The Return Of The Fail Whale, Is Roku Streaming’s Cassandra?

1. The Return Of The Fail Whale

Back in the day when Twitter was still fairly new (figure late 00s), the platform would crash on a regular basis. 

It happened often enough that Twitter actually came up with a graphic—the Fail Whale—to let people know that platform was down—”over capacity” was the term they used.

The Fail Whale is back though, in the form of Elon Musk. Or at least that seems to be much of the ad industry’s take on it.

Why It Matters

Let’s start with Twitter’s audience, which they estimate at around 237.8 million monetizable daily active users (mDAUs) or a little more than 10 percent of Facebook’s audience. 

The problem with that number, of course, is that it does not take into account all of the people who have two, three or even four Twitter accounts that they use on a daily basis.

I’m not talking trolls and bots either, though there are millions  of those. I’m talking regular people who may have a separate account for a side hustle or hobby. Or they post for their department at work, while also maintaining a personal account or two—in the early days of Twitter, it was considered Best Practices to nab all of the potential handles you might want, lest a troll get a hold of them.

The other issue with Twitter’s audience is that it is fairly random. Meaning that there are few targetable demographic categories that can be efficiently reached on Twitter. Compare that to, say, TIkTok, which is a great way to reach Zoomers or Instagram, which is a great way to reach Millennials, or even Millennials In The Greater Kansas City Metro Area Who Are Into Fashion, should you wish to drill down deeper.

Twitter’s got nothing, or almost nothing on that front. 

Then there’s the actual impact of the advertising. 

One of the reasons advertising on TikTok or Instagram is so effective is that it seems more natural on those platforms and the information in the ads is often more interesting than whatever else is in your feed.

Compare that to Twitter, where the ad, on the rare occasion when you do notice it, often seems jarring and out of place, especially if your feed is mostly made up of the business, news and political accounts that dominate Twitter. 

All that said, advertising did account for almost all of Twitter’s income. Which is why it’s a big deal that big agencies like IPG are telling their clients that it is time to take a Twitter holiday, and that, as per the Wall Street Journal, mega brands like General Mills, Mondelez, Pfizer and Volkswagen are also putting Twitter on pause.

IPG’s recommendation is an even bigger deal because most of Twitter’s ad clients are big companies. Compare that to Facebook, where most of the ad revenue comes from small and medium sized businesses. So while Facebook barely felt the effects of the post-2020 election boycott because they don’t really rely on big advertisers, Twitter is likely to take a serious hit when other big ad agencies join with IPG to recommend their clients remain off the platform for the foreseeable future.

Ouch.

Then there’s the blue checkmark thing.

Dating back to Fail Whale days, the blue checkmarks were something Twitter largely put in place to protect itself.

The platform was still new and they realized that the same policies that allowed people to post anonymously also made it easy for people to set up imposter accounts. Which was one thing if you were impersonating Justin Timberlake and selling fake concert tickets, quite another if you were impersonating the Lake Woebegone Police Department and telling people their election polling sites had been shut down.

So while lots of celebrities received blue check marks, so did a whole lot of local police and fire departments, schools, churches, public transportation providers and the like. Most of whom are likely to not understand why it is on them to pay to prevent people from impersonating them on Twitter and sowing chaos.

A whole lot of journalists got blue checkmarks too, since it was easy to spread fake news by pretending to be an actual reporter. This was one of the reasons Twitter caught on with journalists of all stripes, many of whom also took advantage of the ease with which they could craft stories based on a few random tweets—saved them the hassle of actually having to do any actual reporting. 

More than that though, it was an acknowledgement that they’d built up an audience, a body of work and a career that was blue checkmark worthy—critical at a time when the newspaper industry was imploding and many were forced to launch freelance careers.

Point being that, as others have noted, it is unlikely that many of those blue checkmark entities will pay for the privilege, either because it seems desperate, or, in the case of small town police and fire departments, they simply don’t have the funds.

For the television industry, Twitter has always been a double-edged sword. On the one hand, it provides an excellent platform for marketing departments to whip up a show’s most engaged fans, allowing them to interact with actors and showrunners in an ego satisfyingly public way, while ginning up interest in a new episode or new season. 

On the other hand, it’s been all too easy to wind up mired in controversy, either from something one of the shows’ stars actually did say, from a manufactured controversy of the sort Twitter’s become famous for, or from a spate of fake news about series dying, actors lying or both, all of which require an unnecessary expenditure of time, energy and dollars to clear up. 

What You Need To Do About It

If you’re an advertiser, you’ll want to think about what you really get out of being on Twitter beyond checking a box saying you’re on all the social media platforms. I suspect you’ll find that there’s not a whole lot of value in advertising but a whole lot more value in providing a customer service valve (for now, anyway) that lets your most vocal customers feel heard.

If you’re Elon Musk and you are serious about charging for blue check marks, it would be great PR if you waive that fee for things like local fire departments, sheriff’s offices, county hospitals and the like. Maybe give them a different color check mark to show that they are trusted public services, or something to that effect.

Oh, and Zoom calls with top advertisers are a good idea too, just put more PR spin on it—it’s a good look for you and for Twitter.

If you are a TV programmer or showrunner, deciding whether it is worth it to continue to engage with fans on Twitter is going to have to be a week by week call based on how drastically—if at all—you see the types of interactions you’re having changing. Just be vigilant. 

2. Is Roku Streaming’s Cassandra?

Depending on who you talk to, yesterday’s Roku earnings call was either a brave example of corporate honesty or an exercise in doomsaying. Regardless, the streaming device manufacturer/FAST owner had some sobering news about the state of streaming advertising, 

In addition to bigger than anticipated Q3 losses and some gloomy Q4 forecasts, CEO Anthony Wood made a whole lot of people’s blood pressure shoot up when he noted that “The first thing companies do in the face of such uncertainty is cancel their ad budgets. Big advertisers that we traditionally get spend from are not spending this quarter. They aren’t spending with anyone. It’s not just they’re not spending with us.”

Which then raises the question as to whether fear of recession is the only reason they’re not spending.

Why It Matters

In researching our upcoming report on advertising on the FASTs, we heard two seemingly contradictory messages: advertisers were excited about the opportunities the FASTs offered, especially the ability to target ads, both by audience and contextually. 

But the lack of standardization across the board was a huge sticking point, causing them to push less budget over to streaming than growing viewership numbers would seem to warrant.

Without giving the whole report away (though none of this is exactly news to people in the trenches) the key areas where the lack of standardization is being felt is in terms of audience segmentation, transparency and (especially) measurement. 

It wasn’t so much that they felt any of these were irreparably broken, it’s just that every programmer seemed to approach them differently and that made it difficult to spend eight or nine digit sums of money in anything vaguely resembling a seamless manner.

The good news is that there are relatively easy solutions to all these problems, most of which already exist.  (You’ll have to read the report to learn what they are.)

The other good news is that there is a feeling that as Netflix, Disney and other big SVODs get into the ad business, it will create a “rising tide lifts all boats” scenario and that the big players will be able to impose some sort of discipline on the industry so that it is easier to buy and sell across all of the various FASTs and SVOD services.

Or, to quote one ad executive, “No one wants to wind up with just one measurement source for streaming, but at the same time, no one wants to wind up with twenty different sources either. There needs to be some kind of sorting.”

So there’s that too, and our guess is that as Netflix, Disney et all grow their user bases—ad-supported Netflix launched yesterday— and as the various FAST services grow theirs, big advertisers will prod the industry to agree to some sort of common standards in order to make it easier to spend hundreds of millions of dollars on streaming TV.

Or, as The Brains and (later) Cindy Lauper once sang, money changes everything.

What You Need To Do About It

If you are a FAST or SVOD service, time to give up the fantasy that your walled garden will be the best walled garden ever and so you will win out. Or that you somehow benefit from not cooperating with your competitors.

That sort of thinking is so Facebook 2016.

If you are an advertiser, especially a great big advertiser, the sort that spends hundreds of millions of dollars on TV in a single fiscal quarter, time to get together with your peers and demand that the industry adhere to some fixed standards. Sort of like you did to digital back in the 90s around banner sizes.

Also, I want to take this time to remind you of the folly of cutting back advertising in a recession. That said, I am sure I will be the first of many to bring that to your attention and that you will roundly ignore all of us.

Well, most of you anyway.

If you are Anthony Wood, I actually thought that was pretty brave of you, and maybe pretty smart too—getting ahead of the news gives you cover for potential bad days ahead and it might just shame some advertisers into spending again.