Facebook COO Sheryl Sandberg has said that Facebook's daily audience is the equivalent of three Super Bowls on TV.
With Twitter's IPO just days away, it is becoming really interesting to watch the competition between Twitter and Facebook over TV advertising dollars.
A cynic might conclude that the two social networks have only a slight disagreement when it comes to television: Facebook wants it to die; Twitter merely wants to keep it alive but poor.
Here's how those positions are playing out:
- Facebook has gone to war against TV, claiming it has a bigger audience and better measurement. It's hoping to eventually transfer the hundreds of millions of dollars currently being wasted on non-measurable TV commercials and funnel them into Facebook ads, where marketers can see instantly how well they perform. Facebook's Custom Audiences are one aspect of this. Optimal/Brand Networks' two-second TV response ads on Facebook are another aspect.
- Twitter, by contrast, has positioned itself as TV's little helper. It has been heavily pushing a product called Twitter TV Ad Targeting and a companion product called TV Twitter Ratings. The former allows advertisers to enhance their TV advertising by buying promoted tweets at the same time; the latter measures chatter about TV shows so broadcasters can see their impact beyond simple audience ratings.
More recently, Facebook has moderated its stance — perhaps because it saw how cozy Twitter was becoming in TVLand? — and it now reports to the big four TV networks on what kind of chatter their shows generate among Facebook users.
Both companies, officially, say the same thing: TV advertisers should use our platform to optimize the reach of their TV advertising dollars. Obviously, they don't want TV to "die." Twitter's TV ad products can't exist without TV. And a lot of big TV campaign dollars spill over into digital media. (A lot of companies spend money promoting their promotions — I kid you not).
Talk to insiders, however, and people will privately admit that this is not about helping TV advertisers get better at TV advertising. It's about moving dollars out of TV and into Facebook or Twitter, over the long term.
It's all about macro-economics
Facebook is looking to do more than $6 billion in revenue this year. Twitter is heading rapidly toward its first $1 billion in revenue, this year or next. They're both publicly traded companies, and their shareholders won't tolerate them if they don't grow.
When you do revenues in the billions, however, you need to find new clients with advertising budgets in the hundreds of millions of dollars to move the needle. There is only one media category left that routinely deals with $100 million clients: TV.
Thus, Facebook and Twitter must take TV's money if they are to continue growing.
The experience of Google is instructive here. It's in the same — if not more extreme — position than either Facebook or Twitter. It must move a needle that's currently touching $60 billion annually. Google has tried repeatedly to chip away at TV budgets, with Chromecast, Google TV and Google TV Ads. (Google TV Ads — designed to funnel ad dollars through Google instead of directly to the nets — was abandoned.)
Last week, Google signed a deal with Publicis Groupe, one of the bigger ad agency holding companies, to put tens of millions of dollars of ads on YouTube. Online video competes directly with TV because it's video — duh — and because each set of human eyeballs only has 24 hours a day in which to watch anything. The more they watch YouTube, the more it cuts into primetime. Publicis clearly thinks that YouTube may now be worthy of TV-sized budgets. If the ROI on those budgets is better than TV, then god help TV.
The NFL has banned Twitter
TV isn't sitting still for this. The NFL — the biggest, most valuable content supplier that TV has — has banned TV networks from tweeting during live games in order to prevent the dilution of its property. NFL doesn't tweet during games, either. Sports Business Journal reports:
Adding to the irritation is that the NFL restricts how the networks can use Twitter on telecasts. Late last season, the league told networks that they could not feature Twitter’s bird symbol to promote players or announcer Twitter handles during games. The league reasoned that promoting tweets was an in-game sponsorship that is not allowed, sources said.
It was interesting when, a few weeks ago, Twitter held a big meeting during Advertising Week with CBS. Twitter had just signed up CBS as a client for its Twitter Amplify product, which allows advertisers to put pre-roll ads on highlight videos tweeted out by broadcasters or cable companies.
CBS better hope those ads don't work too well — because if they get better ROI from Twitter than they do from CBS' shows, then CBS will have some explaining to do to its own clients.
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