Facebook is due to report its Q2 results today and no doubt eyes will be fixed on how revenues earned from advertising – mobile in particular, have fared. In the lead up to this, Twitter’s Biz Stone has suggested Facebook could earn at least $12bn per year by offering users the option of signing up for an ads-free experience at a cost of $10 per month, i.e. Facebook could potentially earn three times more revenues from such a service than it reaped from advertising last year ($4.3bn). Stone based this on a minimum of 10% of Facebook’s 1.1bn user base ‘buying in’ to the option.
But would users really be willing to pay for this and if so, how much would they consider to be reasonable?
Speculating on exactly this at the turn of the year, leading London-based independent digital marketing agency, Greenlight, polled 500 people globally to gauge just how much they would be prepared to pay not to see ads when using Facebook.
The data from Greenlight’s “Search & Social Survey (2012-2013)”*, showed 15% of users would be prepared to pay Facebook to see no ads with the majority, 8%, indicating they would be willing to spend $5 right up to $10 and even over, per month.
In March, Facebook unveiled the redesign of its News Feed. Andreas Pouros, COO at Greenlight, noted then that Facebook had taken the success of advertising in peoples’ newsfeeds on mobile and based its News Feed redesign on mirroring that format (or close to it) on all devices, which, in his view would help to boost revenues, results of which will be revealed, when Facebook reports its quarterly earnings later today.
Pouros also commented then that:
– Whilst the move was shrewd, in that the redesigned News Feed mirrored that on mobile where it has proved successful from an advertising perspective, the conflict between user experience and driving more ad dollars loomed large. It did with AltaVista historically, who were then unseated in the search engine wars with a new upstart (Google), with a cleaner interface and better user experience
-Facebook may need to pace itself a little less aggressively when it comes to cashing in on its advertising sweet spot. Alongside showing that 15% of users would pay Facebook to see no ads at all, Greenlight’s survey also showed that close to 70% say they ‘never’ or ‘rarely’ click on advertisements or sponsored listings in Facebook, indicative that consumer apathy is very real.
Pouros also noted that the challenge faced by Facebook is ‘reinventing’ advertising so people don’t feel they are being bombarded by ads. With the very recent addition of a video service to its photo-sharing app Instagram, video ads could perhaps be the next step, and some are in fact already betting on it.
All in all, early reports out today indicate analysts are optimistic about Facebook’s results. JP Morgan expects Facebook’s advertising revenue to rise 40% on the previous quarter to reach $1.39bn, with mobile accounting for a third ($446mn) of it, whilst those derived from desktop advertising are projected to fall 4% on the previous year as ad dollars continue to shift to mobile devices. Others have been cautionary, Cantor Fitzgerald for example, pointing to a weaker ad market in Europe, which it says could hurt Facebook’s international revenue.
Notes to Editors:
*Greenlight’s global annual “Search & Social Survey (2012-2013)” asked 500 people – students, law enforcement professionals, medical staff, accountants, lawyers, the unemployed, and everyone in between, how they engage with online advertising, search engines, and social networks, in order to glean insight into how consumers engage with marketers today, and formulate views on what the future might hold.
Andreas Pouros is Chief Operating Officer at Greenlight. He has been involved in search marketing for over twelve years, working for some of the biggest and most prestigious global blue chip companies. Andreas is responsible for an international team of Search consultants, developers, programmers, and copywriters. In his role, he provides guidance to well-known brands, including Santander and Sky as well as a number of government bodies.
Andreas Pouros is available for comment. To arrange an interview or for further information, please contact:
T: +44 (20) 3326 6232
Greenlight is a leading independent digital marketing agency. With over 100 blue-chip clients including Santander, New Look, Sky and ghd, Greenlight is a leader in the digital marketing space, and is recognized worldwide for its commitment to delivering record ROI for its clients and investing in the future.
Greenlight is considered the premier thought leader in the sector publishing widely read industry reports, original research and speaking at trade events. Founded in 2001, Greenlight is headquartered in London, with offices in New York.
SOURCE: Greenlight Digital
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