Can Data Save the Studios in the Age of Social Media?
By Nick DeMartino - Warner’s acquisition of Flixster is Hollywood’s savviest move yet to survive a wrenching transition into the age of social media.
It’s not just that Flixster is the leading social movie site on the iOS, Android and Blackberry mobile platforms with 35 million downloads to date – or that its sister site, review aggregator Rotten Tomatoes, attracts 12 million monthly visitors – or that Flixster powers Facebook’s Movies app, also the market leader.
No, this is about more than traffic and traction. It is about data. Data is the secret sauce of social media that will empower Hollywood to take control of its own business, rather than to cede it to intermediaries, e.g., the disruptors from Silicon Valley.
With this deal, Warner gains direct access to millions of movie fans, and to the data generated by their social interactions around movies – both essential ingredients to build a direct-to-consumer movie business owned and operated by Hollywood.
All this, at less than the cost of a single comic-book movie!
Social media fosters a flood of consumer interaction and generates massive streams of data, enriching companies that collect the data, and penalizing those who don’t.
This is a very different model than Hollywood (or anyone else) has ever known. It’s worth billions, because data can be tracked, measured, mined, parsed and monetized in countless inventive ways. All of which are counter to Hollywood’s old model.
To wit: Studios have been wholesalers who sell to retailers, not end-users, e.g., individual humans. Hollywood’s biggest customers have been theatre chains, TV and cable networks, and big-box stores – and now digital distributors like Netflix, iTunes, and Amazon. All of which have been very busy building a consumer ecosystem powered by data.
To reach customers directly, studios will have to build new businesses to distribute movies and leverage behavioral data. Which means Hollywood must compete with the best-in-class e-retailers like Amazon and Apple. Are they up to this daunting task? Studios have tried before, and failed. (WB’s Entertaindom and NewsCorp’s MySpace debacle come to mind.) Read more >>
Infographic: Real Cost of Going Social
While there are still companies that hold back on social, the network effect that happens when people share content, the sheer content management ease of use and low customer acquisition costs are simply overpowering arguments.
With an “are you crazy?” quote from Seth Godin to kick it off, the infographic below reveals the resource costs, “if you build it, they will come” fallacy on cost-free social advertising and a real-world breakdown or anatomy of a social campaign.
Social budget/ROI example: $52k for a social media strategist, $93.6k for a community manager (well paid imho), $15-30k for a micro-site, $20k for a mobile app (too cheap imho…). The ROI benefits: 85% customer engagement, 65% direct customer communications, 60% speed of feedback, 48% brand building and 42% market research. With Twitter, a 43% ROI, the monthly value of a follower is $2.38 and cost per follower: $1.67. Low CPA (cost per acquisition), indeed.
