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MARKETING TO MILLENIALS: SUCCESSFUL STRATEGIES AND TACTICS

Why should you market to Millennials?

If you are asking yoursef why should I care about the Millennial generation and why should I consider spending my marketing dollars, time and effort targeting Millennials.

I have the answers for you….

The millennial generation represents the largest generation consisting of approximately 80 million people with over $170 billion in purchasing power.

The millennial generation with its large influence is shaping the way that brands send messages, forcing businesses to change or suffer the consequences.

Millennials marketing and an understanding of how to reach the millennial generation is critical and will enhance your organization’s brand and integrated marketing communications strategies. Implementing these millennial elements will help your organization reach its business and marketing objectives.

Millennial Characteristics

Let’s start out by giving the definition. The Millennial Generation is typically defined as individuals born between 1980 and 2000.  According to the U.S. Censur Burean, as of April 2015, Millennials now number 92 million or 20% of the total U.S. population, and are now the largest generation, even bigger than Baby Boomers. 

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A comprehensive understanding of millennial characteristics is critical in creating an integrated marketing communications (IMC) plan.

There are concepts, values, and characteristics unique to all millennials that include:

Concepts

• The use of a variety of media
• They view brands as a partnership and form of self-expression

Values

• Honesty
• Authenticity
• Value

Characteristics

• More technologically advanced than previous generations
• More educated than previous generations
• The most racially and ethnically diverse
• Encumbered with student loan debt, which continues to grow each year
• Have different priorities like putting off marriage, buying a house or automobile

Millennials also take action on behalf of brands based on loyalty and give significant brand loyalty to brands and products of preference. In addition, the millennial generation likes music and events and requires authenticity, two-way communication, social responsibility, and connection with a personal touch.

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Other important concepts of millennials marketing involve the millennial generation’s value systems that include altruism and a predisposition to support social and environmental causes they care about. As a result, millennials purchase and support companies with environmentally and socially responsible products (brands).

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Millennials Marketing Strategy and Tactics

A two-pronged generic millennial strategy and a subculture marketing strategy are critical to an organization seeking to achieve its objectives. Using a homogeneous millennial culture and subculture marketing strategy based on addressing the different ethnic subcultures provide a method to reach the target audience effectively.

The combination of the two marketing strategies will be used in the areas including logo design usage (affect), events, social and digital media, television, radio, and sponsorship (cognition).

The other elements included in marketing to millennials should also consider product or service content options and pricing (environment).

A combination of promotional strategies is required when marketing to millennials. Think in terms of the sum of the parts when influencing the millennial.

The marketing mix (product, place, promotion, and price) also heavily influences the millennial consumer stimulating trial and creating brand loyalty based on leveraging the brand assets.

Marketers are challenged with addressing two diametrically opposite considerations to reach millennials effectively. On one hand, millennials communicate asynchronously (i.e., via text). Conversely, the millennial market segment wants face-to-face interactions and a personal touch.

The key takeaway is for marketers to address the millennial generation using an IMC approach.

Market Research Drives Strategy and Tactics

Market research was the most important step in the approach used by Mercedes-Benz and Amazon. The essential driving force behind the development and launch of the CLA from Mercedes-Benz and the Fire TV from Amazon is market research.

Market research was the basis that determined product development and the corresponding marketing strategy and tactics resulting in both organizations reaching and exceeding organizational objectives.

The list included is not an exhaustive list of marketing elements used in strategy and tactical development, but a representation of the most important and how they fit together to address a diverse generation. The elements listed provide an organization with a framework from an IMC perspective to take into consideration when forming strategies and tactics to reach the millennial consumer.

Event Marketing

IMC messaging strategies with a millennial target audience must use a dual approach. The IMC strategy must incorporate event or experiential marketing offering a personal one-to-one relationship required by the millennial generation based on the statistic that 78% of millennials prefer a brand experience that is relevant and gives them information.

An example of a relevant and simple marketing tactic to reach this audience is Federal Express providing South by Southwest festival attendees charging stations to charge mobile devices. The charging station example demonstrates a marketing tactic that builds an emotional connection with a brand, especially with the millennial generation that does not like to be without the use of its mobile devices.

Digital and Social Media 

Another critical element in an IMC strategy focused on millennials requires a company to use Internet marketing and social media which is in stark contrast to the face-to-face interaction desired by this generation. Event marketing provides the ability to begin a conversation with the millennial consumer supported by the internet and social media.

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The internet and social media allow a company to continue to engage this generation to gain brand awareness, stimulate trial usage, repeat usage, and ultimately  loyalty. The social media channel must consider the product or service offered by the company and target where this generation spends most of its social media time (Facebook, Twitter, YouTube, Pinterest, Instagram, Snapchat).

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For example, using Facebook and Twitter to engage craft beer consumers would be a good social media choice and LinkedIn would be a poor media choice. Training consulting services or customer relationship software provides examples of a product and service that offer a better fit with LinkedIn’s target audience and purpose.

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Millennials are early adopters of different social media channels, and marketers must keep track of the social media consumption patterns and trends adapting marketing tactics to reach this generation.

Millennials Seek Lower Prices, Loyalty and Reward Programs and Discounting and less on product quality

Millennials are forcing brands to become more participative by subtly engaging by offering discounted prices and loyalty and reward programs while relying less on product quality.  77% of the millennial generation reported participating in loyalty and reward Programs

Millennials thrive online, researching product choices online, then placing orders online.

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In addition, 78% of millennials reported to being more likely to buy from a brand with a rewards program than one without.

Millennials have the highest percentage of word-of-mouth marketing, electing to share feedback about a product or service both on-line and off-line.  The implications of these millennial statistics support the social media tactic of engaging using online channels to support the event marketing high-touch required by this generation.

Corporate Social Responsibility (CSR)

A critical statistic for marketers is the fact 75% of millennials donate to charity and 60% volunteer for a worthy cause.

The millennial generation coming of age is one of the most important components influencing marketing and the messages brands send. The millennial generation with its demonstration of purchasing power and brand support for companies that are environmentally conscious has caused a seismic shift in business.

Here is a quote from Simon Sinek that provides a paradigm shift for marketers and how they communicate:

“PEOPLE DON’T BUY WHAT YOU DO, THEY BUY WHY YOU DO IT.”  – SIMON SINEK

Companies must infuse environmentally responsible practices into the core of their business strategy using an IMC approach. As a result, marketing strategy provides a core element in business strategy to promote a company as an ethical entity with genuine concern for social issues and the environment. Marketers must create authentic messages that can be supported with actions regarding the environment and social issues or risk suffering the consequences of the millennial consumer.

CSR Examples from the Automotive Industry

Companies such as General Motors and Ford have had to change significantly over the last six years. It is not enough to provide vehicles that are environmentally conscious, but the millennial generation demands a more significant effort from a brand. GM and Ford have implemented programs across their entire supply chain supporting environmental and social initiatives. GM and Ford now use a sustainability report a common marketing tool in business to provide information regarding the environmental and social practices of the company.

The sustainability report used by many companies across all industries provides evidence of the changing nature of business and marketing influenced by the millennial generation. However, if companies do not provide the millennial generation with authentic evidence of support for the environment, they could face significant brand and company damage.

The key takeaway is to include corporate social responsibility into your business and marketing strategy in an authentic manner.

Benchmarks for Millennial Marketing

There are a few companies out there that I think are really getting it right and setting the bar for marketing. The companies that are in the best position to take advantage of the largest generation include:

• TOMS donate a pair of shoes to someone for every pair of shoes sold. Giving and aligning the millennial generation with a cause allowing them to participate in the story. Blake Mycoskie, the founder, has found a way for philanthropy and profit to coexist in perfect harmony.
• Netflix continuously keeps pulse with the millennial generation exceptionally well and uses social media with shareable content to attract and engage.
• Uber with its unique app focused on convenience and the needs and wants of the millennial generation. Uber provided a disruptive business model that simply works with marketing campaigns focused on the millennials and shareable social media content.
• Dollar Shave Club has disrupted the personal grooming market with a business model that is uniquely suited to millennials. The two critical things marketers can takeaway from Dollar Shave Club is their unique, disruptive pricing model and creative marketing. Dollar Shave uses multiple media specifically targeting millennials with relevant, shareable, and entertaining content.

COMMENTARY:

The focus of this post is dedicated to targeting millennials using an integrated marketing communications (IMC) framework. In other posts, I discuss brand building that must take place before developing the IMC plan.

The millennial generation is an important generation for marketers to target for almost every industry. Forming strategies and tactics to reach the millennial consumer based on solid market research provides the best opportunity to target them effectively and achieve success.

Omnichannel Experiences: Creating Online And In-Store Moments That Matter To Millennials

Mobile marketers, take note: Millennials already live in an omnichannel shopping mindset. In fact, they were living in this mindset years before most businesses realized they needed to adjust operating models accordingly. These young shoppers carry with them the central expectation that a spectrum of seamless and consistent online and offline engagements will be the norm across their shopping journey. 

The goal of omnichannel marketing is not to create multiple experiences across multiple channels — that’s multichannel marketing — it is to build a unified brand-to-consumer interaction across all channels. Omnichannel experiences are not simply coordinated, and not simply integrated, they become continuous. A consumer can begin an experience in one channel and complete that interaction somewhere else. And, with the Millennial demographic set to spend some $200 billion in coming years, theimperative for brick-and-mortar to focus on omnichannel to reach them is more critical than ever. 

Success begins — and begins only, as there are many ways to inspire Millennials in the omnichannel space — with close attention to social-media interactions, live support, and real-time surprise and delight.

• The Social Experience: Based on our recent research, more than 1 in 4 young consumers, aged 14 - 29 (including both Millennials and Gen Z), said they use a mobile phone while browsing in a physical store, seeking guidance, input, and validation from friends and family on their screens. Engaging organically with Millennials as they share these experiences requires nuance and a sense for strategic delicacy, adapting to the distinctive “dialect” of each platform in positive and relevant ways. Taco Bell has earned notice by using Snapchat, for example, challenging young consumers to “Doodle Wars” that can be shared and saved for later, piping more attention to the brand-related drawings via Twitter, and all the while steering diners toward fresh brand-focused engagements. 

• Mobile-to-Live Support: Some 60% of Millennials recently told Radial that they want online chat and communications as part of their in-store shopping segment. A key opportunity for brick-and-mortar, then, is to seamlessly match a conversation that starts on mobile to a moment when an expert in-store representative can pick it up, further prompting the anticipatory inspiration that Millennials say they crave. The hospitality industry has become a superb example of this kind of handoff, with staff having all the immediately preceding information available on desktop and/or mobile device at the moment of the switch.

• In-the-Moment Inspiration: Brands that commit to omnichannel experiences can plug into Millennials’ openness to new ideas in the moment — specifically the kind that arise during otherwise-occupied segments of their shopping journey. Advertisers can prompt or seal the deal around restaurant visits, for example, giving users a chance to skip a seating line by donating to a social cause on their smartphone. This aligns with Millennials’ affinity for purchases that leverage philanthropic outcomes — 70% of them will spend more on brands supporting what they perceive to be worthy causes. It’s an omnichannel solution with in-the-moment meaning, driving sales and loyalty.

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In an omnichannel world, opportunities are free to emerge in seamless and consistent ways at any time, in any space … if these moments match the expectations and values of the Millennial consumer. Each of the above approaches fosters increasingly meaningful moments and, when it comes to Millennials, each instance represents a prime way to tap into the generation’s spending power as it reaches its peak.

Courtesy of an article dated December 3, 2014 appearing in Stephen Zoeller blog, a blog post by Goldman Sachs, and an article dated May 9, 2017 appearing in MediaPost Engage:Millennials

 

SNAP'S Q1 2017 EARNINGS UNDERWHELM INVESTORS, REVS $150 MIL, BELOW WALL ST EST, USER GROWTH SLOWS, STOCK TANKS

 

Snap reported quarterly financial results for its first time as a public company on Wednesday, posting revenue that missed estimates and slower-than-expected user growth.

Shares plummeted more than 20 percent on Thursday. The company spent $2 billion on stock-based compensation expenses after its initial public offering, widening net losses for the quarter to $2.2 billion.

CEO Evan Spiegel got a $750 million bonus for taking Snap public. He told analysts on a conference call that the company was focused on improving quality for users during the first quarter, especially for those with Android mobile phones.

Despite the steep loss during the quarter, Snap is "still in investment mode," the company's chief financial officer, Drew Vollero, said on a conference call with analysts.

The Numbers

• Revenue: $150 million reported vs. $158 million expected by a Thomson Reuters consensus estimate.
• Global DAUs: 166 million reported vs. 167.3 million expected by StreetAccount.
• ARPU: 90 cents reported vs. 90 cents per share expected by StreetAccount.
• Loss of $2.31 a share including compensation expenses.
• Analysts at Thomson Reuters estimate an adjusted loss of 20 cents per share, wider than the 19 cents expected.

That's compared with revenue of $38.8 million in the year-ago period.

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Amid trouble at Facebook and Google, unprofitable underdog Snapchat aims for engagement

As the company behind the viral ephemeral messaging app and Spectacles glasses, Snap's IPO was the biggest technology offering since Alibaba.

And it's growing at an extraordinary rate: Revenue rose 286 percent year over year in the first quarter. Daily active users rose 36 percent from the year-ago period, and average revenue per user grew 181 percent.

More than 3 billion Snaps were made daily in the first quarter, the company said, up from 2.5 billion in the third quarter of 2016. Users spent an average of 30 minutes a day on Snapchat, the company's chief strategist, Imran Khan, said on the conference call, and cited Nielsen data showing that many Snap users could not be reached by traditional TV channels.

Khan told CNBC.  

"We made good progress this quarter improving the performance and quality of our Snapchat application, especially on Android, which has helped result in increased net user adds and engagement.  We still have a lot of work to do, and are excited about the potential from continued performance improvements."

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But since its IPO in early March, Snap has faced an uphill battle to convince Wall Street it can make money with advertising, even with Facebook and Google dominating the market.

Spiegel said that automation will help the company make more money for advertisers.

Khan said.  

"People are going to copy your product if you build great stuff.  Just because Yahoo has a search box doesn't make it Google."

Facebook, in particular, has pushed aggressively into Snap's turf. Boss Mark Zuckerberg told analysts that Instagram Stories has 200 million daily active users, and WhatsApp Status has more than 175 million daily active users.

As a whole, Facebook has 1.28 billion daily active users, nearly eight times as many as Snapchat.

Other revenue sources, like Spectacles, have hardly made a dent in the company's business. Analysts surveyed by Thomson Reuters expect Snap to post a per-share loss through the end of 2018.

Snap has not made great gains in the markets, trading mostly below the high of $29.44 in its first week of trading. Indeed, the stock fell as low as $17.07 after hours, just 7 cents above its IPO price, as shares changed hands in heavy volume.

When Facebook, Yelp, Twitter and LinkedIn reported their first quarterly results as public companies, the stocks fell by an average 14.1 percent the next day, according to Jim Strugger, derivatives strategist at MKM Partners.

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Snap should have set its expectations lower, Art Hogan, chief market strategist at Wunderlich Securities, told CNBC's "Closing Bell" on Wednesday. He explained that a company's first earnings report as a public company is "really dependent" on executives giving realistic guidance. But that's just part of the growing pains of becoming a public company, Hogan said.

COMMENTARY:   I won't lie to you,  I am not a fan of startups with unproven or unsustainable business models and no evidence of profitability.  In my opinion, Snap Inc has many similarities to Twitter:  1) user growth slowing down at time of IPO filing, 2) lack of profitability and 3) small market focus (primarily Millennials).  Snaps has positioned itself as a "camera app" that allows Millennials, its core user demographics, to share photos that automatically disappear.  

In a blog post dated October 10, 2016, I commented on Snap Inc's proposed $25 billion IPO.  Like Twitter before it, I had a lot of reservations about the Snap IPO, because there were already strong signs that user growth was slowing down, and many analysts like myself, felt that Snap's business model, which depended almost entirely on advertising, was unsustainable. Furthermore, Snap derived the majority of its ad revenue from the U.S., so in order to sustain growth, this required expanding its user base internationally.   

Snap is very slow in providing advertisers with the tools they need to target potential customers, and this is the same thing that plagued Twitter's ad revenue growth.  On May 4, 2017, Snap announced a suite of tools to help advertisers market to its users more effectively.  If you ask me, they should've done this much sooner.

For those of you who like reading the minutes of Snap Inc's Q1 2017 earnings conference call with investors, you will find it all below:

Snap Q1 2017 Earnings Conference Call Notes from Tommy Toy

Snapchat is opening itself up to advertisers of all sizes with new buying tools

According to an announcement on May 4, 2017, starting this June, Snap is going a step further by flinging wide its gates to advertisers of all sizes and budgets with a new suite of self-service tools. The move could help considerably grow Snap's fledgling ad business, which is expected to reach $1 billion in revenue this year.

Releasing a self-service ads manager is intended to erase any friction that may be keeping advertisers off Snapchat, a company spokesperson told Business Insider. Snap expects larger buyers to still go through one of its auction partners, which offer more custom targeting like timing ads to run alongside TV campaigns or during specific weather conditions.

Snapchat's new ads manager will let any advertiser buy, manage, and view reporting for their campaigns. All ad formats, including app install ads, sponsored geofilters, and fullscreen video, are available alongside existing targeting capabilities like goal-based bidding. The manager is free to use and requires no minimum ad spend.

A new mobile dashboard will also allow marketers to see their ads like a normal user, view analytics, and get notification updates about their campaigns directly from the Snapchat app. Over 20 brands are testing these new tools now as part of a private beta, and Snap plans to make them available to everyone in June.

Below is the Snap Inc Q1 2017 Earnings Report Press Release: 

Snap Q1 2017 earnings report from Tommy Toy

Courtesy of an article dated March 13, 2017 appearing in MedaPost MoBlog, an article dated May 10, 2017 appearing in MediaPost Social Media & Marketing Daily, an article dated May 11, 2017 appearing in CNBC and an article dated May 4, 2017 appearing in Business Insider

FACEBOOK REPORTS Q1 2017 EARNINGS, REPORTS REVENUES OF $8.03B, AND 1.94 BIL MONTHLY ACTIVE USERS

Facebook had another strong quarter, beating estimates to start 2017. It scored $8.03 billion in revenue and $1.04 GAAP actual EPS in Q1 compared to $0.87 EPS estimate. It earned that from 1.94 billion users, up from 1.86 billion last quarter, growing at a faster 4.3 percent compared to 3.91 perecent last quarter.

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Steady Growth, Strong Profits

At this rate Facebook should hit 2 billion total users in Q2. Daily active users reached 1.28 billion, up from 1.23 billion last quarter. While fake news, video violence, and copying Snapchat have all been fixtures of the Facebook news cycle, its user growth actually grew during the time period. Facebook added 3 million monthly users in the lucrative but saturated US & Canada market, though the Asia-Pacific region was the big driver, where Facebook added 43 million users.

The company told investors that “Facebook is no longer reporting non-GAAP expenses, income, tax rate, and earnings per share (EPS).” That means it will be more prominently disclosing stock-based compensation in its expenses, which is important since tech companies like Facebook pay employees lots of stock that vests over time to keep them from leaving.

[Correction: TechCrunch and several other publications wrongly compared the new GAAP actual EPS with the non-GAAP analyst estimate, since Facebook no longer reports non-GAAP financials. Since Facebook’s GAAP actual EPS was $1.04 compared to the analyst estimate of $0.87, Facebook actually beat the street this quarter, rather than having mixed results as we originally reported.]

Facebook beat analyst estimates on revenue, which were $7.83 billion. Facebook had closed the market earlier today down 0.68 percent at $151.80. Shares dropped 2.37 percent in after-hours trading. Today’s report shows that running out of News Feed ad space hasn’t prevented Facebook from continuing to grow its revenue.

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Mobile now counts for 85 percent of Facebook’s ad revenue, compared to 84 percent last quarter, accounting for $6.7 billion in ad revenue. Facebook earned $3.06 billion in profit in Q1, up 76% year-over-year while revenue grew 49% year-over-year. Facebook managed to slow the decline of its games payments business, with it earning $175 million in Q1 compared to $180 million last quarter and $195 million in Q3. Facebook stopped reporting mobile-only users.

Headcount grew to 18,770 people, up 38 percent YOY. Facebook’s total costs were $4.7 billion, giving it a 41% operating margin, down from 52% margin last quarter.

Facebook’s focus on the developing world with apps like the 200 million-user Facebook Lite, recently rolled-out Messenger Lite, and new Instagram offline mode are paying off. Average revenue per user in the Rest Of World region hit $1.27, up 40% in a year.

Zuckerberg On Leapfrogging Snapchat

During the earnings call, Mark Zuckerberg gave an overview of Facebook’s work on its new mission to “build community” that the CEO described in his humanitarian manifesto in February. Progress includes getting people to join community groups, launching Community Help for organizing disaster and crisis relief, and launching Townhall to connect people to their elected representatives.

One important piece of news from the call was the first indication of the performance of WhatsApp Status, the Facebook-owned messaging app’s Snapchat Stories clone. Zuckerberg said WhatsApp Status now has 175 million daily users just 10 weeks after launch, making it larger than Snapchat as a whole.

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But Zuckerberg’s most electric comments came when he characterized Facebook’s progress in visual communication and augmented reality versus competitors. While he didn’t name Snapchat, the comparison was implied when he said (emphasis mine):

“I think we were a little bit late to the trend initially around making cameras the center of how sharing works. But I do think at this point we’re pretty much ahead in terms of the technology that we’re building, and making an open platform I think is a big step forward. A lot of people are using these products across our family of apps. And I would expect us to continue leading the way forward on this from this point on.”

The CEO seems bullish on outside developers helping Facebook to produce a wider ranger of AR content than Snap can itself. When asked about monetizing AR, Zuckerberg brought up how object recognition could enable floating Buy buttons on real world things.

Another significant point from the call was Facebook’s growing emphasis on long-form video and purposeful viewing, rather than the short-form video people spontaneously discover in the feed today. Efforts to thwart ad blockers have also succeeded, with CFO David Wehner saying Facebook served 32% more ad impressions in Q1 2017 versus Q1 2016.

Scandals Don't Slow Facebook

eMarketer estimates that Facebook will generate $36.29 billion in net digital ad revenue in 2017, up 35% from last year. That would give it the second largest share of the global online ad market with 16.2%, behind Google’s 33%.  45% of Facebook ad revenue is expected to come from the US.  While Facebook doesn’t break out Instagram financials, eMarketer expects it to earn $3.92 billion in global ad revenue, or 12.3% of Facebook’s ad revenue.

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eMarketer analyst Debra Aho Williamson is bullish about Facebook as an advertising platform but says.

“Advertisers continue to report positive results from their ads on Facebook, but they remain concerned about things like fake news and the measurement glitches that Facebook has revealed. How the company addresses these and other concerns will be a key factor that determines whether revenue growth continues as strongly in the next few quarters and years as it has in the recent past.”

Q1 saw Facebook spin up several new products that could turn into serious money-makers for the social network. Following the success of Instagram Stories, Facebook continued its efforts to clone Snapchat with the launch of Messenger Day, Facebook Stories, and WhatsApp Status. These clones could dampen growth for Snapchat while eventually sucking in marketing dollars from the ads it will likely insert between Stories as it does on Instagram.

Competing with LinkedIn, Facebook launched job opening posts that can be turned into ads. Facebook began testing ad breaks inside of recorded videos as well as Live broadcasts, and will keep 45% of the ad revenue while paying creators 55%.

But Facebook saw trouble with Oculus, paying $300 million (plus $200 million from Oculus founders) to Zenimax after losing a lawsuit about stolen intellectual property. Co-founder Palmer Luckey left the company, and Oculus reduced the price of its Rift headset amidst slow sales of tethered VR hardware across the industry.

The biggest story of the quarter was Facebook’s on-going struggles to fight fake news and offensive content. It’s begun working with outside fact checkers, hired a former New York Times product manager to run news product, made banned content reporting easier, and today announced it will hire 3000 people to speed up vetting of flagged content. Yet even that controversy hasn’t seemed to slow down the social juggernaut.

COMMENTARY:   In a blog post dated May 21, 2012, I had predicted that Facebook's IPO had been over-hyped by investers in the pre-IPO secondary market, and that this could result in a further erosion in the share price, and possible share price collapse.  This in fact happened, and by August 17, 2012 (see my Blog post), Facebook shares had dropped to new low of $19.87 from their IPO closing price of $38.23.  I made jokes about Facebook, calling the social giant "Faceplant."  It wasn't until August 23, 2013 that Facebook shares slowly creeped back to exceed their closing IPO price $38.23, by reaching $40.55.  A lot of pre-IPO investors waited over nine months to recover their investments.  Many investors, like yours truly, bailed out of Facebook and took a loss.  I lost over $1,200 myself.  I thought at the time that Facebook was one of my worse investments, and I was probably not the only one.  

Facebook went into their IPO without a detailed strategy and sustainable business model for generating advertising revenues from mobile users. So the month before the IPO, Facebook acquired Instagram, a mobile photosharing app, for $1 billion.  The strategy was to use Instagram as a platform for mobile advertising.  However, it wasn't until Q4 2012, that Facebook was able to deliver on its promise to investors, that it could monetize mobile users.  In Q4 2012, mobile ad revenues were $305 million or 23% of total ad revenues.   The rest is history, of course, as Facebook now dominates all social media sites in mobile ad revenues.  For the year ending December 31, 2016, mobile ad revenues constitute 84% of Facebook's $27.6 billion total ad revenues for the year 2016.  

If you woul like to read the complete transcript of Facebook's Q4 2016 earnings conference call with investors, you can find it at Seeking Alpha

 Courtesy of an article dated May 3, 2017 appearing in Tech Crunch

GOOGLE PLAY WIDENS LEAD OVER iOS IN WORLDWIDE DOWNLOADS, BUT iOS LEADS IN CONSUMER SPEND

Google Play widened its lead over iOS in worldwide downloads; however, iOS maintained its lead in worldwide consumer spend.

The first quarter of 2017 saw record levels of worldwide app downloads and consumer spend. iOS and Google Play downloads grew 15% year over year — to nearly 25 billion worldwide. This is an incredible feat since this number only reflects new downloads and is not inclusive of re-installs or cumulative downloads from past quarters.

Gross consumer spend also grew at an impressive 45% year over year in Q1 2017 to well over $15 billion across iOS and Google Play worldwide. This figure only partially represents how publishers can generate money through apps since it does not include revenue from m-commerce or in-app advertising.

The app market is soaring as consumers migrate more of their lives to mobile and pay for the ease, convenience and accessibility that apps offer.  

Google Play Downloads Boom in Q1 2017

Google Play widened its lead over iOS to 135% for worldwide downloads in Q1 2017, up from a 100% lead back in Q1 2016. It saw both the greatest absolute growth and the fastest growth rate year over year out of the two stores. Google Play grew 20% year over year, fueled largely by growth in emerging markets like India and Indonesia.

India is still in the early stages of the App Market Maturity Cycle. The incredible rate of downloads the region is currently experiencing is the result of consumers trying out new apps before app habits form. Smartphone penetration in India is below 30%, which paints a rosy picture of long-term growth. As more consumers adopt smartphones, we expect India to continue to contribute significant download growth in the quarters to come.

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While Android devices dominate in India and drove Google Play downloads in Q1, India was also a chief contributor to growth in iOS downloads, second only to China. China remains a vital market for the iOS App Store, and as downloads continue to grow, consumer spend follows.

Overall, the iOS App Store saw a healthy growth rate of 5% year over year in Q1 2017; however, it’s when looking at consumer spend that the App Store’s leadership really comes into focus.

iOS Consumer Spend Grew 45% YoY in Q1 2017

iOS increased its lead to 100% in consumer spend over Google Play in Q1 2017, up from 90% in Q1 2016. It saw impressive consumer spend growth of 45% year over year in Q1 2017 along with the greatest absolute gains in consumer spend out of the two stores. Given China’s rise to the #1 country by iOS consumer spend, it’s no surprise that China was a chief contributor of growth. China saw both the greatest absolute gains in iOS consumer spend and the largest growth in market share of worldwide iOS consumer spend year over year. Our App Store Forecast predicts that China will remain the largest single market for app store spend through 2021 and is poised to hold its title as the largest single market for iOS consumer spend in the years to come.

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Google Play Consumer Spend Picked up Speed in Q1 2017

Google Play also saw strong growth — consumer spend grew 40% year over year. While emerging markets fueled much of the download growth, mature markets were the biggest contributors to growth in consumer spend. South Korea and the US saw the greatest growth in market share of worldwide Google Play consumer spend, but Japan and the US saw the largest absolute growth year over year.

While the largest contributors to growth in consumer spend on both Google Play and iOS have come from Asia and the Americas, Europe plays an integral role in driving consumer spend on both stores. The United Kingdom, Germany and France represent three of the top 10 markets for both Google Play and iOS consumer spend in Q1 2017, a trend which has held true for the past five years.

Q1 2017 saw record levels of downloads and consumer spend in the app economy, with particularly strong growth in consumer spend across both stores. With app stores showing undoubtedly healthy growth, one thing is certain: The app economy is nowhere near peaking. Apps are an integral part of consumers lives across the world. Businesses need to adapt to this mobile-first world or be left behind in this booming economy.

COMMENTARY:   According to a new App Annie report released on March 29, Apple will lose its lead over Android in terms of revenue generated by mobile apps this year.   However, the firm’s estimate is based on including third-party Android app stores in its forecast, not just Google Play.  When the Apple App Store is pitted against Google Play alone, Apple is expected to maintain its lead through 2021, the report says.

App Annie is predicting worldwide mobile app downloads to surpass 352 billion in 2021, with gross consumer spend across all the app stores to surpass $139 billion.

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The iOS App Store will account for a large chunk of that spend, as it’s expected to generate over $60 billion in 2021. Google Play will generate $42 billion, and third-party stores, $36 billion.

Those third-party stores – which include the Android app marketplaces offers by Tencent, Baidu, Xiaomi, Huawei, and others – accounted for $10 billion in revenue last year, and will grow to $20 billion in 2017, the report estimates.

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The market for Android apps is growing thanks in large part to mobile adoption in China as well as other emerging markets, particularly Mexico, Brazil, and Indonesia.

This will impact app downloads, too. Android downloads from both Google Play and elsewhere will at an annualized rate of 23 percent to 299.9 billion by 2012.

App downloads are more evenly distributed across countries around the world, but revenue is another matter, App Annie also found.

According to its data, the top five countries by downloads – China, India, U.S., Brazil, and Indonesia – accounted for 54 percent of the downloads last year, and this won’t change much through 2021.

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However, the top countries by revenue – China, U.S., Japan, South Korea, and U.K. – accounted for 75 percent of app store revenue in 2016. This is expected to grow to 85 percent by 2021.

The firm chalked up this shift to increased spending on games and subscriptions from existing smartphone users in mature markets like the U.S., Japan, and South Korea, but especially the maturing market that is China.

China, because of its vast population and growing middle class, still plays a key role when it comes to app store revenues, but its market is maturing, the report notes. The majority of Chinese app users are expected to settle into patterns of habitual use by 2021, which will allow revenue growth to be sustained even though downloads may slow.

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Downloads in China will grow at an annualized rate of 19 percent from 2016 to 2021, while consumer spend will grow 24 percent to $56.5 billion. In larger cities, much of the smartphone market in China is already saturated, meaning a lot of growth will come from other regions across the country.

India, on the other hand, is still in the early stages of the app market maturity cycle, and will see significant download and revenue growth through 2021. Downloads will grow 28 percent to nearly 23 billion by 2021, and app store spend will grow an annualized rate of 75 percent to $2.1 billion.

Despite India’s growth, consumer spend will be lower in the region because of a variety of factors, including more limited purchasing power and a culture that focuses more on saving versus spending on games and entertainment, App Annie says. It suggests that app developers targeting India consider other revenue models, like advertising.

Courtesy of an article dated April 26, 2017 appearing in App Annie and an article dated March 29, 2017 appearing in Tech Crunch