Twitter and the difference between broadcasting, retweets and having value-adding conversations

I have been using Twitter for over two years and have been through a long learning curve. Besides having to get my head around how to use the tool effectively, I have received constant advice from the community on how I should conduct myself on the platform so as not to upset anyone out there. All advice revolves around how to tweet and what to tweet. This is categorised into three areas, namely broadcasting, retweets and having conversations.

I have also started a discussion on this subject on the Social Media Marketing – South Africa group on LinkedIn, where I welcome your contributions. Join the LinkedIn discussion 

Broadcasting

Broadcasting is a one way stream of information, utilised mainly by the marketers out there using Twitter with a Marketing 1.0 mentality. This equates with the likes of TV, billboards, magazine ads and leaflets. As a Twitter user, if you broadcast too much, those following you will lose interest UNLESS the content you are sharing is value-adding, interesting, useful and is not repetitive. If you are providing original content, you can get away with this. If you look at the likes of Harvard Business Review, they are a content originator and attract thousands of followers.

Retweets

Retweeting is important, especially if you want to generate online relationships with specific individuals. If you are retweeting a specific person with the intent of generating some form of an online relationship, do not expect immediate reciprocity. If, however, you continue to retweet their content and you are getting nothing back in return, move on. Do not retweet a content originator that has thousands of followers and expect anything in return. In most cases, this will not happen, unless they see specific value in it. Do not spend too much time retweeting well know content originators because in most cases, like-minded individuals are following and consuming their content already.

Having proper conversations

This is the real differentiator for those that want to use Twitter as an effective tool because this is what Twitter was originally designed for. This is the element that also takes up the most time and effort because you have to go out and find people to talk to and initiate conversations. Seasoned twitter users that actually have real conversations on an ongoing basis have racked up a tweet count in the tens of thousands. Check out Roos van Vugt (@roosvanvugt) of Deloitte in The Netherlands. Her tweet count is over 67 000, most of which is real conversation, not broadcasts and retweets. These individuals make the real connections and build proper relationships on Twitter.  

Keep the balance right

Some people use Twitter purely for conversation. Others represent a company and want to promote themselves, their company, products, services and solutions. You can do this but in limited doses. It is best to provide value-adding content which can assist people in making decisions or solving problems. If you are perceived as a guru or thought leader, people will eventually look at your website or blog and consume the product-related information you have there. Just don’t push it down their throats. Ensure a healthy mix between broadcasts, retweets and conversations. If you can get this right, you will achieve all your objectives, namely:

• Building sustainable online relations on Twitter
• Getting support from fellow Twitter users
• Gaining visibility and attracting followers
• Promoting yourself, company, products, services and solutions  

In conclusion

This is my take on using Twitter effectively. I do not believe I have got it right yet but I will endeavour to improve on an ongoing basis. I have made the decision to switch off my “bot” so all tweets from now on will be generated by hand. I do believe that Deloitte has a wealth of original content which I will continue to share with my followers, however I will work hard to get conversations started around the content and involve Deloitte subject matter specialists where appropriate.

Have you anything to add to this? I will appreciate any input, advice and points of views. Besides providing comments on this blog, I have also started a discussion on my Social Media Marketing – South Africa LinkedIn group. I look forward to your participation.

PLEASE share this blog post with your network!

 

 

Filed under: Executive Leadership, B2B marketing, Deloitte, digital marketing, digital media, social media, social media marketing, social networking, social networks, Twitter

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With this in mind, we have put together a short survey which covers most of the pertinent questions relating to the content we share and your communication preferences. The survey shouldn’t take you more than five minutes to complete.

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Filed under: Executive Leadership, articles, blog, communication preferences, Deloitte, email, LinkedIn, smart phones, thought ware, Twitter

Finding influencers in real-time

Twitter is increasingly being used as a source of breaking news. This is a good source of content but the level of context does not paint the full picture. For example, a person can say something that is positive or damaging to your brand, however, viewing this on a twitter feed of a hashtag could result in the trend setter being lost as the conversing community grows. More importantly, it is not always obvious how influential participants are coming into the conversation (within their specific social networks), nor how influential they are during a specific conversation.

Deloitte South Africa is able to overcome both of these problems with a visualisation of a twitter feed. The person that started a conversation will appear in the center of a map of the conversation. As the conversation grows, the people that contribute the most to the discussion (hash tag) will move to the centre of the map. In addition, you are able to quickly identify who the most influential participants are (represented by the size of the node) as they join a conversation. Finally, one is able to map multiple conversations at the same time using multiple hashtags (represented by point of entry and node colour).

To illustrate this, Deloitte created a visualisation of the twitter conversation during the South Africa – Fiji rugby match on Saturday 8am (GMT+2). The hashtags used for the search were #RWC2011 and #BOKKE. The video below shows a small clip of how the twitter conversation started. Visuals are richer than plain text, so we will explain what the video represents. Each node that appears is a unique user on twitter. The purple nodes are the users that used the #BOKKE tag and will enter the screen from the left. The light green nodes are users that tweeted with the #RWC2011 tag and will enter the screen from the right. A line between the nodes represents a tweet from one person to the other. This is so that we can visualise a tweet where one person mentions multiple people with multiple lines. The size of the node is the Klout score. Klout is an online tool to estimate numerically the level of influence a person has. During the video I will be able to rotate the map along the z-axis and you will be able to see a difference in the height of the nodes. The difference in the height is due to the number of mentions that particular user has. The greater the number of mentions, the higher the level of the node.

Watch the Youtube video

An important analysis of the map is that the people in the center of the map are visually and literally the center of the conversation. This is intuitive as the nodes in the center are usually bigger, implying a high Klout score.

The graph below shows the number of tweets that arrived during the match. The green line is the #RWC2011 tag and the blue line is the #BOKKE tag. We noticed that twitter becomes more frenzied as a point is scored. People also make more comments after a match.

The application for this technology is that you can map a conversation to understand the creators of the content, their relative level of influence, and the context in which a conversation is flowing. This enhances traditional Online Reputation Management. Businesses are now able to understand both historical and real time influence within conversations and manage the viral spread of a breaking topic with far greater precision using these solutions.

To find out more information about how this technology can give you an advantage please contact Andre Hugo @maxrsa or Mithun Kalan @mithunkalan on twitter.

Filed under: Executive Leadership, Technology, Media & Telecoms (TMT), #RWC2011, Bokke, Conversations, Data Analytics, ORM, Twitter, Visualisation Graphs

The $50 billion Facebook conundrum

 

Over the last few  months you will have undoubtedly come across articles in the Financial Mail or other financial magazines reporting on mind-boggling valuations for social media companies such as Facebook, Twitter, and Skype to name but a few. These “implied” valuations pegged the value of Facebook at $50 billion and the value of Skype at $8.5 billion and most recently, Twitter’s valuation of $7 billion.

Before we consider Facebook’s implied valuation, let’s look at why potential investors would like to get their hands on Facebook equity, which is currently privately held by Mr Zuckerberg and a few other select investors:

• Facebook has more than 600 million active users. If Facebook was a country in its own right, it would be the 3^rd most populated country in the world, surpassed only by China and India, each having a population of more than a billion people

• 50% of these estimated 600 million active users log on to Facebook on any given day

• The average Facebook user has 130 friends

• Facebook users spend over 700 billion minutes per month on Facebook, which translates into each active user spending approximately 55 minutes daily logged on to the social media site.

These numbers are quite astounding, but how do these figures translate into revenues and ultimately investor returns, especially given the fact that registration and actual usage of Facebook is free of charge?

It all comes down to one word- “advertising”. To an advertiser, the ability to specifically target its potential customer base is more important than blanket advertising.

Consider the following scenario: when you create your “free” Facebook account you divulge personal information such as your age, relationship status, current employer, current hometown, music and movie interests among other information. As an advertiser having access to this information is invaluable as it allows you to launch an effective, targeted advertising campaign to your potential market.  So, for example, you could target your advertising to say: single males between the ages of 27 to 35 who reside in the Sandton area, which would imply a higher earning potential, all of whom share a common love for a luxury German sports saloon.

The ability to effectively target your likely customers presents a higher return on advertising spend than a campaign that might reach a greater audience that may or may not include your potential customers.

The recent suspects

During May 2009 Digital Sky Technologies acquired a 1.96% stake in Facebook for $200 million. This would imply a valuation of roughly $10 billion for a 100% stake in Facebook (ignoring a control premium).

As recently as January 2011, investment banker Goldman Sachs acquired a 1% stake in Facebook for $500 million. This would imply an equity valuation of $50 billion for a 100% stake in Facebook (ignoring a control premium). This valuation appears excessive when taken in the context that revenues for Facebook for 2011 are estimated to be roughly $2 billion.  This implies a 25 times revenue multiple.

Aswath Damodaran, a professor of finance at the Stern School of Business at NYU and a world-renowned valuation expert raises the following two major concerns to bear in mind when looking at these transactions and their implied values in isolation, viz:

Question 1: Can one extrapolate from a single transaction amount to an overall value?

Answer (a): Yes, as long as the transaction is at arm’s length and all that you are getting for your investment is a share of the equity in the company.

Answer (b): It is possible that Goldman Sachs might stand to gain from the following additional benefits that through extrapolation could result in a misleading estimate of value:

• Investment opportunities for Goldman’s clients: As part of the deal, Goldman will be raising $1.5 billion from its clients to invest in Facebook. While this may seem to be a favour that Goldman is doing for Facebook, the reality is that Facebook is a hot company to invest in and this will allow eager investors an exclusive entrée into the company.

• A front seat for the Facebook IPO: If at some point in time, Facebook decides to go public, Goldman is likely to be the lead underwriter and reap a big share of the commission.

• Private wealth management services to Facebook’s potential billionaires and millionaires: When Facebook goes public, Mark Zuckerberg and a number of other executives will have the capacity to sell their shares in the market. While the wholesale cashing out of equity positions immediately after the IPO is unlikely, it is likely to happen over time, at which point these very wealthy individuals will need some private banking help and Goldman will be there to provide that help.

Question 2: Why would a company worth billions choose to stay private, when it clearly has the option to go public?

Answer: Conventional wisdom has always been that companies like Facebook should get a more favourable response from offering shares in the public market place than from private offerings to venture capitalists and large investors, but yet Facebook remains reluctant to go public. Damodaran believes that the following reasons, rational or otherwise, might be why Facebook is holding back with the IPO:

• Extending the tease: Based on the favourable publicity that Facebook has got from the Goldman deal, it does not look like waiting to go public is hurting Facebook, at least for the moment. In fact, it may be making Facebook an even more desirable investment to those who cannot invest in it right now.

• “Proprietary” information: While this might not be a big factor for Facebook there are some companies that choose to stay private because they are afraid of revealing proprietary information about their products/services to the general market. Instead, they can provide the information, with sufficient restrictions on disclosure, to a few wealthy investors who can then invest in the company.

•  Founder idiosyncracies: If the founder and majority shareholder in a company decides that he does not want the company to go public, the company will not go public. In the case of Facebook, it is entirely possible that Mark Zuckerberg has decided that he does not want to take the company public and he does not seem the kind of person who can be dissuaded easily.

•  Regulatory and information disclosure concerns:  From Sarbanes-Oxley to SEC restrictions, public companies are constrained in ways that private businesses are not.

• No valuation scrutiny: As a publicly traded company, no matter how well regarded it may be, the market valuation will be questioned by sceptical investors. Scaling value to earnings or book value, investors will argue that the company is overpriced, relative to other companies in the market. (Take a look at Apple, Google and Netflix, all big winners over the last year, and you will see this phenomenon at play). Facebook has the best of both worlds, at least for the moment. We get glimpses of its immense value, each time a transaction is made, and no real way to examine whether the value makes sense, since we do not have access to much of the information we need.

Is that another dot.com bubble I smell?

In a recent interview with The Daily Maverick, Antonie Roux, CEO of MIH Holdings, commented that media giant Naspers hasn’t been taking out the cheque book as often as it used to in earlier years. Roux further comments that he believes that the market capitalisation of Facebook is “unrealistic”.

This is a very interesting comment, especially considering that Naspers owns approximately 29% of DST which, in turn, is rumoured to own approximately 10% of the share capital of Facebook.

If we cast our minds back to 1999/2000 most of us will remember the massive multiples on which Technology companies were trading before the correction that subsequently followed.

As was the case with Apple and Amazon that survived the previous correction, a few companies will emerge as winners from the looming correction, but undoubtedly there will be more technology companies that won’t be as lucky as the select few.

In conclusion, the true value of Facebook will only become apparent once it files for an IPO. Subsequently the value of the shares will be dictated by the price that a willing buyer and a willing seller is prepared to pay for the share on the open market. Until then, we will be waiting with bated breath,

Article compiled by Burger Nieuwoudt (Manager at Deloitte Corporate Finance) and Suvir Rambritch (Associate Director at Deloitte Corporate Finance)

References:

Aswath Damodaran blogspot – Musing on Markets, The Facebook valuation!

The Daily Maverick – “Antonie Roux on Naspers’ success – and the new tech bubble” 27 June 2011

Filed under: Executive Leadership, Financial Services, Corporate Finance, Facebook, IPO, Skype, social media, Twitter, Valuation

Older business executives still prefer email

 

by David Graham, Digital Channels Executive at Deloitte Consulting

I ran a poll on LinkedIn where I asked business executives how they would prefer a professional services organisation to communicate with them. The options I provided were email, the company blog, Twitter and LinkedIn. I made a point of communicating the poll through all the options provided in the poll. To be quite honest, I am not surprised with the results of the poll  It is quite apparent that email communication is the preferred option, followed by Linkedin, then the company blog and Twitter. As the Digital Channels Executive at Deloitte Consulting I participate across all digital channels and keep a close eye on developments and research results in the digital marketing industry. These are my observations and findings:

• Whilst LinkedIn is the preferred social network globally for business professionals, there are still those who do not use LinkedIn at all 
• Many business executives may have registered on LinkedIn but do not use the network on a regular basis for communication purposes
• Whilst many business executives have indicated that email is the preferred communication channel, do not abuse the channel. Keep communication short and relevant
• The poll I ran indicated that 45 year plus business professionals prefer email. Do not ignore the younger demographic that DO participate on blogs, Twitter, Facebook, etc 
• Whilst the older demographic prefer email, a large majority also use LinkedIn. Whilst these individuals do not actively participate on blogs or Twitter, they will have visibility of blog posts and Tweets if these are incorporated into your LinkedIn profile and web pages  

In summary, whilst a weekly email is the preference, I would advise the provision of links to pertinent blog posts and to your corporate website, and as mentioned in one of my points above, incorporate blog posts and Tweets into your LinkedIn profile and web pages and incorporate tweets into your blog. Whilst the majority of business professionals prefer email, remember there are others that do participate in Twitter, Facebook, blogs, etc and these individuals are either senior managers and executives, or will be in the future.

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Filed under: Executive Leadership, B2B, B2B marketing, B2B social media, blog, blogging, blogs, digital marketing, digital media, email marketing, LinkedIn, marketing, online marketing, social media, social media marketing, social networking, Twitter