Before I start I’d just like to say that at Blab It Canada we make a living on helping others achieve success with their Social Media. All the networks we support and offer service for we do because we believe they have both a practical and investment use. We know Social Media will be here to stay for a long time, but that doesn’t mean there hasn’t been and won’t be bumps in the road along the way. The recent Twitter IPO got me thinking; are we in a social media bubble?
Twitters IPO debuted at $26 last week and immediately rose to $45 per share with a market cap of $33 Billion. This made Twitter instantly more valuable than over 300 companies on the S&P 500 index, did I mention Twitter is a company is not currently profitable?
If you look at previous Social Media IPOs you’ll basically see the same thing. Excitement for the IPO that initially results in a massive spike in the price per share followed by a downfall to a more realistic value which ends in a more typical, gradual rise. The trick for investors is to spot the ones that will go back up and the ones that will fail, not an easy task.
As they say, “follow the money.” But what if there is no money? Usually when investing you ask yourself key questions about a potential investment, is the company making money? Do they have a system to generate revenue? Are their future plans sustainable? Companies like Facebook are set up for sustainability and that was easy to see at the time. They have a large and mixed demographic that, for marketers, makes it easy to target their exact customers using all kinds of unique data such as interests, hobbies, preferences and even the apps that they use. This obviously makes it easy to say “yeah, we can money here.” Then we have Twitter, a lot of people use Twitter but using its ads as a marketer doesn’t compare. Ads expensive, the analytics aren’t great, but we all need to keep in mind that, just like Facebook, this will all improve with time.
To give you an idea of the price comparison between Facebook and Twitter, we looked at the industry averages for running campaigns on each platform and the data speaks for itself:
- Average CPM (Cost per Thousand Impressions): Facebook $0.59 vs Twitter $3.50
- Average RPV (Revenue per visit): Facebook $0.93 vs. Twitter $0.44
- Average CPC (Cost per Click): Facebook $0.50 vs. Twitter N/A
- Share of Social Referred Sites: Facebook 62% vs Twitter 6.8%
- ROI: Facebook 109% vs. Twitter N/A
- Mobile CPC: Facebook $0.40 vs Twitter N/A
As you can see, Twitter has yet to release the information on a few key metrics and based on the ones we do see Twitter has some work to do in order to make ads more affordable for smaller and mid-sized businesses. The next year will be crucial and determine whether Twitter can rise to the level of Facebook or crash and burn like many before it.
