09 April 2009

Ad Agencies Need to Think More Facebook, Twitter, Less TV

Union Square Ventures partner Fred Wilson has seen the future, and it's in "earned," not paid, media, which has big implications for marketers, agencies and, of course, the media itself.

"There are still a lot of marketers out there buying their media when they could earn it, and earn it a lot less expensively," he said today at Ad Age's Digital Conference in New York.

While overall spending on marketing may go up, traditional-media outlays are declining, and spending is growing on the creative and technology necessary to implement social campaigns on Facebook, Twitter and MySpace. Agencies have to find a way to continue to make money in this environment.

"The total amount of money flowing out of marketers' pockets to agencies won't decline and will likely go up, but the mix is headed for important changes," Mr. Wilson said.

As a venture capitalist, Mr. Wilson said, he's funding companies that address the new marketing paradigm, from earned-media platforms such as Twitter and social video site Boxee to next-generation ad agencies such as Federated Media and Clickable, and from analytics firms such as ComScore and Quantcast to tech platforms such as FeedBurner and Dave Morgan's Simulmedia.

What do earned-media campaigns look like? A lot like Burger King's "Whopper Sacrifice" effort on Facebook, which resulted in 234,000 "killed" friendships; like Disney's building a following for the Jonas Brothers online and not on the radio; or like the gourmands behind the Kogi BBQ trucks in Los Angeles, which have 14,000 Twitter followers who are alerted when the Korean taco truck is in the neighborhood.

The challenge for marketers and agencies, then, is to engage with social media in an authentic way, and know they are going to be punished by its denizens for any perceived spam.

Indeed, controlling spam or unwelcome marketing has become a huge expense for Google, Twitter, Facebook and others. "One of their biggest costs is 'environmental mediation,' or keeping the bad people at bay," Mr. Wilson said.

Once a niche phenomenon, social media has achieved mass, network-TV-like scale. Mr. Wilson predicted Twitter could reach 50 million users, or one quarter the size of Facebook today, by the end of 2009.