Posts Tagged 'Facebook'

Three Companies that Apple Could and Should Buy

By: Tim Baker
It’s amazing how a company that went from the brink of bankruptcy 13 years ago now has $51B in cash reserves,  market cap of $275 Billion and a share price of over $300. Last week, CEO Steve Jobs said that Apple plans to hold on to it’s $51B in cash to pursue “strategic opportunities.” As their war with Google continues to grow as does threats from music startups that could potentially dethrone iTunes as the de-facto digital music destination, here’s a list of companies that could be huge acquisitions for the Cupertino giant to buy that could potentially change the shape of the tech industry for decades to come.

Facebook
Facebook is currently valued at a little over $30B. While it would be an enormous investment for Apple to make, the rewards from purchasing the world’s number one social network could have seismic effects across all of Apple’s verticals. It’s pretty safe to say that Apple will be launching a music subscription service in the future and as physical music formats continue on their death march, streaming music startups such as Spotify, MOG and Rdio are winning people over left and right. As smartphone and home broadband penetration continues to expand, it’s only a matter of time until most music fans are enjoying their music in the cloud. Apple realizes this and it’s most likely why they purchased Lala.com last year. Should Apple buy Facebook, every user could have access to a streaming iTunes service instantly. Apple’s new music social network Ping would also have a much better home than living in the iTunes desktop & mobile software and Facebook credits could be used to purchase video rentals.

Putting aside the benefits that an embedded iTunes store from within Facebook could have, the most appealing thing that comes with the purchase of Facebook is their data. Apple’s foray into the mobile advertising business with iAd has put them toe-to-toe with Google and owning Facebook would give them ownership of the very lucrative Facebook ad platform to compete on the desktop as well. Facebook ads allow marketers to deliver very hyper-targeted messages based on the data found in a user’s profile and Apple’s merging of that information with the data they receive from their iAds could very well shift the power in online advertising for years to come.

Netflix
Netflix currently has a market cap of $9B and a subscriber base of over 15 million. While Apple dominates the digital music space, the same can be said for Netflix with regards to digital video. While Netflix started out as a DVD by mail service, their business model has shifted towards streaming video and as they continue to roll out streaming-only plans, their subscriber base is expected to explode. Analysts expect Netflix to have over 19 million subscribers by the end of 2010, which totals about 6% of the US population or 17% of the estimated 116 million US TV households.

An acquisition of Netflix would allow Apple the flexibility to focus on streaming video rather than the pay-per-view rental or pay-to-own model that they’re stuck in now. Streaming video is the way of the future and it’s only a matter of time when Blu-Ray users will see they can get the exact same audio and video experience via the cloud than on an overpriced physical disc that takes up space and is prone to scratching.

Additionally, a purchase of Netflix by Apple would give them enormous market penetration within streaming devices already in-use, such as video game consoles, TiVos, Roku Boxes and Netflix-enabled televisions. While the newest incarnation of the AppleTV is a huge leap forward compared to its predecessor, future success in streaming video will not come from being one of many players in the hardware game – one must control the content.

Last.FM
Last.FM is a popular music social network that founded in the UK and was acquired by CBS Interactive for £140 Million in 2009. While it may not have the cache or price tag as Facebook or Netflix, Last.fm would give Apple something that it’s failed to crack thus far – success in social media.

It’s pretty safe to say that most diehard music fans are finding Apple’s Ping social network to be a joke. Aside from the very lackluster initial offering of artists involved, it’s pretty much the most anti-social social network of them all. Artists that are on Ping are not interacting with fans like often found on Facebook or Twitter. Ping is basically a glorified RSS feed of artists news and events and feels as warm and welcoming as a hospital waiting room.

I don’t see Ping taking off ever in its current form. There’s no way for artists to create their own accounts; an Apple staff member must create the account on their end. There’s also a ridiculous list of rules for entertainers participating on Ping that is nothing if not laughable.

Music loves have embraced Last.fm for multiple reasons, but the three that are most popular are 1. scrobbling, 2. streaming radio and 3. social networking. Scrobbling is basically Last.fm’s way of indexing all the music you listen to on your computer or iPod and keeping a running record of it. It uses that data to show which artists and songs are most popular on the site as well as allows users to meet other music fans based on their compatible music tastes. Last.fm also leverages their API so other music services can import their data into a user’s Last.fm account for even more ways to scrobble music. Two great examples of the API use are Spotify and Blip.fm. Ping currently only automatically tracks your iTunes purchases. The streaming radio on Last.fm also allows users to listen to Pandora-like stations built for them based on their actual listening habits.

While a purchase of Last.fm would be a drop in the bucket for Apple, it would allow them to buy into an established and trusted network of music lovers. They could also leverage all the data they obtain from users on their listening habits to offer a better targeted buying experience within the iTunes music store.

I believe all three of these aforementioned services provide excellent growth opportunities for Apple as they continue into the next decade. I’d love to know what other companies you think Apple could and should realistically buy. Leave your thoughts in the comments.

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Why Twitter Followers are Better Than Facebook Fans

By: Tim Baker

An informative article in today’s eMarketer shows that Twitter followers are more likely to induce advocacy and future purchases than those on Facebook. According to their data, 37% of respondents were more likely to purchase from a brand after following them on Twitter as opposed to only 17% of those that “like” a brand on Facebook.

The numbers are also pretty similar when asked if they would be more likely to recommend a brand after following them on Twitter or Facebook.

I can’t say that I’m surprised one bit by these numbers, and I believe the reason is simple: Twitter is a platform that attracts an audience receptive to marketing messages much more than Facebook. A great quote that I wish I could say I came up with goes something like this: “Facebook is for the people you know while Twitter is for those you want to know.”

Statistics tend to show that there’s a fork in the road that many new Twitter users reach. There’s a marked drop-off by users with only a handful of tweets that abandon the service versus those that continue to embrace it. Many of those that find value in Twitter gain that value from its function as a news platform. In fact, 44% of adult internet users aged 18-29 and 45% aged 30-49 are getting their news online.

Facebook is not a good platform for delivering news. The default front page view does not show a user every post from all of those in their network but rather an abbreviated feed that Facebook feels is most relevant to them. Additionally, the function of setting up lists, which are an excellent way to segment content on Facebook and could provide value in the service as a news aggregator, is vastly underused.

Lastly, a factor that I believe plays a part in gaining more quality followers on Twitter versus Facebook is the fact that it’s generally a two-step process to follow a brand as opposed to the one-click “like” on Facebook. One that visits a brand page and sees a “follow us on Twitter” option has to click through to the Twitter profile page of that brand, and from there they can choose to actually subscribe to their stream. This multi-step process not only cuts down on the number of more casual, less-likely-to-buy followers but also gives potential subscribers a taste of one’s stream before they are convert to a follower of the brand.

From my own experiences as a marketer, I consistently see this play out time and time again. Brands that have a much greater number of Facebook fans than Twitter followers that are serving their audience with the same discount savings offers consistently showing a higher return via Twitter. This is not to say that Facebook should be ignored, because there’s definitely  value in reaching a large audience with marketing information. What I feel this says is that those brands that are late adopters to the social media game and still don’t see value in Twitter, or are not using the site to its greatest potential need to understand that from a lead generation perspective, Twitter must be a part of their social media strategy. Social media is a quality versus quantity play and nowhere is it more apparent for brands than on Twitter.


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