ImaginativePRO Blog

BLACKBERRY'S NEW PRIV ANDROID PHONE, REAL KEYBOARD, SECURITY, AVAILABILITY, PRICING, SPECS AND REVIEWS

 

BlackBerry Ltd.’s new Android phone hit the market through AT&T on November 6, 2015, and could be the company’s last attempt at making its devices profitable before ending production.

 

The Canadian company has unveiled several new phones in the two years since Chief Executive Officer John Chen took over, but none has managed to stop hardware sales from falling. Chen has repeatedly said he will exit the device business if he can’t make it profitable.

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The BlackBerry “Priv” -- named for its emphasis on privacy -- runs a full version of Google’s Android operating system but features some of BlackBerry’s highly respected security and productivity features. It comes preloaded with an application that tracks how much other applications on your phone are accessing your personal data and location. It also has BlackBerry’s signature physical keyboard, which slides down from under the touch screen.

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Brian Colello, a Chicago-based analyst at Morningstar Investment Services, said in an interview.

“Perhaps there’s something else in the pipeline, but this device does seem like a last stand.  We’ve seen new products come out for the last couple years, BlackBerry’s trying to get a hit with any form factor, any price point and now it’s with a different operating system.”

With its share of the global smartphone market at less than 1 percent, BlackBerry has been working to shift its focus to higher-margin software sales. As he tries to turn around the company’s fortunes, Chen has held onto the phone business, which still accounts for about 40 percent of revenue. Blackberry could stop producing phones within the next year if it doesn’t begin turning a profit, he said at a conference in October.

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Software Target

Chen is working to reach $500 million in software revenue by March 2016 by acquiring security-focused software companies and building up new products like secure teleconferencing. BlackBerry completed its $425 million acquisition of Good Technology Corp. on Monday, a deal the company said will contribute about $160 million in revenue in the first year.

Ron Louks, BlackBerry’s head of devices, said the company will make announcements about its product “road map” in the beginning of 2016, but declined to say whether it would announce a new phone. Chen has said the company is going ahead with software updates to its BlackBerry operating system. 

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By running Android for its new device, the Priv sidesteps one of the biggest problems BlackBerry has had in persuading people to use its phones: a lack of applications. As the company’s operating system waned in popularity, developers stopped making applications that were compatible with it, prompting even more people to ditch its devices.

If the Priv sells better than BlackBerry’s two most recent major releases, the Passport and the Classic, it may keep the phone business going, Colin Gillis, an analyst at BGC Financial LP, said in an interview.

Declining Shipments

BlackBerry shipped 800,000 smartphones in the quarter that ended Aug. 29, its lowest since at least 2007.

Gillis, who has a buy rating on the stock, said.

“It doesn’t take a lot of phones to really move the needle for this company.” 

The company’s shares gained 2.9 percent to $7.50 at the close in New York and have declined 32 percent this year.

The Priv, with a retail price of $699, is targeted at a “very, very competitive market,” of high-end Android phones, Colello said, including those made by HTC Corp. and Samsung Electronics Co. The new device is BlackBerry’s latest effort to find a phone that can stabilize sales as the company transitions toward Chen’s software revenue target.   He said.

“They’ve done a good job of continuing to lower their break-even level for the hardware side to stay in business, but even though the bar’s going lower and lower, the sales still aren’t keeping up.  I think BlackBerry’s still searching for a hit phone.”

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COMMENTARY:  

Cellular Network Support, Prices, and Pre-Order Details For The BlackBerry Priv

AT&T is the currently the only U.S. cellular carrier offering BlackBerry's Priv smartphone.  Customers can purchase the phone for $250.00 with a two-year contract or via AT&T Next with $0 down.  You have your choice of the following contracts:

• Next 24 (30 payments) for $24.67 per month.
• Next 18 (24 payments) for $30.84 per month.
• Next 12 (20 payments) for $37.00 per month.  

Both T-Mobile, Sprint and Verizon are in negotiations to offer the BlackBerry Priv through their cellular networks, but no definite dates have been released. T-Mobile CEO John Legere told CNET that BlackBerry is "on a comeback" and hinted that the Uncarrier will have the Priv soon.

The comment on BlackBerry's comeback is just one in a growing collection of comments by Legere on BlackBerry.  In an interview with Fox Business News anchor Liz Claman, Legere said that John Chen is doing a "great job running BlackBerry," and T-Mobile is "trying to figure out how to get to groups of zealots -- T-Mobile fans and BlackBerry fans -- how to get those two together.

T-Mobile confirmed that that talks are happening, and suggested a 2016 release date is probable.  T-Mobile's network already works on the BlackBerry Priv, if the phone is unlocked.  

The phone sold through the BlackBerry Store is designed to work with GSM cellular networks, but a CDMA-compatible is coming to Verizon soon.  Verizon tweeted confirmation on November 6, and directed those interested to sign-up on its website for more information.  No release timeframe was offered.

BlackBerry will also make the Priv available internationally as follows:

• Canada -  Rogers (Pre-Orders) and ShopBlackBerry Canada ($900 CDN)
• United Kingdom - Carphone Warehouse and ShopBlackBerry UK (560 Pounds including VAT)

Marshmellow and Security Updates

In a recent interview with Android Central, Ron Louks, BlackBerry's president of devices, commented on the upcoming update to Android Marshmellow 6.0 and monthly security updates.  Louks didn't give a firm date for Marshmellow 6.0, but said the update should hit "sometime in the new year," at least confirming that BlackBerry Priv users will not have to wait long for it.

BlackBerry's added improvements to Android that will attract enterprise users who seek data encryption and built-in security features that track how apps are interacting with your data (Click Image To Enlarge)

BlackBerry has done really solid work adding a layer of security to the Priv — "Priv" stands for "privacy," after all. The user-facing aspect of it is a piece of software called DTEK security, which monitors your phone for nefarious acts and also gives you a handy security audit that lets you know what's going on inside each one. The Priv isn't running the most recent version of Android, but it has the same ability to let you examine each app's access to your privacy settings and turn them off if you don't like them.

On security updates, Louks said BlackBerry will try to adhere -- at least in Europe -- to pushing security updates within a month of Google releasing them.  As more malware and vulnerabilities hit Android, manufacturers are being called upon to quickly update devices and make sure users are safe and secure.  BlackBerry will import its own security systems as well, to ensure vulnerabilities are mitigated before Google patches them.

Priv Specifications

BlackBerry has gone all-out with the Priv Android phone, so the specs are about as high-end as any other flagship Android phone -- Unfortunately, the Priv also has a high price tag to match.  The phone has an intriguing slider design, the likes of which we haven't seen in a number of years, so that users can choose between a virtual keyboard or a physical keyboard.  When you slide the screen back, a full QWERTY keyboard in the old school BlackBerry style is revealed.  The keys are touch sensitive for scrolling and cursor control, too, so you can use it as a trackpad if need be.

 

GSMArena created this wonderful breakdown of the BlackBerry Priv's technical specifications:

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BlackBerry's New Android Apps

When it comes to software, BlackBerry's added a few bells and whistles to make Android secure enough to suit its standards.  The BlackBerry Hub is included, which brings all your messages into one feed, as are other standard BlackBerry apps like BBM.  BlackBerry's special DTEK for Android software will also alert you when your privacy may be at risk, give you a security rating for your device, and it offers for specific security features, so that you know what's going on with your personal info and more.  You can determine which apps and services are allowed to use your microphone, camera, contacts, and more. 

BlackBerry released a range of apps onto Google Play store in late October.  The apps will be pre-installed on the BlackBerry Priv, and are apparently only usable on that device.  Users that tried to download the apps were informed that their devices are incompatible. 

The apps include BlackBerry Launcher, Keyboard, Camera and Services.  Password Keeper has been added to store all passwords in a single folder, encrypted and secured by BlackBerry -- the app can also import infor from previous BlackBerry owners moving to Android.  DTEK for BlackBerry and MicrosoftextFat for BlackBerry have also been added to the Google Play store.

Having all the applications available on the Google Play store should make them instantly available without a firmware update.  BlackBerry plans to offer an almost stock experience, with additional security and some new applications ported over from BlackBerry 10.

BlackBerry "Old-Style" Keyboard

A lot of mobile device experts don't give the BlackBerry Priv a chance of succeeding among smartphone users or making a dent in the smartphone market, because its debut comes four years too late.  However, I believe that the Priv will be able to capture market share because there is a latent demand for smartphones with old-style features like a physical keyboard.  

Although the BlackBerry Priv may look "old-school," a physical keyboard fills a need in the marketplace.  The limitations of a virtual keyboard on tablets like the iPad, quickly gave rise to attachable physical keyboards, and now they are a must-have accessory for most serious tablet users. It is my opinion that the Priv's physical keyboard is going to be a hit with users, especially old-school users like yours truly.

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BlackBerry's keyboard is truly special, incorporating fresh ideas that most smartphone makers ignore:

• The keyboard software is optimized for the keyboard — no mean feat, given how few Android phones have bothered with them anymore.
• The keyboard is also touch-sensitive, so you can scroll with it and swipe down on it to bring up an optional symbols keyboard.
• The keyboard does not make the Priv top-heavy or ackward to hold or use.

You are probably not going to be any faster or more accurate using the Priv's physical keyboard than you are on a touchscreen virtual keyboard, but it isn't about what's definitively "better." Because after you reach a certain level of quality and functionality, it's perfectly fine just to have personal preference. Live and let live.

I believe that enterprise and government users will like and value the BlackBerry Priv's security and data encryption features.  These are must-have features for corporate users, government agencies and individuals who want that extra layer of security not found in most of today's smartphones.    

Multi-Tasking On The Priv

One change that I love on the Priv is the layout for multitasking. Instead of showing a vertical stack of cards, BlackBerry designed multitasking to show a grid of apps in varying sizes. Think of it like the Windows 8 Start menu for apps you already have open. Hitting the multitasking button and then thumbing through the list of apps on the keyboard’s touchpad feels like magic. Compared to the stacked card interfaces of Android Lollipop and Marshmallow and iOS 9, Blackberry’s implementation is a breath of fresh air. You can see more than one app with its preview clearly. It’s one of the biggest things I’ll miss when the Priv goes away. 

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BlackBerry Priv Reviews

BlackBerry Priv reviews by expert reviewers are mostly good averaging about 3.5 stars out of 5.  The Priv is regarded as a good phone, not a great phone, but a "great first effort for an Android phone." The $699.00 price tag may scare off a lot of potential buyers, but with a two-year plan through AT&T, the price is only $250.00.  According to Ron Offringa, Droid-Life, ere are the good and bad of the Priv:

The Good  

Display - The 5.4-inch (1440 x 2560 pixels) display on the Priv is visually great. Colors are accurate, text is crisp, and the curve along the edge of the display makes Android’s slide out menus feel more real.  The display is able to get very dim, but I have definitely seen displays that get brighter, meaning you may have some issues in direct sunlight.

Hardware Design - The Priv feels like a tank. A plastic tank, but a tank nonetheless. That’s not a bad thing, but don’t expect the Priv to delicately slide into your pocket.  The body looks downright handsome in its stealth black paint. Where other phones look delicate with their bendable aluminum bodies and glass backs, the Priv feels like a solid, well constructed pocket computer.  The body of the Priv is curved to match the sloping glass on the front, but the middle edges are flat so that the phone is easy to grip.  The power on/off button is on the left instead of the right, but that's no big deal.  The bottom of the phone has a micro USB port at the center and the headphone jack on the right.  The placement of the headphone jack makes it relatively easy to find with a cursory brush against the bottom of the device.  The top of the phone features a micro SD card tray and the SIM tray. For whatever reason the SIM card should've been placed on the bottom of the tray (facing the back of the phone) instead of on the top. This isn’t a big deal, but it is an odd design that was confusing at first.

The Keyboard - The slider keyboard on the Priv is probably the single best thing about it.  Can you type faster on a virtual keyboard?  Probably not, but if you have never used a phone with a hardware keyboard then it might take you longer to adjust, but after using the Priv keyboard a few times, you will feel right at home.  The keyboard is touch-sensitive and can be used as a trackpad for scrolling by brushing your fingers on the keyboard.  Finally, as long as you’re using the stock launcher, you can also set shortcut keys for individual presses or long presses on the keyboard.

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The Software - The Priv runs an almost stock version of Android 5.1.1 (that’s right, no Marshmallow 6.0 Android on the most secure phone in the world), but CEO Chen says "they are working on it (getting Marshmallow upgrade) sometime in 2016."  Here are a few changes to note. Notifications can be bundled by app, so if you have a ton of new notifications, but you really just want to see your emails you can tap on your email app icon and only see those in the notification shade. BlackBerry includes a Peek menu on the edge of the display to quickly see your calendar, favorite contacts, messages from BlackBerry Hub, and tasks.  BlackBerry Hub is an app that summarizes your communications for you. All of your emails and texts and calls and even social media bits can be found in one place. I can see this being really helpful for someone who either needs or wants a summary of their day regularly or who wants a notification center to go to because they find the notification tray too limited or lacking context.

Device Search is a limited replacement for Google Now that allows you to search your device or, if you don’t find what you want, you can tap a button to search the web or Drive or any other app listed under Extended Search. When you’re on the home screen if you start typing on the keyboard it will ask if you’d like to use Device Search or Google Now.  I haven't tried Device Search, but I use Google Now all the time, and like it very much.

Multitasking  (See above) on the BlackBerry Priv is a breeze and one of the changes that users love is the layout for multitasking.  Instead of showing a vertical stack of cards, BlackBerry designed multitasking to show a grid of apps in varying sizes.  Think of it like the Windows 8 Start menu for apps you already have open. Hitting the multitasking button and then thumbing through the list of apps on the keyboard’s touchpad feels like magic.

Average

Security and Privacy - The first, and most important, is that the Priv lacks a fingerprint scanner like high-end phones like the iPhone, Nexus 6P, Nexus 5X, HTC One A9, Galaxy S6, and Note 5. 

The second is that DTEK (See Above) thinks it’s secure for me to have a password or PIN that locks my device after 10 minutes.  BlackBerry should not be giving that default setting a passing score. I also love that DTEK has a section that says that my device is secure because it is a BlackBerry.

The third is that the Priv runs Android 5.1.1. While this shouldn’t be too upsetting for users considering Marshmallow is only just over a month old, from a security standpoint it is a bit of an issue. Maybe BlackBerry will be quick with updates, but there’s a good chance that unless BlackBerry picks up the pace the OS itself will become a security issue.

NOTE:  In my opinion, Ron Offringa from Droid-Life either does not understand the Priv's security features, or didn't want to dwelve too deeply into the Priv's security capabilities.  For these reasons, I differ with the security review of Ron Offringa from Droid-Life.    

If you wonder just how secure the BlackBerry Priv really is, well, it's very secure.  For starters, the Priv uses data encryption technology and its security software works like an internal "firewall" that operates in the background and monitors for malware and mobile app spyware that might want to tamper with your program files and data.  If it senses this, it will notify you immediately to take appropriate action.  

And there's much more than meets the eye centered specifically around security and stability.    

What about fingerprint readers? Apple does them. Google does them. Samsung does them. Why doesn’t BlackBerry?  Dave Kleidermacher, BlackBerry’s chief security officer, said.

“User authentication is a freakin’ nightmare in the mobile world today.  There is not yet a widespread and ubiquitous user authentication mechanism that is both strong for security and users don’t hate it."

Kleidermacer explains why the Priv does not come with a fingerprint scanner.

“The reason we haven’t put a fingerprint scanner is that if you lose your fingerprint, you’ve lost that part of your identity forever. And that’s a problem, because it’s a static picture of your finger. It’s just bits. You drop those bits, and you’re done. We’ve never put a fingerprint scanner on our devices because we think of it as a relatively weak authentication system.”

Kleidermacher argued that, if implemented poorly, it’s easy to steal those bits off of a device, or even lift the fingerprint off the actual device and use that to log into it. In short, he believes that using your fingerprint as your identity is flawed from the get-go, because it doesn’t change. Other types of biometrics, where the “password” isn’t just a static image, but rather something that is moving or changing, while still being unique to you, are “much better.”

He elaborated further.

“I’m not saying biometrics are a bad idea.  I’m saying that today, in terms of what’s available in the market ubiquitously, there is not yet one that I’ve seen that passes our muster from a security and stability perspective.”

Indeed, Kleidermacher refused to declare that BlackBerry would never include a fingerprint reader in a future device. He said that relying on a combination of a fingerprint and something else might be a reasonable tradeoff, adding that “eyepanning” technology shows tremendous promise.

He continues.  

“We are constantly evaluating biometrics in general, and when we feel satisfied that the security strengths, cost, and usability are in a sweet spot, then we would consider putting them into devices. When that will happen, and exactly what type of biometric, remains to be seen still.”

Translation: Don’t be surprised if a BlackBerry Android phone next year has some sort of biometric solution.

So, what exactly has BlackBerry added to the Priv that isn’t available in Lollipop out of the box? Quite a bit.

There’s the aforementioned DTEK and picture passwords, as well as a Password Keeper app and media card protection.   FIPS 140-2 compliant full disk encryption is on by default, and you get the S/MIME encryption protocol for digitally signing and/or encrypting messages, and of course doubly encrypted messages via BBM (though you can install BBM yourself on any Android device, assuming you still have someone to message on it).

But there are three improvements that particularly stand out on the Priv:

• Secure compound, a special BlackBerry area of firmware that runs below Android (making it immune to Android vulnerabilities) and handles operations such as validating the integrity of the Android OS itself
• Verified Boot and Secure Bootchain, which uses the embedded keys to verify every layer of the device in order to make sure they haven’t been tampered with
• Modifications to harden the Linux kernel with patches and configuration changes to improve security

The first two points we discussed earlier:  These are the two that were impossible to pull off before Lollipop came along. For the third, Kleidermacher explained that BlackBerry has made “literally thousands of changes to both the Linux kernel below Android and to Android itself for security and privacy.” Of course, if Android 6.0 was the base, the company wouldn’t have had to include as many patches.

But there’s more than just software fixes here.  Back in February 2009, BlackBerry acquired cryptography company Certicom. Ever since, BlackBerry has injected security keys into its chipsets to guarantee the “hardware root of trust.”  This is a big sell to corporations, according to Kleidermacher.

He declared.  

“How do I know that the hardware key, that the hardware root of trust, hasn’t been tampered with during the supply chain? You can’t test this with Fibs certification.  So we don’t really care where the device is being manufactured, the chipset and the injection is controlled by BlackBerry and our Certicom technology. That can give users and businesses a very high level of confidence that the root of trust for all crypto (encryption, integrity validation, and application-level security policies) is rooted in something that is truly BlackBerry secure.”

This is where it becomes very clear that BlackBerry will be selling the Priv to die-hard BlackBerry fans, sure, but it will be mainly selling it to corporations.  The Priv is meant to be Android plus BlackBerry, the best of the consumer and business worlds.  

I know this has been an lengthy explanation for why I differ with Mr. Offringa's poor review of the Priv's security.  Having said this, it is my opinion that the Priv's security is the real strength of this phone, and why security should be rated as one of its best features.  Heads of IT and enterprise users are going to love the security features of the Priv, but I think that regular users concerned with mobile app spyware and malware will love the Priv as well.  Security should be everybody's concern, so BlackBerry must communicate its security strengths when it markets the phone.  Execution will be everything. 

Performance - Performance on the Priv is great. Between the Snapdragon 808 and the 3 GB of RAM apps launched quickly, ran well, and stayed in memory for plenty of time. The device does run hot when under the stress of a game (which shouldn’t come as a surprise considering this year’s Snapdragons) and battery life definitely takes a hit.  That being said, the Priv took everything thrown at it with aplomb.  For whatever it's worth, I have the Snapdragon 800 on my non-BlackBerry smartphone, and it screams, plays video without any interruptions and the heating issue is hardly noticeable.

Audio - The front facing speaker on the Priv is great to see.  It’s not a Boom Sound speaker or anything, but it’s plenty loud for speakerphone calls or listening to music in an otherwise quiet room. I put The Beach Boys on while washing dishes and I could hear Brian and the gang perfectly well. I do wish the volume got louder with headphones, though. With headphones the audio is certainly audible, but my iPhone and the Galaxies are able to get several clicks louder.

The Bad

Pricing and Availability - The BlackBerry Priv is available right now at AT&T for $24.67 per month on a payment plan or $249.99 on a 2-year contract.  BlackBerry's CEO says the company is now negotiating with T-Mobile, Verizon and Sprint to carry the Priv, but not likely to become available through those carriers until Q1 2016.   You can also buy the Priv directly from BlackBerry for $699.99.  The model from BlackBerry will work with AT&T or T-Mobile. This isn’t the best availability we’ve seen on a phone at launch.   I’m also not a huge fan of the pricing, but remember most top tier phones have been within $50 of this price point until very recently.

Battery Life - According to Droid-Life, battery life on the Priv was less than stellar. The same deficiency was reported by The Verge, CNET, Engadget and Android Authority.  TechAdvisor gave the battery good marks for longevity, but they didn't use the phone for watching videos or playing games. Like most of the phones reviewed this year, fast charging is a nice workaround for low battery life. However, you need a fast charger which costs extra.  The Priv is equipped with a very decent sized battery in it.  On Ron Offringa's first full day with the phone the battery lasted until 3:30 PM when it was around 10%.  Better results are expected of a phone whose manufacturer claims the battery can last up to 22 hours.  

I never trust the claims of the manufacturer when it comes to battery life.  They tend to exaggerate. How long the battery will last before requiring a charge depends on how you are using the phone.  If you view a lot of online videos and play games, those activities are very processor and battery intensive, and this will drain a battery twice as fast.  On the other hand, if you are just sending and receiving emails, texting, making or receiving calls, and visiting your social networks, and dont't view a lot of videos or play games, you could conceivably get 10-12 hours of usage.  

A lot of these reviewers did not operate their Privs at different types of activity and intensity of usage. In my opinion, batteries should be tested for light use, medium use and heavy use (includes watching videos and playing games).  I have a feeling that those 22 hours were based on very light usage.    

Camera - The front facing camera on the Priv is good in bright light. In anything other than bright conditions you’re going to want someone else to take your selfies for you unless you love blue/green hazes over your photos. The fact that BlackBerry shipped a front facing camera this bad in 2015 just goes to show how little they care or know about what people want in a smartphone. 

The rear facing camera on the Priv takes good shots. Pictures are sharp and clear, and colors are bright and true. The dynamic range was surprisingly good in shots where the light differed and it performs well enough in low light situations. That led to an experience a bit more akin to shooting with an actual camera and I felt like I was able to stabilize the shot better than I can if I have to push in a volume button or peck at the screen.

 
Pictures taken with the BlackBerry Priv's front-facing camera (Click Image To Enlarge)

The frustrating and ultimately disappointing part about the camera is that it is downright slow.  It takes about a full second for the shutter to activate after you press the take picture button.  

Here again, I beg to differ with Ron Offringa's bad review of the Priv's camera's.  Most of the Priv's pictures will be taken with the 18-mega pixel rear-facing camera.  As you can see from the above, the pictures are just fantastic.  I think Ron's criticism of the front-facing camera is way over the top.  I would've given the Priv a good grade for its phoos.  Shame on Ron for being so centered on selfies. Kind of tells you what this narcistic reviewer does with his smartphone camera.

Final Verdict

The Priv features a lot of really good software ideas with interesting hardware, particularly with its security and stability, but the lackluster battery life and poor camera performance make it hard to recommend to anyone but the biggest keyboard nerd.  If you don’t use your phone to take a lot of pictures and you don’t mind having to charge your phone then the Priv is worth looking at. This is heartbreaking to write because the Priv does so much so well and, most importantly, actually offers something you can’t get on any other Android phone.  

It's apparent that Ron places far too much emphasis on battery life and the camera.  Exactly what I thought he would do.  Ron entirely misses the point of the Priv.  This is not a phone targeted to Ron's Millennial generation.  It is targeted at older Generation X, younger boomers, corporations, SMB owners, and former BlackBerry users who appreciate quality construction, a "built like a tank" smartphone, with unbreakable security, a physical keyboard, good rear-facing camera and accessibility to the Android ecosystem.  If they want selfies, they will ask someone to take them using the rear-facing camera.  If you want to make egg over the battery life, I can show you several instances, where even the iPhone and Galaxy phones can suck up a battery dry in no time at all.  As a Boomer, I don't get all bent out of shape if my phone sucks up juice. I get a better battery, kill apps running in the background that I don't need, watch videos on my laptop, and drop the brightness of the display a bit. That's what I do with my ZTE ZMAX smartphone, and this works for me.  It's been a long 15-hour day, and my ZTE ZMAX is telling me I have 80% power still available.  Battery no problem. My grade 4.0 out of 5 stars.  If you don't like me review, sue me.          

Courtesy of an article dated November 2, 2015 appearing in Bloomberg, an article dated November 9, 2015 appearing in The Verge, an article dated November 6, 2015 appearing in VentureBeat, an article dated November 25, 2015 appearing in Droid-Life, an article dated November 17, 2015 appearing in Digital Trends, an article dated November 18, 2015 appearing in International Business News, an article dated November 17, 2015 appearing in ValueWalk

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SQUARE'S IPO POPS BY 45%, BUT ITS A LOSER, 25.7 MIL SHARES SOLD AT $9.00, SHARES CLOSE AT $13.07, THE WINNERS AND LOSERS

The most anticipated technology initial public offering of 2015 is in the books and Square finished its first day of trading on the New York Stock Exchange up more than 45% from its $9 per share IPO price. In the aftermath, there will be plenty of talk of unicorns, ratchets and the disparity between public and private valuations. But who actually came out on top and who was hurt in the San Francisco-based company’s IPO? FORBES assesses the winners and losers from Square’s big day.

 

Winners

Jack Dorsey turned 39 on Thursday,  the day of the IPO, and now holds the unique position of being CEO at two multibillion-dollar public companies. While most wouldn’t envy his task,  Dorsey seems to relish the fishbowl-like scrutiny that comes with running both consumer-facing tech firms, Square and Twitter.  Yes, his net worth fell $730 million because Square went public below its last private valuation, but Dorsey has never been in it solely for the money.  He has returned shares to his companies in the past, most recently handing one-third of his Twitter stake back to the social media firm in October. In the Square IPO prospectus, Dorsey committed to give 40 million shares, or about 10% of the company, to a foundation. He’s also not struggling at the moment with a net worth of more than $1.4 billion. It remains to be seen if he can manage the dual-CEO roles, but Dorsey has established himself as one of the leading entrepreneurs of his generation and he’s not even 40.

Square CEO Jack Dorsey receives kiss from his mother, Marcia Dorsey, outside the NYSE (Click Image To Enlarge)

Square CEO Jack Dorsey poses for photo outside NYSE (Click Image To Enlarge)

Square CEO Jack Dorsey with co-founder Jim McKelvey (Click Image To Enlarge)

With Square pricing its offering well below its expected range at $9 per share, Square merchants, some of whom were able to buy in at the IPO price, benefited greatly. Through a special program, certain merchants who use Square products were able to purchase some of the 1.35 million shares that were donated by Dorsey.  Dorsey told FORBES on Thursday.  

“Sellers want to own Square and be investors in our success.”  

It was also a win for retail investors, who were in a frenzy as the stock shot up in its first hour of trading. More than 47 million shares exchanged hands on the first day of trading, according to FactSet data, and those who bought early and held on through Thursday were able to feel the full extent of the stock’s pop. Among those investors was Tod Wilson, a pie maker whose company was used as an example of a successful Square business in IPO filings and on the company’s roadshow video. Wilson “missed the program” that allowed him to buy shares at the IPO price, but bought in on Thursday and is still holding that stock.

As an investor in the company’s late-stage Series E round, Goldman Sachs and other participants in that financing were protected by a provision known as a “ratchet.” While those investors bought shares at a price of $15.46, the company guaranteed them at least a 20% return on that investment. In order to make that happen when it priced its shares at $9 each, Square was required to issue an estimated 10.3 million shares–valued at nearly $93 million at the IPO price–to those investors. Those shares were worth a collective $135 million when the market closed on Thursday.

Losers

Goldman Sachs saw gains on Thursday as an investor, but as underwriters along with Morgan Stanley MS -3.03% and JP Morgan overseeing the IPO process, it certainly left money on the table for its client, Square. This of course opens up a debate as to what constitutes a “good IPO” with companies weighing the benefits of a first-day stock pop to drive investor interest versus taking in as much cash as possible. Publicly bankers often say pricing an IPO is more an art than a science, with the general understanding that a 15%-20% first-day trading pop is optimal in terms of maximizing proceeds and allowing buyers to feel like they got a deal. Had the underwriters priced Square’s shares at $12–in the middle of its suggested $11 to $13 range–the company could have taken home an additional $77 million in cash. Some argued that because of Goldman’s role as a Series E investor and its ratchet preference, the bank may have had an incentive to price the IPO as low as possible.

While investors with ratchets benefited from the provision, Square’s employees did not. Because the company was obligated to issue more stock to those Series E investors, the entire share pool was diluted. At a Silicon Valley tech firm, where employees are often attracted to companies based on the type of equity packages they receive, that won’t sit well with a mid-level engineer or designer who may have given up a cushy job at Google GOOGL +2.32% for Square and its equity. Come the expiration of the lockup period, which prevents investors and those inside the company from selling, employees may find themselves in a tougher market if they want to offload their shares.

Perhaps one of the more curious things on Square’s IPO prospectus was the disclosure of two unnamed investors who bought $30 million worth of Series E shares last month. The company said those backers included one existing investor and one new investor, though a Square spokesperson declined to say who they were. Whoever they were, they bought a total of 1.9 million shares at a price of $15.46 each and waived their right to maintain a ratchet. With shares closing at $13.07 apiece today, that holding is still underwater to the tune of about $4.5 million.

COMMENTARY:   Square, known for its small, white readers that plug into smartphones and tablets, now has a market value of about $3 billion compared to the $5 billion value implied in its fundraising a year ago.

The steep markdown could foreshadow trouble ahead for venture capitalists and other investors who have been pouring billions of dollars into technology startups in recent years.

The IPO discount also leaves Square with less money to draw upon as it strives to turn a profit for the first time in its six-year history. Before paying its investment bankers and other fees, Square raised $231 million in the IPO, instead of the $282 million to $346 million that the San Francisco company had been seeking.

According to Square's S-1 filing, which I described in detail in a blog post dated October 16, 2015, a total of 185,361,631 class B shares are held by outside investors, insiders and directors.   The percentage of total class B shares held by major shareholders include Jack Dorsey (24.4%), Khosla Ventures (17.3%) and Director James McKelvey (9.4%).

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Square had to discount its IPO shares at the $9 per share late Wednesday, below a target of $11 to $13 that Square set the week before.  The price is 42 percent below the $15.46-per-share price that Square fetched a year ago when it raised $180 million while it was still a privately held company.  In my opinion, this was just a strategy by the IPO underwriters Goldman Sachs, JP Morgan and Morgan Stanley to line their pockets at the expense of Square.  Shame on Jack Dorsey for letting them get away with this.  Don't let Jack Dorsey ever give you advice on bluffing while playing poker. He left a lot of money on the table    

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The initial public offering of Square was supposed to be a sign of doom for unicorns (startups with pre-IPO market values of $1 billion or more), a proof that you can't make money investing in pre-IPO tech companies any more. On the other hand, here is how much money Square's investors have actually made, by funding round: 

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Those are paper profits, based on Square's $9 per share initial public offering price, and on a $13.50 per share trading price as of about 11 a.m. Here they are in table form:

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If you invested in Square at any point, from its Series A round in 2009 through its IPO last night, you've made at least a 20 percent return on your money as of this morning, or about a 7 percent compound annual growth rate. And if you got in early enough, or late enough, your returns were way better. In aggregate, Square's investors have tripled their money; its pre-IPO venture capital investors have almost quadrupled theirs. Everyone can breathe easy now! Unicorns are fine again.

Obviously there were some bumps along the way. Thursday's IPO priced below the Series D round, leaving the Series D investors with a paper loss. It priced even farther below the Series E round, but the Series E investors had negotiated for themselves a "ratchet," in which Square essentially guaranteed them a 20 percent return in the IPO. Their shares were worth only about $87 million at the IPO price, so Square had to give them another 10.3 million shares -- worth another $93 million -- to make up for it.  

WHAT TO MAKE OUT OF SQUARE'S IPO

The stock market guru Ravi Bala of Seeking Alpha really know how to sense out of the Square IPO. Ravi took the time to compare the financials for Square Inc and Twitter, and I agree with his conclusions. Seeking Alpha says.

"Square (NYSE:SQ), like most IPOs, runs on stories. How an unprofitable company got into the market is beyond me. There are parallels between Dorsey's new company and his older one, Twitter (NYSE:TWTR), that makes me believe that Square is on track to cause major headaches to investors who will focus on the future and not pay attention to current results.

Square was founded in 2009 and just went public. It is approximately six years in business and is unprofitable. Twitter was founded in 2006 and went public in 2013. Interestingly, both went public in November in their respective years. Both companies are very young. Just as Twitter has shown, I would say that Square needed to stay private for a bit longer until it showed signs of profitability before entering the public markets.

Take a look at the two financials below. The first table is Square and the second is Twitter. Notice the general similarities. Net income and cash flows are negative despite increasing revenues. What struck me as interesting is that both companies had increasing revenues and increasing negative free cash flow in their respective years as they finished their IPOs. Everyone in the investment world touts the philosophy of Warren Buffett, but no one seems to apply his sage wisdom. You just do not invest in companies that have not proven themselves out. Like Twitter, Square is still trying to prove its concept out. There is no moat established. For GARP investors, what did Peter Lynch say? He said that you need to see a tendency in growing earnings. Square shows the complete opposite.

Square Inc Financials

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Twitter Financials

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Here is where things get much more interesting. Below I extend the table and show you how worse off Twitter has been since it went public. Revenues have been increasing, but it has become very obvious that the net income and free cash flow numbers are accelerating in the wrong direction. I do not want to draw any conclusions but based on the youth of Square and the fact that it may be losing one of its biggest customers, Starbucks, I think Twitter's performance foreshadows Square's future.

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I took a look at both companies' S-1 filings to see if there were any similarities. Four of the banks who underwrote Twitter's IPO underwrote Square's. I'm very curious to know why these banks would want Square to go public given that its financials going into the IPO were much worse off than Twitter's. It may not mean much to some people, but I would not trust their judgment this time for their poor judgment last time."

SQUARE IS A LOSER IN SHEEPS CLOTHING

I don't think that Ravi Bala is not too far off in his assessment of the Square IPO.  I don't think we will have to wait more than a year or two to realize that the Square IPO never should've happened.  There is just too much shit going on right now that is likely to affect stock prices in the immediate future, not including rising interest rates, ISIS terrorism, Square's unproven and unprofitable business model, geo/political problems like a possible confrontations with China, North Korea and Iran.  When you add the weakness in the IPO market, the underwriters rushing (more like RUNNING) to get this IPO in the books before the end of the year before stocks lost their luster, it would not surprise me if there is a shareholders revolt somewhere along the way, when this thing collapses due to some or all of the above.  

I keep reading that Jack Dorsey was the only logical choice that Twitter had, so they kept him to serve as permament CEO.  It's quite a challenge to fix the problems of a bad and underperforming company, let alone two simultaneously.  If you ask me, I think Twitter's board of directors should've hired Snoop Dogg.  He offered to serve as CEO, and I think they should take him up on it.           

In my blog post (see above) about Square's IPO filing, I made the following comments about Square's IPO which you should note.

"I am always concerned when a startup that has never generated a profit since it began operations, that startup competes in a mature and highly competitive industry (credit card payments) and that industry is dominated by larger and more established players, and that startup is led by a CEO (Jack Dorsey) who splits time between two troubled companies (Twitter and Square), and then that CEO thinks its time for an intial public offering when stock market indicators say otherwise, then it makes me wonder about the wisdom of that CEO.  This is the case with Square, Inc. and CEO Jack Dorsey.

Jack Dorsey has his work cut out for him, not only with Square, but especially with Twitter, a social network which has never generated a profit, has lost numerous executives since the start of this year, whose monthly active users has stalled, and advertisers are questioning Twitter's viability as an advertising platform.  

Dorsey recently announced that Twitter would layoff about 10% of its workforce or about 336 employees, mostly from its engineering staff.  This will cost the company about $20 million in severance payments and other separation entitlements.  Even after you factor the savings from in wages, payroll taxes and employee benefits due to these layoffs, this will not make a substantial dent in their operating losses to date.  This makes you wonder if Square will require some staff pruning after the IPO.   

Even if you adjust Square's earnings for the money that it is losing from the Starbucks deal, the company is still losing a substantial amount of money.  Unfortunately, Square will continue to lose money off the Starbucks deal until October 2016."   

Courtesy of an article dated November 19, 2015 appearing in Forbes, an article dated November 20, 2015 appearing in Bloomberg, an article dated November 19, 2015 appearing in Forbes, an article dated November 19, 2015 appearing in Seattle Times, an article dated November 19, 2015 appearing in The Wall Street Journal, an article dated November 19, 2015 appearing in QZ.com, an article dated November 19, 2015 appearing in Newsweek, and an article dated November 19, 2015 appeariong in ABC News

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THAI DESIGN FIRM ALL(ZONE) CREATES THE LIGHT HOUSE, AFFORDABLE AND PORTABLE TINY HOUSING CUBES FOR EMPTY BUILDINGS

This house is so easy to move, it's like picking up a suitcase.

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If you can't afford an ordinary apartment, maybe you can try living in a parking lot. Even a Google employee is already doing it, leaving the rest of us mere mortals resigned to our fate.

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In Bangkok, where rents are quickly rising and young professionals often struggle to find places to live, architects created a simple tiny house that can easily pop up in a parking garage or inside one of the city's half-built abandoned buildings.

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Rachaporn Choochuey, cofounder of All(zone), a Bangkok-based design firm says.

"It is very difficult for young professionals to live with a bit of quality of life in the city.  We noticed the issue and want to offer an alternative way of semitemporary living."

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Because the climate is mild in Bangkok, the pop-up apartments are open and airy—something that Choochuey says is somewhat similar to traditional Thai design.

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Choochey says.

"Traditionally architecture was so light, so thin.  With modernization, we began to build following international standards, which are somehow too solid for tropical conditions. People ended up living in air-conditioned environments all the time, which is very absurd."

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Instead of solid walls, the structure has a lattice-like design that lets breezes pass through.  She says.

"With the wall, we need as much ventilation as possible.  It is always too hot, not cold. . . . The perforated nature of the structure would be perfectly matched with the climate conditions."

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The lightweight building can easily be moved from place to place and set up in unused spaces, like the many half-built buildings in Bangkok that were abandoned after repeated economic crashes. Instead of signing a lease, someone would have a home they could bring along if they need to move.  She points out the housing's portability.  

"It's a bit larger than moving a suitcase."

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When the architects set up a prototype in an abandoned parking garage, a couple of young designers volunteered to try living in it for a few days. Their verdict: It had some advantages over typical apartment living, beyond the savings in rent.

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 Choochuey says.

"There are also opportunities for community gathering, the exposure that living in a small apartment unit of a big building cannot offer."

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The Light House is on display at the Chicago Architecture Biennial.

COMMENTARY:  The lighthouse portable housing cubes attract squatters and are especially usable in tropical areas.  The micro-dwellings can be built on a budget of just $1,200 (£790) and disassembled in a matter of hours.

The floors are made from plastic-laminated plywood, while a polyethylene-coated metal grid envelops the space and doubles as shelving structure. Different degrees of perforation creates various configurations and spaces that can be unique. The studio built two prototypes within a vacant parking garage in Bangkok for two designers who inhabited the structures for several days. The firm said.

“The prototype house could lead to a new type of housing with less rigid materiality and energy.”

Courtesy of an article dated November 4, 2015 appearing in Fast Company Exist and an article dated October 8, 2015 appearing in Habitat

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SHOCKER: HOLLY HOLM KO'S RONDA ROUSEY TO WIN UFC WOMEN'S BATTEMWEIGHT CHAMPIONSHIP

I could've predicted this.  Ronda Rousey is just not a great striker.  If she gets you on the mat, watch out. Most of her wins have been submissions via arm bar.  Holly Holm is a world champion women's boxer.   Holly Holm just beat the crap out of Ronda. You could've seen this coming in the first round. Ronda could not get close enough to bring Holly down onto the mat.  Every time Ronda tried something, Holly swept her aside or moved out of her way, and then pow!!  A punch to the face.  By the beginning of the second round, you could see that Ronda was pretty beat up, and that soon, very soon, she would be knocked out.  I saw Holly Holm use that leg kick once before, and the result was a knockout.  Same thing happened tonight.  Ronda never had a chance after being punched drunk.  Here is the KO!!

 

Click Image To View The KO!!

HOW BRANDS CAN SUCCEED ON SNAPCHAT: KNOW THE SNAPCHAT AUDIENCE AND USE SIX SIMPLE MARKETING APPROACHES

If your brand is thinking of marketing itself on Snapchat, marketers must understand who is using Snapchat and use the right marketing approaches with that audience. 

First, Brands Should Know The Snapchat Audience

Here are a few of the most significant stats really helpful in understanding where Snapchat is as a platform.

• Snapchat currently has over 200 million monthly active users (or MAUs). Compare that to Twitter with 316 million MAUs and Instagram with 300 million MAUs and we see Snapchat is clearly becoming a massive platform for social marketers to consider.
• 70% of Snapchat users are women.  That makes Snapchat only 2nd to Pinterest (79% female) when it comes to female user gender trends on major social networks.
• 71% are under the age of 25.
• 18% of US social media users are on Snapchat.
• According to a recent ComScore study, millennials make up 71% of active users.  30% of millennial internet users access regularly.  This is impressive when you consider that it currently tops Facebook (38%), Twitter (41%) and Tumblr (53%) as this age group’s preferred social media platform.
• According to Photo World, Snapchat users now share 8,796 photos per second, more than any other messaging services and photo sharing platforms including Whatsapp, Facebook, Instagram, Flickr.
• According to the Financial Times, Snapchat is quickly gaining ground in the battle for dominance in video on social networks: it now claims a whopping six billion daily views, or triple the traffic it got in May.

What Is Snapchat and Who Uses It?

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Trying to attract Millennials? Snapchat should be your go to marketing tool.  Share photos and videos on the go. That is what users are there for. Understanding Snapchat as the middle part of life

Second, Apply Six Simple Snapchat Marketing Approaches

If brands are to succeed in resonating with Snapchat's largely Generation Z audience, they must pay attention to these three simple marketing approaches. 

1. Create unpolished content

According to an interview conducted by UK-based business insights agency Firebrand with US frozen yogurt perveyor 16 Handles, who has been active on Snapchat since 2013, Snapchat users have always been an early adopters of new social networks.  Lara Nicotra, Marketing Manager, 16 handles said.

"Your fans want you to be fun and authentic [on Snapchat]. It’s okay if the message isn’t polished – that’s the whole point!"

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This “unpolished” mindset on Snapchat is something important for brands to consider. Waiting for the right moment or sending all your creative through a design team are not ideal habits for Snapchat content.

People share stuff on Snapchat that might never make it to the cutting room floor or Facebook, Instagram, or Twitter. They take random photos, draw silly pictures, and – in general – capture the details of their life that tell you more than a Facebook highlight reel.

Brands can do this too. And those unpolished moments have the potential to create big loyalty and engagement.

2. Provide exclusive, rarely seen content

Building on the idea of offering the “unpolished” style of content and thinking more about the subject of your content, includes providing Snapchat fans original, behind-the-scenes, brand-generated content that cannot be found anywhere else.

Fashion lifestyle blog Refinery29. was also interviewed by Firebrand and this is what Neha Gandhi, Vice-President, Editorial Strategy at Refinery29 had to say. 

“Snapchat allows you to experience something that feels exclusive and inaccessible in a really accessible way… it disappears after 24 hours, so you sort of get a clean slate and can do anything you think is working and resonating with your audience.”

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There are two ways to think about this.

1. Behind-The Scenes - The nature of Snapchat as a channel is behind the scenes and exclusive content. The photos, videos, and art users share on Snapchat is not organic on other social channels.   If brands want to fit in on Snapchat they would be well served to try and capture their own behind the scenes content.
2. Keep Content Fresh and Original - Snapchat users have a lot of content to engage.  If you are sharing the same old content that they see on Facebook and Instagram already, there is less of a reason for them to keep coming back and choosing to view your brand’s content.

The nature of Snapchat’s user interface is not a stream, but a list of options to click on. They do have to CHOOSE to see your content.

And, beyond that, they have to choose to keep watching your content. Like a video. So it needs to be unique. As Neha say, try to help your fans “experience something that feels exclusive and inaccessible.”

3.  Tell A Compelling and Cohesive Story

Too many brands post snaps that are disconnected from each other and hours apart. Most of your followers are going to be watching your story all at once so regardless of what time you post each snap, you need to tell one cohesive story when played beginning to end.  

• Continuing Story Snapchats - If you’re snapchatting from an event or throughout your day, watch your story as you add to it and put yourself in the position of a follower who has no context of who you are, where you are or what you’re doing.
• Single Story Snapchats - If you’re posting all at once, make sure that you close out the story with an ending that includes a Call To Action that directs followers to one of your other social media profiles or let’s them know when they can expect more content from you on Snapchat. This invites them to engage with your brand elsewhere online and serves as an opportunity to tease upcoming content or events.

4.  Use Video

We’re living in a video centric world in case you’ve been asleep for the past 3 years or don’t have access to YouTube, Vine or Facebook. Video lets you show instead of tell.  It will show off your brand’s character more than any character limit or staged photo.  It allows you to do things like include music or conduct a 10 second interview. It allows your followers to connect with you because you’re appealing to another one of their senses. Use video on your Snapchat story often and you will learn to use it well.

 

My roommate Lawrence is a health nut.  Here he is making healthy smoothies

5. Partner With Influencers

Firebrand also reached out to Delmondo who specialize in connecting brands with influencers on platforms like Snapchat.  Delmondo said.

“Headphone maker JBL is an example of a brand that has gotten creative with its use of Snapchat. The brand commissioned Snapchat marketing firm Delmondo to identify Snapchat tastemakers to share messages with their followers during the NBA All-Star Game weekend. An influencer campaign in the same vein costs as little as $50,000, and has the potential to generate hundreds of thousands of views.”

Catch emgarber on Snapchat as he snaps his #NBAAllStarNYC weekend with us! What could be next? #JBLAllStar pic.twitter.com/TfXgrjrB3X

— JBL (@JBLaudio) February 15, 2015 

Influencers on Snapchat afford a brand two very important benefits:

1. Audience. If you want to gain followers and fans, paying to work with influencers or partnering with them on some level is a shortcut to building that audience.
2. Platform Education. Secondarily, working with an influencer or group of influencers can do wonders for learning what works on a platform, what doesn’t work, and the intricacies of how that social network lives and breathes.

Frankie Greek, social strategist and the host of WWW offers this bit of advice on how to identify the righ influencers:

"The fastest way to grow your brand’s Snapchat following is to partner with influencers. This means working with someone who has a large following on social media, preferably on Snapchat, and having them create and promote stories for your brand. Identify influencers in your field that your audience will like and be able to relate to. Do your due diligence to find the right influencer, not just the cheapest or the first one that shows interest in your brand. Does their personal brand align with your brand’s values? Do they believe in your mission?

Now forget that you work in marketing and talk to that person like a human and figure out a mutually beneficial arrangement that ends in them telling powerful stories for your brand and your brand being exposed to their fans."

6.  Leverage Your Audience

As you get traction on Snapchat, direct those followers to your other social media profiles. Announce a giveaway on Snapchat that followers can enter by commenting on an Instagram post. Create a poll that they can participate in by screenshotting their vote and tweeting it to your account with a branded hashtag. Tease YouTube videos by showing shorter clips with a caption that tells them where to go to find it and asks them to subscribe.

COMMENTARY:  Launched in 2011, Snapchat has become so much more than a place for sending ten-second-selfies (although there’s still a lot of that going on!) It has become a very credible platform for brands to market themselves to a large audience – Snapchat boasts over 200 million monthly active users; 71% of which are under 25.

With social media being a great way to reach out to customers and potential customers, and inject personality into a brand, Snapchat is certainly a channel that companies should be looking at.

Perhaps unsurprisingly, Burberry – who are pioneers in combining technology and digital aspects with fashion – have been using Snapchat to create a buzz around their brand. Take for instance, the preview of their SS16 collection 24 hours prior to their runway show at London Fashion Week. It was a great move, appealing to Snapchat’s largely Generation Z audience, who have come to expect the consumption of fresh content immediately. Plus, it generated a huge buzz for the actual show… which was certainly no bad thing!

Click Image To View Burberry's Prosum SS16 Collection runway show during New York Fashion Week

Not only that, but Burberry launched their own Live Story: available for 24 hours from the morning of their fashion show, it showcased Burberry show-related images and videos straight from Snapchat. Allowing fans to take part in their marketing campaign – pretty smart, don’t you think?

Snapchat became increasingly aware of the potential opportunities for brands through the social media site; and launched Snapchat Discover at the beginning of 2015. An exclusive channel available to a mere 15 companies (this has grown from 12 since its launch), it enables the selected few to release content to the 100 million active Snapchat users. Cosmo, CNN and Mashable all use Discover; with Cosmo enjoying 3 million readers on Snapchat a day!

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Those on Discover need to ensure they get it right though – Snapchat booted Yahoo off after they failed to resonate with their younger audience – the broadcast-type videos just didn’t cut it. In a world where breaking news is readily available; the announcement itself needs to be innovative, otherwise users will look to other companies for their updates instead.

OK, so maybe you shouldn’t hold your breath on getting an invite to Snapchat Discover any time soon – but you can rest assured that the channel itself is still a valuable marketing tool for your business. You could consider running your own Live Story – a user-generated video collage of a special event. Cosmo hosted one for their 50th anniversary, featuring the Kardashians on the front cover of their magazine, as well as in the video; which was sponsored by Covergirl. With 6 billion video views in Snapchat since May 2015, brands can be sure that their content is being viewed.

Taco Bell has also been a hugely successful user of Snapchat. Back in 2013 in a bid to build their number of followers, they encouraged users to add them in exchange for a “secret announcement”, with snippets of the new menu revealed.

Essentially, Snapchat – the fastest growing social media platform – should certainly not be overlooked as part of your social media strategy. At 400 million snaps a day from the 100 million daily active members, if you can reach out to the younger market successfully, then you’ll achieve great exposure for your brand, which is most definitely a good thing!

Top 10 Brands on Snapchat

As of January 2015, these are the Top 10 brands on Snapchat.  

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Snapchat Adds Slow-Mo, Fast-Forward, And Rewind Video Filters

Teenagers have short attention spans, but Snapchat’s latest feature could keep them tuned in.  On October 28, 2015, Snapchat introduced a new set of filters called “Speed Modifiers” for videos you shoot on iOS or Android. They let you add slow motion, fast-forward, or rewind effects to your video. Just swipe sideways after shooting a video and you’ll eventually see them applied to your snap.

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What you see above is actually two videos stitched together. First, a clip in fast-forward, and then in rewind. Normally the Snapchat videos only go forward or backward, not both like Instagram Boomerang.

Snapchat is also adding 3D Touch capability for the iPhone 6S and 6S+ today. You can strong tap on your Snapchat homescreen icon to quickly reach options for sending a snap or adding a new friend. The features come in an update for iOS and Android that should be out soon if you don’t see it yet.

Courtesy of an article dated August 4, 2015 appearing in SocialFresh, an article dated October 23, 2015 appearing in Delmondo Blog, an article appearing in LinkedIn Pulse, an article dated November 13, 2015 appearing in MediaPost Social Media & Marketing Daily, and an article dated August 17, 2015 appearing in Likeable Social Media

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2015 DIGITAL STATSHOT FOR CHINA: THE STATE OF DIGITAL, SOCIAL MEDIA, MOBILE AND eCOMMERCE

The latest report in our series of studies into Digital, Social & Mobile use around the world shows that the pace of digital adoption in China shows few signs of slowing.

You can read the full report in the SlideShare embed above (or download it here), but numbers don’t mean much on their own, so we’ll use this post to dig into the significance of the data and their associated trends for marketers.

China Digital, Social and Mobile By The Numbers

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To get us started though, here are the key data headlines:

• Internet Users: 668 million, a 6% year-on-year increase
• Social Media Users: 659 million – more than the USA and Europe combined
• Unique Mobile Users: 675 million, responsible for 1.3 billion mobile subscriptions
• Mobile Internet Users: 594 million, accounting for 89% of all China’s internet users
• Mobile Social Media Users: 574 million, up 15 million since this time last year

The year-on-year growth rates tell interesting stories too (note that the mobile figures in this slide represent the growth in mobile subscriptions, not unique users):

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We’ll examine each of these in detail in the sections below.

Internet in China

Roughly 100,000 people in China started using the internet every day over the past year – that’s more than one every second.

Much of this growth is being driven by improved mobile access, with close to 90% of the country’s netizens using mobile devices to access the internet. It’s worth noting that this is often in addition to PC-based usage too, but an increasing number of the country’s internet users are mobile-only, especially in rural areas.

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When it comes to the total volume of web traffic, PC-based access still dominates, with 56% of the web pages served to China’s netizens in the past month going to laptop or desktop computers. However, this figure is down 29% year-on-year, while the number of web page requests from mobile devices has jumped 136% to 42%.

These trends suggest that mobile usage will account for more than half of all China’s web activity by early 2016.

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Despite mobile’s promise of ubiquitous internet access, however, internet usage still isn’t evenly distributed in China, and a marked difference remains between urban and rural usage rates. Nearly two-thirds of China’s urban population now uses the internet every month, but barely 3 in 10 of China’s rural citizens are online:

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The good news is that connection speeds are up considerably on last year, with the average fixed-connection access speed up 17% year-on-year according to Akamai. It’s worth noting that the average mobile connection speed is considerably higher than that of fixed connections though, with the average connection in China now considered ‘broadband’ (i.e. 4Mbps or above).

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Social Media in China

The overall number of social media users in China grew more slowly than we expected over the past year, but this is more likely due to a change in behaviour, rather than a waning of interest in social media. 

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It’s also worth noting that social media usage in China is already at a very high level, with the numbers suggesting that 99% of China’s internet community uses social media of some description.

The numbers for individual platforms tell the more interesting story though. QQ, Tencent’s ever-popular instant messaging service, still claims the country’s top position in terms of monthly active users (MAUs), and despite the vast majority of its users residing in China, it also claims the second-place spot in the worldwide rankings behind Facebook (click here to read more about the global picture).

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It’s worth noting that more people sign in to QQ via mobile devices each month than sign in to WeChat, but WeChat offers more varied services and functionality for both users and marketers.

User numbers suggest that QZone still dominates when it comes to traditional ‘social networking’, but WeChat (or Weixin, as it’s know in China) is quickly catching up, and is the platform that most users claim to use on a regular basis (note the difference between ‘use’ and ‘sign in’, the latter being the metric many of the platforms use to measure ‘active’ users).

For those who are still relatively unfamiliar with Chinese social media, Baidu Tieba may be a new discovery. Tieba, or “Post Bar” as the platform calls itself in its English literature, is a community that has grown up around specific areas of user interest related to the searches that people conduct on Baidu, China’s largest search engine.

Meanwhile, readers of our previous China reports (2013, 2014) will notice the absence of Tencent Weibo in this ranking. Tencent stopped publishing monthly active user figures for Tencent Weibo a number of months ago, and we have interpreted this to mean that the company has de-prioritised the platform in favour of its three larger ‘products’, QQ, Qzone and WeChat. Tencent Weibo appears to remain popular with many users though, with 38% of China’s internet users claiming to have used the platform in the past month (see below).

Research from GlobalWebIndex suggests that more than 6 in 10 internet users in China used WeChat in the past month. Sina Weibo comes in second, with 54% of survey respondents claiming to have used the service in the past 30 days.

It’s interesting to note that Facebook, Google+ and Twitter all appear in this list too; they may be officially ‘blocked’ by the Great Firewall, but GlobalWebIndex’s research suggest that a considerable number of China’s netizens are getting round these blocks to access non-Chinese social platforms.

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87% of China’s social media users now access via mobile devices at some point each month, with platforms like WeChat helping to drive overall numbers up 77 million over the past 12 months – a year-on-year increase of 15% that equates to more than 200,000 new users every day, or almost 2.5 new users every second.

At 1 hour and 43 minutes per day, social media accounts for just under half of all the time that people spend online in China. The country’s social media users spend 23% longer using social media than they do watching TV each day, although it’s worth noting that much of this time overlaps, with many TV viewers engaging in ‘second-screen’ social media use at the same time.

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It’s worth noting that use of tablets appears to be down slightly year-on-year though, with 22% fewer web page requests coming from tablet devices in the past month compared to this time one month ago.

Mobile in China

With 675 million unique subscribers in China, almost half the country’s population now owns a mobile phone, and we fully expect to see the country pass this milestone before the end of 2015.

The number of mobile subscriptions in China rose significantly in 2014 too, with three new subscribers every second contributing to annual growth of 94 million – an 8% year-on-year increase.

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The number of mobile subscriptions in China is now very close to the number of people living in the country, which suggest that the average user still maintains close to 2 active connections.

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However, we expect that this ratio will reduce over the coming months as more and more people upgrade from feature phones to smartphones; the main reason why individuals operate more than one mobile contract is to benefit from intra-network deals, but data-powered communications such as chat apps and VOIP are more efficient and effective ways of achieving the same benefits.

Smartphones are clearly the must-have devices in China today, accounting for 90% of new handset sales. They already account for just less than two-thirds of all handsets in active use, and we expect their overall share to increase steadily over the coming months as more people renew their devices.

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When it comes to internet-powered activities on mobile devices, Chinese netizens appear to be particularly interested in checking the weather. 

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China’s mobile users also appear to have embraced m-commerce, with reports suggesting that 20% of the country’s population have made a recent online purchase via their mobile device.

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E-Commerce in China

E-commerce more generally appears to be thriving in China, with almost one in three internet users buying online each month. 

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The country’s consumer e-commerce market was worth more than a quarter of a trillion US dollars in the six months to June 2015, with the year’s biggest shopping event – Singles Day – still to come. Sales on Alibaba’s various sites exceeded US$9 billion in just one day last November, and there’s every chance that number will pass $10 billion on 11th November this year.

Conclusions

So what does all this mean for brands? Here are our three key tips, designed specifically for non-Chinese marketers looking to make sense of the world’s largest consumer market:

China’s Different: it’s obvious that the platforms that dominate in China are markedly different to those that marketers are familiar with elsewhere – even those in their Asian neighbours. However, it’s not just the platforms that are different; the ways that Chinese netizens use social channels is also markedly different, and marketers need to carefully adapt their approaches for China’s cultural and societal idiosyncrasies as much as for its technological differences. One size does not fit all when it comes to China, and marketers would do well to engage the expertise of a partner who understands the ‘how’ as well as the ‘what’.

1-to-1 Social: The numbers in this year’s report highlight the growing popularity of chat apps – a trend that we’ve seen elsewhere in the world too. The growing popularity of chat apps presents a new set of opportunities for marketers, as many of the conversations that take place on these platforms are more private in nature, taking place between individuals and small groups (versus the public environments that Western marketers will know from Facebook and Twitter). In order to take advantage of the ‘intimate’ nature of these one-to-one conversations, however, marketers will need to explore new approaches to social media and content marketing, ensuring that the tactics they employ make it easy for audiences to find and consume content on one platform (e.g. video-sharing services like Youku or Tudou), and then share that content proactively via chat apps. This will require greater emphasis on highly engaging content and organic sharing, rather than an approach that relies on paid media to push mediocre content to the masses.

Social Selling: China’s netizens are already very comfortable buying things online, whether that’s through their PCs or via their mobile devices. The next big opportunity for marketers is to understand how the dynamics of social referral work in China, and use that to move from social engagement to social conversion.

COMMENTARY:  If you have been looking for information on the state of China's growing digital, mobile, social media and e-commerce for 2015, this is a great source thanks to the nice guys at We Are Social. 

Courtesy of an article dated August 18, 2015 appearing in We Are Social

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INSTAGRAM OFFERS BRANDS A HUGE OPPORTUNITY TO COMMUNICATE THEIR MESSAGE VISUALLY, AND HERE'S HOW TO GET STARTED

After months, some would say years, of expectation, advertising on Instagram is now available to everyone.

Instagram drives massive engagement and just recently reached the following milestone:  

• 400 million monthly active users (MAUs), passing Twitter’s 316 million MAUs.
• 3.5 billion daily likes.
• 80 million+ photos shared daily.

According to SproutSocial, Instagram’s demographics are very appealing for advertisers.

• Young, mostly millennials, who spend hours scrawling the feed. 
• 53% of 18-29 year olds use Instagram.
• U.S. has 77.6 million or 25% of total overall monthly active users.
• 75% of its users live outside of the States, mainly in Brazil, Japan and Indonesia.

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Advertising on Instagram is now open to everyone.  Here’s what you need to know if you want to implement an Instagram advertising campaign:

The 3 Ad Formats

1. Image Ads

Promote an image ad that looks just like the regular feed photo, and includes a call to action of your choice (and indicates ‘Sponsored’).

Michael Kors and Levi's Instagram sponsored photo ads (Click Image To Enlarge)

2. Video Ads

After six months of testing, Instagram's first video ads were launched in October 30, 2014. Instagram's first video ads were 15-second autoplay spots from Disney, Activision, Lancome, Banana Republic and CW. The ads will start appearing today and roll out over the coming weeks. For instance, Disney is promoting its film, Big Hero 6, with a video showing animated characters posing as if they were taking selfies.

 

Click to run the 15-second video ads for Disney's Big Hero 6

Click to run the 15-second video ads for Banana Republic

Changes to Instagram’s advertising policies will increase the length of video ads to 30 seconds in November 2015 from the previous 15, doubling the time in which companies can promote their products.  Those same videos will also be appearing in non-square format, too, as the company extends its recent aspect ratio relaxation to ads.

3. Carousel Ads

Following the success of carousel ads in Facebook, Instagram added the carousel format in March 2015 that are designed as a digital analog to the multi-page print magazine spread. Advertisers can include up to four photos that people can swipe through as well as a link to a dedicated landing page.  The carousel ad format allows brands to gain more engagement with a good visual storytelling.

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On top of these three great options, there’s a 4th Premium option which is not open to everyone: Marquee. The Marquee “drives mass awareness and expanded reach in a short time-frame”, says the company. This feature is great for time-sensitive events, like launching a product.

Targets to Accomplish with Instagram Ads

Instagram offers four different call-to-action objectives you can achieve using their ads:

1. Clicks to Website: leads users to the desired website or landing page with varied call-to-actions like “Learn More”, “Shop Now” or “Sign Up”.
2. Mobile App Installs: directs users to install a mobile app through an image or a video ad.
3. Video Views: attracts users’ attention through a captivating video. 
4. Mass Awareness: This one is a Premium option through the Marquee route. It drives mass awareness in a short time frame. Currently not available to everyone.

How Do I Get Started?

To create an Instagram ad you’ll need to use Facebook’s Power Editor.

Funny as it sounds, in order to set up an ad on Instagram you must have a Facebook account even though not necessarily an Instagram account (though it’s recommended).

Want to launch your own Instagram campaign? Here are 6 simple steps you should follow:

1. Connect your Instagram account to your Facebook page. Go to your page settings and then to the “Instagram Ads” tab.

2. After confirming the account via email, go to the Power Editor.

3. Choose one of the three objectives offered: Clicks to Website, Mobile App Installs or Video Views.

4. Continue creating the ad just like you would on Facebook, targeting your audience by language, location, and demographics.

5. Choose the CTA: Book now, Contact Us, Download, Learn More, Shop Now, Sign Up or Watch More.

6. Choose your budget and launch the ad with a great image and copy!

Design Tips for your Instagram Ad

Image Dimensions:

• The recommended image ratio is 1:1 with 1080 x 1080 pixels.
• Just like with Facebook ads, an image should not include more than 20% text. Test your image here to check if your text exceeds the limit.

Caption: 

• Instagram recommends keeping the text up to 125 characters. Maximum 300.
• Use hashtags to tag your ad and increase its reach potential beyond the target audience you’ve set.

Video: 

• Video format needs to be MP4.
• Audio: Instagram recommends Stereo AAC audio compression, 128bps and above.

Instagram’s Biggest Challenge

When Instagram announced its advertising opportunities you could almost hear a sound of relief from brands around the world. Marketers were eager for this piece of news.

Just three years ago Facebook acquired Instagram for $1B, with many questioning that price tag. Today things look completely different. eMarketer estimates that Instagram will bring $595 million in mobile ad revenues in 2015 and $1.48B in 2016.

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The main question is how quickly marketers will adopt this new advertising opportunity and allocate necessary budgets. Marketing opportunities are by all means huge here. With great ad copy and smart targeting, users may think alike.

COMMENTARY:   Instagram has over the last two years ventured into video to enrich its storytelling experience rivalling other players like Twitter's Vine. Instagram’s interest in video came from the observation that videos tended to have more engagement than still photos, which was the platform key offering. Lululemon was among the first companies to adopt video on Instagram. However, Instagram noted that Lululemon videos recorded up to 7 times comments than photos and clearly video was the future. The content sharing platform now allows users to shoot edit and share short videos of 15 seconds, which now has been extended to 30 seconds.

Video is shot within the app and is based on 640×640 px dimension, and even has an option of shooting several clips and editing them together. Alternatively, one continuous video can also be shot. Since video is a great format to deliver brand’s narrative to audiences, below are some handy tips on how to leverage Instagram’s power.

• Instagram offers marketers several features including 13 preset filters to edit photos and cinema features available on iOS to stabilize video clips. Videos can be shared on Facebook, Tumblr, or even embedded on brand’s website or blog.
• To create Instagram videos, consider using a mini adjustable tripod holder with a sturdy Smartphone holder. This is especially helpful if you seek to shoot video with your Smartphone. The one disadvantage with this is that the head holding the Smartphone has limited mobility, which can limit scope of your video. Alternatively you can use a cell phone tripod adapter like those for iOS and Samsung, which are portable, slim, and adjustable to fit Smartphone’s. The only difficult with phone tripod adapters is that the phone may wobble, if the head is moved too fast as rubber tabs holding the phone in place can be improperly secured. Other alternatives include the 60 inch tripod stand and Glif cell phone mounts.

With diverse apps available today, images can also be converted into short movies or GIFS using applications like Burstio App available for iOS5/6 & 6Plus. Apple users can also use iMovie 11 to speed up or slow down video frames for emphasis. This lets you share more of your narrative in 15 seconds.

Create Quick Instagram Videos With Instagram's Boomerang App 

On October 22, 2015, Instagram launched a new video app called Boomerang, which will produce GIF-style animation clips at the click of a button.  Boomerang takes a one-second burst of five photos to create a mini video loop which can be shared to the main Instagram app and Facebook. Boomerang doesn't require users to be logged in, or to even have an Instagram account, according to TechCrunch. The controls are simplistic, one shutter button when you open the app, and another screen to share the looping video you've just created.

Instagram has been reluctant to add new creative features directly into its main app, and instead has been building stand-alone apps. Boomerang is the third stand-alone app from Instagram, following Hyperlapse and Layout.

Boomerang product manager John Barnett told TechCrunch.

"It was something we built just for fun for us to play with as a team."

The app, which was initially built by a group of five people from Instagram's Android team, soon caught on within the company and became a full-fledged product, according to TechCrunch.

Boomerang is available for both iOS and Android mobile devices.

The Anatomy of an Awesome Instagram Ad

Bannersnack prepared this wonderful infographic that describes what you need to know to create an awesome Instagram ad.  Thanks guys.

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Courtesy of an article dated October 14, 2015 appearing in Klear, an article dated October 30, 2014 appearing in AdWeek, an article dated July 27, 2015 appearing in eMarketer, an article dated September 16, 2015 appearing in Video Advertising News, an article daed April 7, 2015 appearing in Advertising Age, an article dated September 9, 2015 appearing in Gizmodo, and an article dated October 15, 2015 appearing in The Telegraph

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THE STATE OF DIGITAL VIDEO ADVERTISING AND WHY FACEBOOK IS POISED TO SURPASS YOUTUBE IN VIDEO ADS

Marketers are reprioritizing video advertising budgets, shifting their spend from traditional to digital video, according to a recent report from Aol.

The report was based on data from an annual survey of nearly 300 brands, agencies, and publishers.

Nine in ten ad buyers say they are are shifting spend from linear TV to digital channels, with 10% of television budgets being reallocated on average.

Some 88% of marketers who are moving TV dollars toward digital channels say they are shifting that ad spend to some form of video, such as desktop, mobile, or over-the-top (OTT).

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Below, additional key findings from the report.

Digital Video Ad Types

Buyers, agencies, and brands are all most optimistic about the growth of mobile video advertising, with more than 60% of respondents in all three groups expecting budget increases.

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Buyers say the biggest challenges with mobile video advertising are attribution/measurement (55% cite as an issue) and cross-device targeting (50%).

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Programmatic Ad Buying

Some 27% of brands surveyed say they have already implemented in-house programmatic ad buying; 42% plan to do so in the next year.

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About the research: The report was based on data from an annual survey of nearly 300 brands, agencies, and publishers.

COMMENTARY:   If you have an opportunity to review the latest survey published by Mixpo, you may find it as interesting as I did.  According to its survey, more advertisers plan to run video ads or promotional content on Facebook than YouTube this year.

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The survey includes “125 agencies, brands, and publishers” and aims to show how advertisers are driving the trend to reach consumers on social channels. In 2014, 77.8% of respondents ran a video ad campaign on YouTube compared to only 63% on Facebook. And yes, those two platforms were the overwhelming winners when it came to this question. On the heels of all of the recent Facebook buzz, it’s no wonder the numbers jumped to show that 87% plan to run an ad on Facebook, compared to 81.5% on YouTube in 2015. There was also a big jump in agencies planning to use Twitter, Instagram, and Snapchat:

 

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Most Important Metric: Fan Engagement

Not surprisingly fan engagement was the winner when it comes to most important metrics for video ads on social. Shares, conversions, time spent watching and views were the next most important categories (in that order) but the respondents showed that social marketing is more than just getting exposure, it’s about creating buzz and building relationships with fans.

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Whether these agencies actually run ads or are merely planning to do it has yet to be seen, but the fact of the matter is that it’s about more than YouTube now when you talk about video marketing. Despite a slight bump in unique visitors to YouTube in March and a continuing decline for Facebook that has been happening since last August, the agencies in this survey see Facebook as the more important destination for ads.

YouTube and Video Advertising: A Shift coming?

Perhaps I use Facebook differently, but I find that I rarely see or interact with a video ad on Facebook whereas on YouTube, I feel inundated with them on a daily basis. Maybe that is why YouTube e-mailed partners about a major shift happening in their format, possibly as soon as this year?

The widespread use of programs that block advertising content has left YouTube searching for alternate ways to not only make money, but solve the problem of ads that annoy viewers. The video giant plans to offer an ad-free subscription service to its most valued partners in a new model for the site expected to cost around $10 per month and would remove ads on channels who have opted in to the deal:

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From users I’ve talked to, that price could be a bit steep for a service they have come to think of as a “free service”. Conversely, an ad-free viewing experience would be a win for viewers and creators. Viewers because they would be able to see more of the content they love without being interrupted with ads and for creators because video views would likely increase for the site based on this change.

Depending on the number of viewers who opted in to this deal and the way payouts were calculated with YouTube, it’s even possible that creators could earn more revenue than they did previously if this new venture is a success. On the heels of the Mixpo survey, it seems as if YouTube is the destination for viewers and creators but Facebook’s personal data may be giving it the edge with advertisers in 2015.

You can download the report here in return for a few details.

Courtesy of an article dated November 4, 2015 appearing in MarketingProfs and an article dated April 17, 2015 appearing in Reelseo

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FACEBOOK REPORTS STELLAR Q3 2015 REVENUES, 1.55 BIL MONTHLY ACTIVE USERS, VIDEO BECOMING SIGNIFICANT FOCUS

Facebook stock hit an all-time high after-hours after the company reported its Q3 earnings, beating analyst expectations on the top and bottom line.

Here are the most important numbers:

• Revenue: $4.5 billion vs. analyst expectations of $4.37 billion, up 41% year-over-year.
• Adjusted EPS: $0.57 vs. analyst expectations of $0.52.
• MAUs: 1.55 billion monthly active users vs. 1.52 billion expected.

The after-hours stock was up nearly 5% initially, dipped down to +2%, and settled around 4% after the earnings call. At about 107.7, Facebook's stock is at a new all-time high and shares are up roughly 25% since mid-August.

Facebook (FB-NASDAQ) Shares climbed from 104.00 to 108.76 on Thursday, November 5, 2015, a gain of 4.82 following stellar Q3 2015 earnings call. (Click Image To Enlarge)

None of the numbers reported in the release were hugely surprising. Its expenses were up 68% year-over-year, but the company had previously said that it plans to invest heavily this year. Also as expected, Facebook saw an increase in the percentage of its revenue coming from mobile.

One of the most mind-blowing numbers came in the earnings call, though, when the company shared that Facebook now has 8 billion video views per day. That's double the 4 billion daily views the company reported in April. Those views come from the 500 million users who are watching videos every day.

CEO Mark Zuckerberg said when asked about video on the call. 

"We're just so early in this right now.  It's pretty amazing how quickly it's growing. But there's a lot more to do."

Here are the other important numbers:

• 1.01 billion daily active users on average for September, which is up 17% year-over-year, and 894 million people use Facebook on their phone every day.
• Of Facebook's 1.5 billion monthly active users, 1.38 billion are accessing the site on mobile, and 727 million are mobile-only users. That's up 37% year-over-year, likely driven by Facebook's adoption in emerging markets like India and Africa, where people primarily access the internet on smartphones.
• Costs and expenses of $3.04 billion, which is up 68% year-over-year, with R&Dmore than doubling year-over-year to $1.27 billion. That's also up significantly from $2.76 billion in costs and expenses last quarter.
• The adjusted operating margin was 54%, down from 57% year-over-year.
• About 78% of advertising revenue came from mobile, up from 66% at this time last year and 76% last quarter.
• As usual, most of Facebook's revenue came from advertising, but about 4%, or $202 million, came from payments and other fees. That's down from 7% in Q3 2014, which Facebook has, in the past, attributed to a drop in revenue from gaming apps.
• Free cash flow was $1.41 billion in the third quarter.
• Most of Facebook's revenue comes from North America and Europe, with only about 25% ($1.1 billion) coming from Asia-Pacific and the rest of the world. But those areas account for 65% of its monthly active users. The average revenue per user in those regions is still tiny, compared to in the US — $1.39 and $0.94, respectively, vs. $10.49 and $3.47 in the US and Europe.
• Facebook recently made a big press push around its efforts in emerging markets, and how it's optimizing its content and, importantly, its advertising to work well in areas of the world. But it seems those efforts haven't shifted the average revenue-per-user numbers yet.

Here's a look at where Facebook's revenue comes from:

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And you can see that Facebook also makes more per user in the US than it used to, likely attributable to the rollout of video and Instagram ads:

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And here's Facebook's state of the union as far as the size of its various products:

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Some highlights from the earnings call

Zuckerberg and COO Sheryl Sandberg shared some stats on the call:

• There are 8 billion daily video views on Facebook. That's up from 4 billion a few months ago.
• Lots of those views are coming from the 500 million people who are watching video on FB daily.
• Over 1.5 million small businesses posted a video — organic posts and ads — on Facebook in September.
• 1 billion people use Facebook on Android.
• 925 million people use Groups — and in some countries, more than half the population use them.
• People share 80 million photos a day on Instagram.
• 1 in 5 of the minutes that people spend on their phones per day is with Facebook and Instagram.
• More than 9.5 billion photos are now sent on the chat app Messenger.

Zuckerberg also said that Facebook-led Internet.org, which aims to spread connectivity to parts of the world that don't have it, has made significant progress in places like Africa.

Sandberg also gave some updates on its ad products, including that there are 2.5 million active advertisers on the service. The price per ad was up 61% in Q3, though total ad impressions fell 10%.

She also subtly burned YouTube: 

"People come to Facebook and Instagram because we have the best-performing mobile-video ad products."

The company added 1,000 new employees this quarter for a total of 12,000 employees, up 44% year-over-year.

Facebook also said that it expects its total 2015 capital expenditures to be between $2.5 billion and $2.7 billion.

When asked about Facebook in China, Zuckerberg said it was a "complex situation."

He said.

"You can't have the mission of wanting to connect everyone in the world and leave out one of the biggest countries.  We need to try to figure out a way forward on that issue."

He did say that people who think that Facebook isn't in China at all are wrong, though. Although the app isn't allowed in the country, China is "one of the biggest advertising markets" that Facebook has. Big Chinese companies use FB as one of their primary tools to spread info about what they're doing to people outside the country, he said.

COMMENTARY:   The complete transcript of Facebook's Q3 2015 earnings call with analysts can be found HERE:

The Instagram Effect

There is one important part of Facebooks business that has not been revealed: Instagram. During the Q3 2015 earnings conference call, Facebook CEO Mark Zuckerberg did not reveal how much of its advertising originated through Instagram.  The standalone photo-sharing app has more than 400 million users now and Instagram advertisers now have many of the same targeting capabilities that they get on Facebook.

For Instagram, this was a busy quarter. The community celebrated its five-year anniversary and reached a new milestone of 400 million monthly actives. More than 80 million photos are now shared on Instagram every day, and the pace of adoption among public figures, organizations and people around the world continues to grow really well. When President Obama visited Alaska in September, he used Instagram to document his trip, and this is a great example of how Instagram is changing the way that people see the world.

The result is what many believe will be a very sizable business for Facebook moving forward. Analyst firm MoffettNathanson believes Instagram will bring in $1.8 billion in annual revenue in the next two or three years. SunTrust analyst Robert Peck agrees. He wrote in his pre-earnings report that he believes Instagram’s annual revenue will be greater than $2 billion by 2017.

That’s a lot of revenue considering Facebook isn’t saying much about Instagrams contribution to advertising revenues. But investors are definitely interested, and any news on that front would definitely be good news.  The social network has consistently appeased investors of late with significant quarter-over-quarter revenue and growth results.

Mobile continued to drive Facebooks growth.  At the end of the third quarter, approximately 1.39 billion people accessed Facebook on mobile devices, up 23% from last year.  It is becoming more apparent that Facebooks mobile appls will represent a major source of advertising revenues with numbers like thse:  Instagram, Messenger and WhatsApp now exceeding 400 million, 700 million and 900 million monthly actives respectively.

This argument is further strengthened with the fact that Facebook now has more than 2.5 million active advertisers and more than 45 million small and medium-sized businesses actively using Facebook pages.  During the third quarter 2015,  Facebook continued to focus on helping marketers achieve results using video and carousel ads as well as on Instagram.

Facebook COO Sheryl Sanderg said.  

"On Instagram, we think that with Facebook and Instagram, we now have the two most important mobile platforms out there.  And what we bring to this is a common ad infrastructure. So Instagram ads, now that we've rolled out as we have this past quarter and gotten to a really good product offering, combined the creative format of Instagram which is very visually compelling and has a lot of engagement from people with the back-end infrastructure and marketer base that Facebook has.

Yeah. To the Instagram question, what we see in the short run is that some of the spend on Instagram is incremental to Facebook and some isn't. Some clients are comfortable with Instagram and bringing a new budget to bear. Some clients are shifting some of their Facebook budget. For us in the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media. And if you want the most eyeballs and we think the highest ROI, over time we think that will benefit Facebook and Instagram.

The average American adult spends 25% of their media time on mobile, and Facebook and Instagram together continue to account for over one minute in five minutes on mobile in the U.S. Businesses are lagging behind consumers in making this shift to mobile, and we believe we're well positioned to help them catch up.

We're also capitalizing on the shift to mobile by expanding ads on Instagram. This quarter on Instagram, we introduced new ad formats and objectives, opened up our API and launched self-serve ad capabilities. Instagram ads are now available in all countries where we offer Facebook ads, and marketers can manage campaigns across both platforms with the same targeting.  We're really pleased with the marketer demand for Instagram ads."

Courtesy of an article dated November 4, 2015 appearing in Business Insider and an article dated November 4, 2015 appearing in RE/CODE

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THE TOP PERFORMING FASHION RETAIL BRANDS ON SOCIAL MEDIA, AND THE TOP SOCIAL MEDIA PLATFORMS FOR FASHION

The climax of the famous speech by Miranda Priestly (played by Meryl Streep) in the 2006 fim, The Devil Wears Prada, is that the sweater Anne Hathaway’s character is wearing has slowly trickled down over the years from high-end runway to “some tragic Casual Corner where you, no doubt, fished it out of some clearance bin.” The implication here is also that the quality and design has declined in those iterations. But these days, Miranda Priestly’s premise would be totally irrelevant. 

Enter Fast Fashion. Fast Fashion includes brands like H&M and Zara, which bring runway looks to affordable retail stores quickly: no need to wait for trickle down as magazines select the best looks and publish them in glossies, or as retailers measure customer response. Now runway looks are live-streamed or Snapped or Instagrammed or live-tweeted by bloggers and influencers, and retail interpretations of those looks are available in your local Forever 21 within mere weeks.

The success of these fast fashion retailers depends in large part on their social media success: Are bloggers wearing your clothes in posts? Are digital influencers bringing in customers through in-store events? Are those customers sharing their own photos of your designs on social?

Thanks to Sprinklr’s new Benchmarking tool, which gives brands access to competitive analytics and insights, which are arguably the most crucial insights in any brand trying to scale, we can now look at the state of fast fashion on social. Sprinklr compared the top four fast fashion retailers—H&M, Zara, Topshop, and Forever 21—in terms of their social following, engagement, and brand perception.

A few takeaways from the infographic below:

• Instagram is the top platform for all four brands, though Facebook is far from dead for Zara. Twitter isn’t a major player for any of these brands.
• Topshop has the lowest amount of followers, but the highest engagement ratio and the best customer experience score. Perhaps this is part of a scarcity model, as Topshop’s stores in the U.S are few and far between, or that their price point is a bit higher and designs a little more cutting edge. In any case, their small but active audience is working for them.  
• Brand perception scores for Zara, H&M, and Forever 21 are fairly equal despite their varied price points and similar product quality scores, leading me to believe that fast fashion is simply popular in the social sphere. It makes sense that consumers of fast digital would be naturally drawn to fast fashion.

Also: check out the Sprinkler Benchmarking tool here if you think it could be useful for seeing where your business falls among the competition.

Click Image To Enlarge

COMMENTARY:   How is the fashion industry embracing social media? Despite the fashion industry coming fashionably late onto the social media scene, it definitely has wasted no time in making sure its presence was felt.  Top brands like Burberry, Urban Outfitters, and Louis Vuitton are promoting exclusive clothing and have become more accessible to the general public via social networking. This industry has embraced all that social media has to offer for it to grow in business. Today, ads are being replaced with blogs and marketing activities are centered on social advertising. Not only do brands and retailers use social media to communicate with their consumers, they use it to listen to them as well.

According to Seock and Norton,

“With the consumers' increased use of retailers' Internet Websites for searching out product information and purchasing, the websites have become key tools for retailers to communicate with current and prospective customers and the attributes of a retailer's website are crucial for attracting shoppers to the site and convincing them to become or remain customers.” 

A perfect example of how the industry has embraced social media is Burberry’s campaigning strategy. Burberry, known to always be innovative and fresh, uses a mixture of different media platforms such as Facebook, YouTube, and Twitter. The most dominant of the three, YouTube, is being used by Burberry to broadcast its image and promote its campaigns. This specific media platform is a personal studio place for the YouTube user to express their self in a creative, dramatic and artistic way while being recorded.

Burberry’s theme used in this YouTube is high fashion, youth, style and innovation. In the video is Romeo Beckham, the 10 year-old son of Victoria and David Beckham, who was specially picked to represent Burberry’s spring 2013 campaign. What do you think Burberry is trying to pitch here? High fashion +youth+ fan= Burberry. The company’s vision is that a customer has total access to Burberry, across any device, anywhere. This example goes to show just how much the fashion industry has embraced social media. 

Burberry has become aware of the different social media platforms consumers use (especially young consumers), it’s created various advertisements using the social media platforms consumers use the most. Not only should a brand be aware of imagery when reaching out to consumers, but their overall content as well. The more unique a brand's overall content is, the more likely it is to receive a large amount of re shares and likes across social media platforms. According to Seock,

“Consumers across the age spectrum shop online, but college students aged 18 to 22 have been identified as the Internet's 'hottest' market and a prime source of future growth in online sales.”

For what reason did the fashion industry decide they needed social media as a marketing tool? One reason is that the fashion industry’s old way of marketing products and brands eventually went out of style! According to Winter,

“In a matter of minutes, eight cameras coupled with computer software can generate three-dimensional images of the human form, both clothed and unclothed.”  

Without social media, the fashion industry would definitely be behind.  The fashion industry is all about keeping up with the new and latest trends that are in, and social media happens to be one of the new trends in which they needed to take part.

The fashion industry used to be an industry that focused solely on the quality of its goods. This is still the case today, but this industry knew that it was time to take the next step forward in order to stay relevant, and social media was its solution.  The fashion industry functions sort of like your most popular high school clique:  A leader confidently undertakes something new; a few imitators carefully follow the leader’s get-up, and the rest then rush to participate before that trend dies out. Therefore, the fashion industry undertook social media, consumers follow the trends that the industry shares through social media and then next thing you know everyone wants to try it out to before it’s too late. The fashion industry’s reason for using social media was to keep up with trends and stay relevant so it wouldn’t be left behind.

To view "American Fashion Retail Brands Make It Big On Social Media" click HERE

What are some social media platforms that are most effective in the fashion industry today?  There are so many:  

• Fashion blogs
• YouTube
• Instagram
• Twitter
• Pintrest
• Tumblr

and many more social media platforms that are highly popular in the fashion industry today. Out of the many social platforms listed, blogging seems to be one of the most popular in the industry today.  According to Chittenden,

“According to Luman (2006), in 2006 there were approximately 27 million blogs in the world. Corcoran (2006) noted that some 2 million of these blogs were devoted to fashion and fashion/shopping-related themes. Fashion bloggers are now seen as leaders in the industry, and brands are now turning to them not only to check and offer feedback on their products, but also to act as a connection between themselves and their target consumers.”

Fashion blogs typically include a mix of images from personal photographs and professional photographs of runway shows or magazine shoots (taken from other websites), to images of products seen on websites, other blogs, or in the local neighborhood of the blogger. Written entries discuss events in the blogger’s day, their outfit choices, ‘things they like’, or fashion items encountered in other places or other media.  This social platform has a very big influence on how many people dress, shop, wear their hairstyles and even do their make-up.

The second most popular social media platform is YouTube; this social platform is used to create videos. Breen stated,

"As more people capture special moments on video, YouTube is empowering them to become the broadcasters of tomorrow."

This self-glorifying quote may have seemed far-fetched less than a year ago, but of late, YouTube has been discussed as a potential "sixth network”.  Various YouTubers upload videos about fashion, hair and beauty tips to share with people all over the world. These views benefit from these videos because they can do and watch at the same time, which gives them the leisure of playing and pausing when they want. Not only do the viewer’s benefit from these videos, the YouTuber does as well.  

Many YouTubers now earn six figures from marketing products for top companies in their videos and go on to owning their own fashion businesses and selling products of their own. A lot of the big designers you see today were discovered on YouTube.  Depending on how interesting and useful the YouTube video is, many viewers will subscribe and pass on by word of mouth, helping the You Tuber sell their own personally made clothing.

Last but not least, Instagram, Pintrest, Tumblr and many other apps that allow many to express their sense of fashion are highly used today to influence how one views and captures fashion. These apps target more towards the younger generation; it’s quick and easy, you just snap and go. According to Livingston,

“The most popular photo revival software is Instagram available for iPhone and Instaplus for iPad with excellent reviews. You can load images from your photo library or from your  iPhone and create stunning artistic compositions. Images are re-developed (digitized) replicating past analogue processes, before your very eyes, complete with original mechanical sounds of the Polaroid camera.” 

Instagram is a mobile app for photo sharing and accomplishes the same social, visual goals as Tumblr, but in a prettier, scaled-down way. Many use this instagram as a channel of self-expression. Like Facebook and Twitter, Instagram’s appeal lies in its number of provided utilities both for individuals that love fashion and for owners of fashion brands. Many use instagram to do several things like display their personal lines, make up tips, cooking recipes and many other skills they have, but fashion is the most seen on these networks.

Therefore, to conclude, the days of a brand’s success relying solely on the quality of its goods are well and truly over. As the fashion industry has embraced social media, brands are simply opening their doors to personal contact and adding humanity, emotion and opinion. Whether you are interested in fashion or not, it is difficult to escape the constant bombardment of information on the latest fashions and trends that we receive through social media and the internet. From the fashion blogs, to the live streaming of catwalk shows from the main fashion weeks and the social shopping where we get all sorts of opinions on different pieces of clothing through Facebook, and Twitter, the fashion industry will never be the same.We live in the digital age, where it is important that social media is used as a marketing tool to avoid being left behind.

Courtesy of an article dated October 18, 2015 appearing in Social Media Today and the research paper by Crista Washington titled, "Social Media's Influence on the Fashion Industry"

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