Social media adverts turf war heats up

It is five months since General Motors last spent a cent on Facebook advertising. The US carmaker's revelation in May that the $10m it spent on ads had failed to deliver returns stunned the social network on the eve of its initial public offering. Facebook is yet to win back the carmaker's business.

But GM – one of the world's largest advertisers – is no social-media refusenik. Its brands, such as Chevrolet, Buick and GMC, have been actively buying ads on Facebook's main challenger, Twitter, for two years now.

Andrew Dinsdale, Chevrolet's director of digital and CRM, says of the microblogging site: "It's a unique medium and offers us unique opportunities to engage customers in the social space on a level no one else can match in this particular way."

"From research, we know that Twitter users really care about what's happening with businesses," Mr Dinsdale adds. Chevy has seen response rates to Twitter ads of typically between 1 and 3 per cent. "That's several orders of magnitude higher than traditional online display advertising."

GM's endorsement of Twitter is a powerful one in the growing turf war between the leading social media firms, which are pushing out many new capabilities for marketers in recent months.

As competition grows, a once-collaborative energy among the top social networks is fizzling out as they each compete to maintain their own slice of the internet landscape.

Facebook, Twitter, LinkedIn and other social media sites are increasingly at war, shutting down channels of data-sharing and cross-promotion, and copying each other's features as they seek to be more independent and to capture more of their users' time.

"All of them are under intense pressure," says Jed Williams, an analyst at BIA/Kelsey. For Facebook and LinkedIn, being public companies "fundamentally changes the way you think about growth," he adds.

Although it was bruised by GM, Facebook can point to positive results from other global brands such as Electronic Arts, which attributed $12.1m in incremental sales from Facebook around the launch of its Battlefield 3 game, according to EA data shared by Facebook.

GM and EA sit at opposite extremes; Facebook states that on average, 70 per cent of brand marketers see a return of at least three times their investment. One big advantage Facebook can flaunt is its scale, with 1bn active users dwarfing Twitter's 140m.

"Facebook's reach is unprecedented – every day a brand has the ability to reach half a billion people "the equivalent of almost five Super Bowl audiences," says Brad Smallwood, Facebook's head of measurements and insights. "That's very important for marketers because reach drives sales."

Yet Facebook's large scale has led to suggestions that it is throwing its weight around, competing with some of the many developers that operate on its vast platform. Its introduction of a "want" button last week – which allows users to add images of clothing or homewares shared by retailers to a "collection" or "wishlist" on their own profile page – was widely seen as an attempt to head off competition from Pinterest, the online scrapbooking community which has seen rapid growth over the past year.

In another social-media skirmish, Twitter last month ended its users' ability to funnel all their tweets to a connected LinkedIn account, one of several such moves that has raised eyebrows in Silicon Valley.

Within weeks, LinkedIn responded in kind, rolling out the ability to "follow" public figures, such as Barack Obama.

Eventually, LinkedIn will expand the number of people who can be followed, just one of a series of new features, all reminiscent of facets of Twitter, Facebook and Tumblr.

"They are indeed beginning to mirror each other," says Norm Johnston, a global digital leader at Mindshare Worldwide, a WPP agency.

Compared with Facebook, Mr Johnston says Twitter's simpler set of features can limit its appeal for the more "emotive" online experiences that consumer goods brands want.

"However, we're finding Twitter better at generating social spikes, PR and buzz," he says. "Facebook doesn't really have that same instant dynamic." Twitter's advantages come at a higher cost for marketers.

"It's more expensive to get followers on Twitter than it is to get likes on Facebook," says Simon Mansell, chief executive of TBG Digital, a social media agency, adding that the cost-per-click on Twitter also tends to be higher.

Yet at an estimated $288m this year, according to eMarketer, Twitter's advertising revenue is far smaller than Facebook's projected $4.23bn. Under pressure to narrow that gap, observers say Twitter is closing more and more doors in its previously wide-open system.

Mr Williams at BIA/Kelsey says. "It's tough to build a streamlined advertising experience for advertisers if you have to syndicate that across a host of third-party apps."

Adam Bain, Twitter's head of revenue, denies that the effort to create what he describes as a "consistent experience for our users" has been driven by commercial motives.

"It more has to do with when users sign up to immediately understand the value of Twitter," he says, noting that Twitter still works with many external partners and developers. "Twitter is not an island, it's a bridge ... There's a whole world inside of the tweet."

For now, Twitter can claim the advantage in generating more cash from its mobile activity, according to estimates from eMarketer. Twitter's ad revenue on mobile now exceeds its desktop income on a "pretty consistent" basis, says Mr Bain.

"I guess a lot of people in this space talk about mobile being the future of advertising," he says. "For Twitter it's our present."

However, Twitter cannot afford to let up the competitive pressure – even sceptical GM could soon return to Facebook. A GM spokesman says that it is "very encouraged" by its "positive discussions" with Facebook.

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