completed a test of a power-producing prototype which actually works, and lifted a wind turbine 350 feet off the ground to generate double the power at high altitude than at typical tower height. The test in the video was completely automated, according to co-founder, Adam Rein -- unpiloted and able to "lift, generate, and land without any active controls." These tests took place in the middle of winter in northern Maine. 

The Air Force still uses tethered helium inflatable technology -- called aerostats, the industrial cousins of blimps -- on project construction. So, the inflatable technology is not entirely new.

Here's the video:

 

First public video of the 35-foot-wide Airborne Wind Turbine. The scale prototype harnessed strong winds up to 350 feet high to produce over twice the power of traditional wind turbines.

Rein notes that the company uses an "off-the-shelf" 2.5-kilowatt, 3.7-meter, 3-blade wind turbine merged with helium inflatables that have lifted radar systems for decades. The unit is rated to go to about 1,000 feet in the boundary layer. The tallest terrestrial wind turbine is 350 feet high.

Altaeros looks to deploy the units in off-grid and hard to reach spots such as military bases, remote villages, oil and gas sites, eventually even off-shore applications. Power in those areas is typically diesel gensets with an expensive price tag of getting the diesel delivered and a total cost of $0.50 to $0.75 per kilowatt-hour. Altaeros claims it cost will be "a third of that."

Lending itself to these remote sites, the unit AWT is "really easy and cheap to set up," according to Rein, and "the whole system packs down to smaller than a compact car."
 
Regulatory bodies and the powers that be are beginning to recognize the existence of this new technology. The FAA has put out draft regulations for high-altitude tethered wind turbines. Rein claims the AWT design can overcome some of the challenges of traditional types wind turbines -- making them quieter with less bird and radar impacts. Garrad Hassan, a leading wind consultancy, has taken a look at the technology as well.

However, technical, regulatory, financing, and environmental risks remain for this alluring technology.

Altaeros is funded by private seed investors, the USDA, and the CEC. Other players in this field include Makani Power, SkyWind Power, Magenn, Ampyx, KiteGen -- also exploring this part of the atmosphere.

Altaeros Energies Airborne Wind Turbine prototype test 250-feet in the air (Click Image To Enlarge)

COMMENTARY:   Altaeros Energies airborne wind turbines are a neat idea, but the blimps will have to be scaled to lift larger wind turbines with larger electrical generating capacity.  2.5 kiowatts is not a lot of wattage (equivalent to what a small house would consume under normal circumstances).    The fact that Altaeros airborne wind turbines completely mobile and can go anywhere power is needed, without the need to erect or build wind turbine towers, is a huge plus.   

In a blog post dated September 30, 2010, I reported on the research being conducted to develop viable airborne wind turbines.  One of those companies was Altaeros Energies.  It looks like Altaeros has scaled its donut-shaped blimp and actually got their technology to work and generate electricity.   

Courtesy of an article dated April 20, 2012 appearing in GreenTechMedia

VENTURE CAPITAL INVESTMENTS DECLINE IN DOLLARS AND DEAL VOLUME IN Q1 2012

WASHINGTON, April 20, 2012 – Venture capitalists invested $5.8 billion in 758 deals in the first quarter of 2012, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.  

Quarterly venture capital (VC) investment activity fell 19 percent in terms of dollars and 15 percent in the number of deals compared to the fourth quarter of 2011 when $7.1 billion was invested in 889 deals. The Life Sciences (biotechnology and medical device industries combined) and Clean Technology sectors saw marked decreases in both dollars and number of deals in the first quarter.  However, there were double-digit percentage increases in dollars invested in the Consumer Products and Services, Medical Device, and Telecommunications industries. Additionally, investments into companies in the Later stage of development experienced an increase, rising 11 percent and accounting for 40 percent of total dollars invested during the first quarter of 2012. 

Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC US remarked. 

"Venture capitalists remained cautious during the first quarter after a lackluster fourth quarter in the public markets, as evidenced by the shift from investing in earlier stage companies to a focus on later stage companies in Q1.  Given that we saw an improvement in the public markets during the first quarter, we could see VCs return to placing their bets on seed stage companies in the coming quarters.  While on the surface, the jump in dollars invested in the Medical Device industry during Q1 may seem surprising given the 22% drop in Life Sciences funding, a deeper dive shows that companies in the Later stage of development accounted for more than half of the investments in this industry.  A more active M&A market may be the reason that the Biotech industry experienced a decline in investing in Q1, as VCs saw more of their portfolio companies experience exits during the first quarter." 

Mark Heesen, president of the NVCA said.

“The overall decline in investment in the first quarter underlies several shifts occurring in the venture space.  The industry continues to contract and consolidate which is beginning to manifest itself in fewer dollars being invested in fewer deals. Yet, we feel that the overall impact will be positive for the asset class as only the best entrepreneurs and technologies will be funded at rational valuations.  As innovation continues to advance at a very quick pace, we suspect that many seed stage companies are being funded in stealth mode, forming a pipeline that is not yet visible to the public eye.  Lastly, with the exit market improving, we hope to see venture capitalists in a position to focus more on first time deals in the coming months and less on sustaining mature companies that have been held back over the last few years.  All of these factors equate to an industry that is well positioned to optimize its performance in the coming decade." 

Industry Analysis 

• Software - The Software industry received the highest level of funding for all industries with $1.6 billion invested during the first quarter of 2012.  This level of investment represents an 18 percent decrease in dollars, compared to $2.0 billion invested in the fourth quarter.  The Software industry also had the most deals completed in Q1 with 231 rounds, which represents a 12 percent decrease from the 262 rounds completed in the fourth quarter of 2011..   
• Biotechnology - The Biotechnology industry was the second largest sector for dollars invested with $780 million going into 99 deals, falling 43 percent in dollars and 14 percent in deals from the prior quarter. 
• Medical Devices & Equipment - The Medical Devices and Equipment industry experienced an increase, rising 33 percent in Q1 to $687 million, while the number of deals dropped 6 percent to 72 deals.  Overall, investments in the Life Sciences sector (Biotechnology and Medical Devices) fell 22 percent in dollars and 11 percent in deals, which was the fewest number of deals since the first quarter of 2009. 
• Internet - Internet-specific companies received more than one billion dollars for the eighth consecutive quarter with $1.4 billion going into 188 deals.  This investment level is 3 percent lower in dollars and 23 percent lower in deals than the fourth quarter of 2011 when $1.4 billion went into 244 deals.   Two of the top ten deals for the quarter were in the Internet-specific category.  InternetSpecific’ is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company’s primary industry category.   
• Clean Technology - The Clean Technology sector, which crosses traditional MoneyTree industries and comprises alternative energy, pollution and recycling, power supplies and conservation, saw $951 million go into 73 deals, representing a 30 percent decrease in dollars and an 11 percent decline in deals compared to the fourth quarter of 2011.   The relative decrease in Clean Technology investments was driven by fewer larger rounds in Q1 as well as the fact that the fourth quarter of 2011 was exceptionally active in the sector.  Still, three of the top deals from the quarter were classified as Clean Technology investments.   

Eleven of the 17 MoneyTree sectors experienced decreases in dollars invested in the first quarter, including Semiconductors (43 percent decrease), IT Services (26 percent decrease), and Industrial/Energy (14 percent decrease).  The Consumer Products & Services sector experienced a 78 percent increase during the quarter due to the largest deal of the quarter ($238 million) occurring in that sector. 

Stage of Development   

• Seed stage investments fell 9 percent in dollars and 41 percent in deals with $141 million invested into 53 deals in the first quarter. The average Seed deal in the first quarter was $2.7 million, up from $1.7 million in the fourth quarter.
• Early stage investments fell 31 percent in dollars and 24 percent in deals with $1.6 billion going into 290 deals.   The average Early stage deal was $5.6 million in Q1, down from $6.1 million in the prior quarter.    
• Seed/Early stage deals accounted for 45 percent of total deal volume in Q1, compared to 53 percent in the fourth quarter of 2011.  
• Expansion stage dollars decreased 32 percent in the first quarter, with $1.7 billion going into 207 deals.  Overall, Expansion stage deals accounted for 27 percent of venture deals in the first quarter, a slight uptick from 26 percent in the fourth quarter of 2011.  The average Expansion stage deal was $8.3 million, down from $10.9 million in the prior quarter.   
• Later stage deals increased 11 percent in dollars and 13 percent in deals to $2.3 billion going into 208 rounds in the first quarter.  Later stage deals accounted for 27 percent of total deal volume in Q1, compared to 21 percent in Q4 when $2.1 billion went into 184 deals.  The average Later stage deal in the first quarter was $11.0 million, which decreased slightly from $11.2 million in the prior quarter. 

Venture Capital Investment Stages (Click Image To Enlarge)

First-Time Financings 

First-time financing (companies receiving venture capital for the first time) dollars decreased 22 percent to $783 million in Q1, the third lowest level in survey history.  And, the number of deals fell 28 percent to 195 deals in the first quarter, the lowest level since the third quarter of 2009.  First-time financings accounted for 14 percent of all dollars and 26 percent of all deals in the first quarter, compared to 14 percent of all dollars and 30 percent of all deals in the fourth quarter of 2011.

Companies in the Software, Media & Entertainment, and IT services industries received the most first-time rounds in the first quarter.  The Life Sciences sector experienced a dramatic drop, falling 60 percent in dollars and 43 percent in deals during the first quarter to $120 million going into 21 companies. The average first-time deal in the first quarter was $4.0 million, up slightly from $3.7 million in the prior quarter.  Seed/Early stage companies received the bulk of firsttime investments, garnering 81 percent of the deals.  

MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org.  

COMMENTARY:   As discouraging the Q1 2012 venture capital investment numbers appear to be, startups with clearly defined value propositions, defensible competitive advantages, sustainable business models and profitability or a path to profitability are must-have's before you make the plunge to raise venture capital.   Your value proposition should be real and truly compelling, not something concocted or imagined.   Your startup should be solving a real problem or filling a real need in the marketplace.  Your management team must proven and experienced in the chosen industry sector all of them should be 100% committed and passionate about the startup.  

For entrepreneurs in the early stage of development and thinking of raising venture capital, I encourage you to view the following videos of Guy Kawasaki, founder of Garage Ventures.  Guy is always very blung, and talks in plain language that we can all understand, and he points out the six key things that are very important when raising venture capital.

• Are you a VC-fundable deal or a viable deal?   Viable is not the same as fundable.
• Hot or Not?   Can you explain your deal in under 15 seconds.  
• Are you a 'clean' VC deal?
• The "10 slide PowerPoint presentation" Rule, delivered within 20 minutes, and a maximum of 30 bullet points.
• Raising venture capital is a time-consuming numbers game, so you must "drill a lot of wholes" to find the right VC that will ultimately fund you.
• You need capital to scale because you have problems keeping up with the growth is preferable over finishing a prototype. 

 

  

 

Courtesy of a press release dated April 20, 2012 by the NVCA and PricewaterhouseCoopers 

AMERICANS SET RECORD WATCHING 8.3 BIL VIDEO ADS IN MARCH, HULU & YOUTUBE WERE 1 & 2 WITH 1.7 BIL AND 1.2 BIL ADS RESPECTIVELY

Whetting the appetites of marketers, consumers are watching more online video advertising than ever. Breaking all previous records, Americans viewed more than 8.3 billion video ads in March, according to new data from comScore.

Delivering another record month. The leaders were:  

• No 1 - Hulu recorded more than 1.7 billion video ad views in March 
• No 2 - YouTube, ranked second with more than 1.2 billion video ads. 
• No 3 - The BrightRoll video network came in third with 953 million. 
• No 4 - Adap.tv came in with 892 million. 
• No 5 - Specific Media came in with more than 775 million.

Time spent watching video ads totaled 3.5 billion minutes, with Hulu delivering the highest duration of video ads at 690 million minutes, according to comScore.

Video ads reached 51% of the total U.S. population, an average of 53 times during the month, while Hulu delivered the highest frequency of video ads to its viewers with an average of 51, followed by ESPN, which delivered an average of 26 ads per viewer.

Overall, 181 million U.S. Internet users watched nearly 37 billion online content videos in March, while video ads topped 8 billion for the first time on record.

Ranked by number of viewers:  

• No 1 - Google Sites, driven by YouTube.com, ranked as the top online video content property in March with 146.1 million unique viewers. 
• No 2 - Yahoo Sites with 60.6 million unique viewers. 
• No 3 - VEVO with 51.3 million unique viewers.  
• No 4 - Facebook.com with 45.1 million unique viewers.
• No 5 - Viacom Digital with 44.3 million unique viewers.

Nearly 37 billion video views occurred during the month, with Google Sites generating the highest number at 15.7 billion, followed by Hulu with 1 billion and Yahoo Sites with 815 million.

The top drawing video channels were:

• No 1 - VEVO -- 49.1 million viewers. 
• No 2 - Warner Music -- 30.3 million viewers.
• No 3 - Gaming channel Machinima ranked third with 22.9 million viewers. 
• No 4 - Maker Studios with 14.6 million viewers. 
• No 5 - FullScreen with 12 million viewers.
• No 6 - BroadbandTV with 8.5 million viewers.

Among the top 10 YouTube partners, Machinima demonstrated the highest engagement -- 69 minutes per viewer -- followed by VEVO at 62.5 minutes per viewer. VEVO streamed the most videos -- 670 million -- followed by Machinima at 379 million.

Also of note during March, 83.5 percent of the U.S. Internet audience viewed online video, while the duration of the average online content video was 6.4 minutes, and the average online video ad was 0.4 minutes.

Video ads accounted for 18.5% of all videos viewed, and 1.5% of all minutes spent viewing video online.

COMMENTARY:    In my blog post of April 21, 2012, I reported that online advertising for the year ending 2011 was $31.7 billion, and that according to the Interactive Advertising Bureau, digital video advertising increased 29% from $1.4 billion in 2010 to $1.8 billion in 2011. 

Break Media partnered with market research leader Advertiser Perceptions, and just completed "Digital Video Advertising Trends 2012."  The study explores where the growth opportunities are for marketers and their agencies.  Which video ad formats are advertisers and agencies seeking out?  What models do they prefer to use when allocating budgets to digital video?  Find out the answers to these among many other insights in our annual study. Download the study HERE!   Checkout the video:

Digital Video Advertising Trends 2012 - Watch More Funny Videos 

Courtesy of an article dated April 20, 2012 appearing in MediaPost Publications Online Media Daily