About 17 months ago I posted a blog about the dangers Facebook posed to the dominant Mail and Messenger products in Australia, owned by Ninemsn and Yahoo!
The full post is here – https://talkingdigital.wordpress.com/2009/11/15/facebooks-big-chance/
In it I wrote: “Facebook – either by accident or design – now has its sights set on a bigger scalp – the local reliance on Yahoo! and MSN on traffic, revenue and engagement from their email and messenger properties.”
“For many, it’s replacing email and messenger – or at least reducing the user’s reliance on these tools.”
I went on to talk about both MSN and Yahoo!s reliance on these tools to beef up their respective network sizes. Their reliance on these 2 products is significant.
The reason I am revisiting this topic is because I now believe Facebook is a much larger threat to the big 5 than many think, and it has the power to become effectively a “4th Free to Air” … ie, a property that could command similar revenue scale to their FTA TV stations. 2011 is the year this will start to really happen. And it will happen quickly.
– it’s simple to buy
– minimal formats
– de-complicates a convoluted ecosystem
– creative agencies have ‘bought into’ it and have discovered ways to make money from it
– it’s a lower touch option for media agencies than a 50 line media buy
– brands have bought into it (most importantly) as usage is ubiquitous
– it’s a digital ‘champion’ that the new generation of ‘digital strategists’ actively lobby for (unlike most sites established pre 2004 which are often now considered ‘old’)
– It now has numbers that are starting to rival TV (ie big chunks of oncurrent users during key times – evenings, daytime)
The beauty of becoming a ‘4th Free to Air’ is potential access to 100’s of millions of ad revenue and the very real opportunity Facebook and Google will command, between them, a monster chunk of Australian digital ad revenue.
Most of Facebook’s gains will come from the large ‘macro’ players – mostly big sites that have seen significant revenue as a result of large user numbers.
If Facebook can do this sort of ambush globally, it makes the $50b valuation that Goldman Sachs and their clients bought in at seem low.
So anyway, back to the original topic. That is, Facebook’s erosion of the Mail and Messenger products in AU.
Let’s have a look at some comparisons between September 2009 and January 2011. Numbers have been taken from the same source, Neilsen Netview.
Nov 09: 5.38m users
Jan 11: 3.57m users
Nov 09: 4.07m users
Jan 11: 3.57m users
Nov 09: 618k users
Jan 11: 473k users
Nov 09: 1.78m users
Jan 11: 1.48m users
These numbers aren’t great – but the core issue is these 2 products are absolutely key to boost overall network numbers and generate a significant amount of the time people spend on the sites (which is the widely accepted metric for loyalty and engagement)
Hotmail has been the foundation of MSN for years and it is being quickly eroded. Yahoo’s Mail product has never been a big player in AU but it’s still decreasing off a small base.
The big strategic issue is replacing the time people used to spend on these properties across the large portals and moving them into other areas – ie, decreasing your reliance on these particular properties for repeat visitation.
In September 2009 users spent a total of 1.96 billion minutes on the site. Of those minutes, 1.68 billion were on Mail or Messenger.
In January 2011, users spend a total of 998m minutes on ninemsn, of those 670m were on mail of messenger. The time spent on mail and messenger has dropped per month by 1 billion minutes. That is massive whichever way you try and cut the data. 67% of time spent on the site is across 2 products in rapid freefall.
What’s more, total time spent on the site between Sept 09 and Jan 11 has dropped by almost 50%
In September 2009 users spent 567 million minutes on Yahoo!7. 355 million of those minutes were on Yahoo! Mail and Yahoo! Messenger. This represented 63 per cent of total time spent on the site.
In January 2011, users spent 451m minutes on Yahoo!7. 254m were spent on Mail or Messenger. This represents 56% of all time spent on the portal.
This wouldn’t be news to either MSN or Yahoo!, and both for the past 3+ years would have been working on ways of decreasing their reliance on these 2 properties. Group buying, category based content specialisation and Video are 3 of the areas both are looking to to provide growth over the next 3-5 years. Both have made some excellent moves in these areas over the past 2 years.
Still, it shows how quickly Facebook has decimated 2 of their pillars and the significant impact this has on both inventory and time spent. Both ninemsn and Yahoo! have recently reported strong local numbers and EBIT, but there is still significant pressure to build these aggressively over the next 3 years and Mail and communications products (and their longer term health) play a pivotal role in user recruitment and retention.
If Facebook can continue to evolve its ad product, and hold audience in numbers and time spent, it might just get close to realising the potential its huge valuations place upon it.
For email and messenger the outlook isn’t so good. Messenger in particular looks terminal. Email – a touch better health wise – but losing relevance and more importantly, facing serious competition for advertisers wanting lower cost demographic targeting options.
Plus there’s the rumours Google will start adding display ads to GMail.
Interesting times ahead.