Only four social platforms really matter: Facebook, YouTube, Instagram and WeChat.
This is too bad for Vine and Google+, deemed “clear losers” by L2 Inc., a business intelligence firm in its second annual Social Platforms Report, which came out Tuesday evening. It’s also not great news for Twitter, Sina Weibo, Pinterest and Tumblr, platforms that L2 has determined are losing their traction in the space, and as a result nabbing places in the “losing” category. Google+ saw posting and engagement rates drop a staggering 98 percent year over year and Tumblr, Vine and Pinterest saw a decrease in adoption among brands.
This story first appeared in the November 5, 2014 issue of WWD. Subscribe Today.
Twitter is grappling with flat growth while Sina Weibo is exhibiting signs of slowing down (right as competitor WeChat showed the strongest growth of any social medium globally in the past year).
The report looked at 382 brands across 17 social media platforms — up from 15 last year with the addition of Wanelo and Weishi (a Chinese product similar to Vine). L2 analyzed the platforms in terms of such characteristics as reach, engagement, advertising, e-commerce and marketing.
“They [Facebook, YouTube, Instagram] seem to be pulling away and starting to suck the oxygen out of the room for everyone else,” Scott Galloway, New York University marketing professor and cofounder of L2, told WWD.
Twitter, which was among the top three platforms in last year’s study along with YouTube and Facebook, saw a complete flip, according to Galloway. He called it the “most overvalued company” — surprised that despite being valued at $25 billion, more than Clorox, Coach and Abercrombie & Fitch combined, Twitter still has flat user growth.
Brands are not adopting the microblogging platform’s advertising products at the same velocity they are Facebook, Instagram and YouTube.
Pinterest faces similar hurdles when it comes to advertising. “Our sense is that Pinterest was pre-revenue too long and as a result hasn’t developed a deep understanding of where advertisers find value,” he said. “Within 60 days, they announced two different monetization strategies. It reflected poorly on the management team. We think they are being blown off the road by Instagram.”
All of which further feeds into the strength of Facebook, according to Galloway.
“Facebook is one thing: scale,” he said. “Their strategy is scale, and it’s the same as Amazon’s and China’s: more for less. Because of this, they can offer people more targeted impressions to a larger audience at a lower price.”
Facebook is the clear winner right now, according to Galloway, who is not worried by reports that Millennial usage on the platform was slipping since it is leading in so many other areas. Not only does Facebook have scale, but it’s now tracking more people across the Web than Google. When a user logs in, Facebook knows exactly who they are — and they now know way more about them than Google does thanks to the former’s ability to let individuals follow and “like” things they are interested in. And in addition to owning the hottest social platform, Instagram, Facebook acquired WhatsApp in February, which boasts about a half-billion users.
“Facebook has pulled off the biggest bait and switch,” Galloway said, calling the decade-old social medium “slippery but nimble. They built a huge community, spent a bunch of money building it and then they start charging for access. At the same time two years ago, they had zero percent of revenue from mobile, and now it’s 62 percent. They pivoted into a mobile platform which is incredible.”
He lauded the way that Facebook has marketed Instagram up to now — part of the social media giant’s “pay to play” strategy that has brands from Michael Kors to McDonald’s advertising on the image-driven mobile app.
Facebook uses Instagram as a VIP room of sorts for its advertisers, Galloway said. In order to advertise on Instagram, one needs a Facebook representative, and in order to get a Facebook representative, he estimated that marketers have to spend at least $1 million on Facebook. “Unless you’re doing seven figures plus with Facebook you can’t advertise on Instagram.”
An area where Facebook has failed to meet expectations, however, is social commerce. L2 said this is because American and European consumers do not yet possess a social commerce orientation — compared with Asia, where 40 percent of people have purchased from a social platform.
There is one social media app that’s starting to demonstrate traction in the shopping space: the almost four-year-old Wanelo. Billed as a digital mall that boasts more than 11 million users, 350,000 digital stores and more than 20 million products, presence on the platform is quickly becoming a priority for brands.
Urban Outfitters reported that its Wanelo shoppers convert at a rate four times higher than any other social network and for Nordstrom, Wanelo was the fastest platform to reach one million followers. At WWD’s CEO Summit last week, Wanelo founder and chief executive officer Deena Varshavskaya said the product was born out of necessity, as other social networks failed to address the specific set of problems that an online shopping platform has to solve — namely if a product is in stock, if the store has it in a shopper’s size and if it’s on sale.
The point of differentiation here is that users who log onto Wanelo are looking to shop since it is the sole function of the product.
Looking ahead, Galloway said that for the fashion and retail worlds specifically, Instagram and WeChat are the leading destinations that brands should be focusing on now.
Data showed that Adidas is active on the most platforms of any brand in the study, with a presence on 13 of the 17 social platforms. The German activewear brand was followed by Gap, Uniqlo and Asos, which each maintain a presence on 12 platforms. Despite this, only an elite group of three — Burberry, Chanel and Dior — have solidified positions in the top 20 percent (for followers and engagement) across every Western-based platform where they’re active.
This proved to Galloway that yes, there is a lot of experimentation with brands on social platforms, but it’s not mandatory that they’re active on each and every one.
“Brands don’t need an active presence on 12 platforms, just like how they don’t advertise on 12 different mediums,” Galloway said.