Facebook’s advertising revenue has increased dramatically over the past few years, with a total of $2.9 billion reported in Q2 2015. What’s more significant is where the revenue is coming from—76 percent of its total advertising revenue derives from mobile advertising . Facebook is taking a piece of the digital ad pie from other players by offering unrivaled, innovating ad products that include Atlas and seamless ads optimized for mobile consumption.
In Q3 2014, Instagram overtook Facebook in average brand post frequency, as brands shifted to view Facebook as a traditional media platform and Instagram as a platform to build community. In the past year, this trend has continued and the gap between the platforms has widened. The average brand now posts about 10 times each week on Instagram, compared with about once a day on Facebook. It’s important to note that brands are not yet seeing the same post fatigue on Instagram as they did on Facebook—followers are not becoming disengaged with more brand content.
To understand how the social platforms landscape has continued to shift, L2 analyzed the changing strategies of four luxury brands: Chanel, Dior, Louis Vuitton, and Christian Louboutin. While Chanel, Dior, and Louis Vuitton all show similar trends in platform usage and interaction, Louboutin exists as a compelling outlier. Louboutin’s strategy demonstrates the efficacy of Instagram as an organic platform and reinforces the conclusion that the platform remains the best place to play for brands with smaller media budgets.
Most brands are global, which requires significant investments in local platforms to reach every audience. Many rely on local Facebook pages but do not realize the limit to its reach. While brands are posting on localized accounts, the number of interactions under-index given the number of posts for all countries excluding the US and Brazil. For some markets, investing in Facebook is not the solution to garnering engagement.
Social platforms are beginning to disrupt the media industry as cord cutters reject the traditional TV model and opt for premium options that do not subject them to excessive advertising. Brands are desperate to reach the young and wealthy cohort, and are turning to social media to fill this void. Through rapid video innovation, social media platforms are attempting to service the demand of brands trying to reach this valuable demographic.
Looking at the Beauty brands in our index, only three brand channels have garnered both above-average total channel views and share of organic views: Chanel, em Cosmetics and YSL Beauty. Over half of the most-viewed videos published in Q1 2015 were repurposed TV advertisements. However, the success of these advertisements is largely spend-dependent. While the top three most-viewed brand advertisements uploaded to YouTube in Q1 2015 generated a combined 15.2 million views, just one percent of these views were organic.
The messaging ecosystem may seem fragmented at first glance, with multiple platforms vying for the lion’s share of monthly active users. However, comparing Facebook Inc. owned properties to other messaging platforms reveals that Facebook takes the lead in most countries except for China and Japan. Facebook’s attempt to dominate the messaging market indicates the increasing importance of mobile messaging platforms for the years to come.
When it comes to features, APAC messaging apps lead the pack with their constant innovation. WeChat is not just a messaging platform, but rather a lifestyle app with Uber, loyalty programs, an e-commerce platform, and a P2P payment platform rolled into one. We expect Facebook and other messaging platforms from the U.S. to follow suit.