Pirates of social media industry

1. ‘Pirates’ of
social media industry
26 Feb 2013
© Salorix  All Rights Reserved  Confidential

2. 2
Outline
 The facts about social media around the world
 Inside the real economy behind social media's fake fan industry
 The Twitter Underground Economy: A Blooming Business
 BBC story questioning the value of "likes" on Facebook pages

3. The facts about social media around the world

4. 4
2012 was a year of social media shake-ups, new social platforms, and a tighter integration of social
media into exciting business processes, Here is a synapses of how each social network performed.
Facebook (In million) Despite an increase in total registered users,
$5,000 Facebook’s monthly visitors count is down 4%, with
Growth: C- 1500 recent changes to distribution and targeting options,
Users: A+ Facebook continues to evolve and keep brands on
1000
their toes.
Twitter
With a steady increase in visitors, twitter remains the
$350 go-to social channels for marketers looking to
Growth: B- 37 monitor conversations, learn about customers,
Users: A- distribute content, and build relationship
560
Linkedin
With consistent traffic and a strong business focus ,
$938 LinkedIn remains a major social workhorse of
Growth: C 28 marketing and sales teams everywhere. After a
Users: B- needed face lift and added for business.
200
Google+
Still on the outskirts of the social media fray, Google+
spent the majority of 2012 quietly adding features,
Growth: B+ 26 building a user base, and integrating with Google’s
Users: B- search engine to set itself up as a major player in
500
2013
Pinterest
Pinterest exploded onto the social scene in 2012
with over 1000% growth in monthly visitors. With a
Growth: A+ 27.2 focus on visual content and a massive mobile
Users: B- audience.
13
Source: Nielsen, Techcrunch & eMarketer’s

5. 5
Emerging markets Brazil, Argentina and India show the highest rates for Awareness, Penetration
and Average number of social network membership
120% 4
100%
# of social networks
3
80%
60% 2
40%
1
20%
0% 0
Aware of at least one social network member of at least one network Average number of social networks one os member of
Aware and current member Membership
Aware and once a member Awareness
Aware, but not a member
Not aware
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
• More than 7 out of 10 internet users are member of at least 1 social network. This implies that more than 1.5B people use social network sites.
• The world is not waiting for the next social network. In fact, most people want to keep their digital life as it is. No need for something new and no
intention to quit. On average, people only join 1 or 2 social networks. The Twitter & Google+ paradoxes are living evidence for this conclusion:
both sites are very well known, but their adoption is still rather low.
• But, Consumers are willing to join ‘unique’ new social networks like Pinterest. For example“10 pictures per second tagged with “sandy” flowing
hrough the Pinterest. In total, more than 230,000 images are using that hash tag — but there could be more related to the storm”

6. 50% of social network users follow at least 1 brand online. On average, people follow 8-12 brands in a passive way and 6
about 3-6 in an active way. China has the largest share of brand followers in social media, whereas in the US, the
highest number of brands are followed on average.
70% % of Brand followers in social media
60%
50%
40%
66%
30% 56%
61%
56%
52% 53% 50% 47% 48%
20%
10%
0%
16 Following, actively following & interacting with brands
14
# of Brands
12
10
8
6
4
2
0
# brands following # brands actively following (reading/sharing majority of content) # brands interacting with (entering into dialogue)

7. Food/retail, fashion/luxury and media/entertainment are the most-followed sectors in Europe. In China, 7
fashion/luxury and cars are most popular. Also Number 1 driver for following a brand online is actual usage of the
brand.
Sectors for brand following Drivers to become a brand follower
Food and retail 49% After using the brand 49%
Friend recommend 33%
Media / entertainment 47%
Search engines 32%
Fashion / luxury goods 45%
Online advertisement in
31%
social media
Sports 32%
buy the brand in the future 30%
Travel 32%
invitation from Contact list 26%
Cars 30%
Other online advertisement 25%
Good causes / charity 26% invitation from Brand /
24%
Company
Industry 18% Traditional media 21%
Others 11% Other 6%
0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60%
Source: InSites Consulting

8. 8
Interactive marketing spend will near $77 billion by 2016, i.e.. brands will spend 7% of ad budget
in Social networks. But there are some limitation/dependency in Social media advertising
Interactive marketing spend forecasts
Search marketing Display marketing Mobile marketing Email marketing Social media
2011
2012
2013
2014
2015
2016
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000
(In Billion)
Social media marketing spend forecasts
Integrated campaigns on social networks Social media management technology Agency fees for scoial media
$6,000
(In Million)
$5,000 $1,742
$4,000 $1,469
$1,109
$3,000 $1,234
$926
$1,016
$2,000 $903 $744
$565 $2,863
$634 $447 $2,322
$1,000 $271 $1,815
$1,086 $1,364
$683
$-
2011 2012 2013 2014 2015 2016
Source: Forrester

9. Inside the real economy behind social media's fake fan industry

10. 10
Social media's fake fan industry
“Gartner Says By 2014, 10 to 15 Percent of Social Media Reviews to Be Fake, Paid for By Companies”
8.7% 2.4%
 Based on US regulatory filing Facebook wants to disable 8.7% of its 955
million (dated Aug 2012) monthly active users worldwide are actually
duplicate or false accounts.
 Facebook further estimates that about 2.4% (about 23 million)
personal accounts are “misclassified” — users who have set up a
personal profile for a business, video game avatar, or something like a
family pet. (Mark Zuckerberg’s dog, Beast, is an example of a Page
associated with a personal account) Duplicate or False accounts Misclassified accounts
Actual Facebook users
Social profile sellers:
Source:
• Gartner report "The Consequences of Fake Fans, 'Likes' and Reviews on Social Networks“
• http://www.sec.gov/Archives/edgar/data/1326801/000119312512325997/d371464d10q.htm#tx371464_14

11. 11
Fake fan industry - Experiment
It’s a Point system. you submit the social media accounts you want to promote and earn
points for endorsing other people's pages. You can offer, say, 5 points to anyone who follows
you on Twitter or 10 points if they add you to a G+ Circle. If that sounds like too much work,
you can purchase points for .3 to .6 cents apiece and then use those to attract fans.
like Amazon; we can buy a certain number of endorsements and wait for them to show up
on your virtual doorstep. FanMeNow, will sell you 500 "real worldwide Facebook fans" for
$500 or deliver 5,000 YouTube views for $25.
An independent contractor who can add/generate social followers , like. ~20K views to an
Youtube video virtually overnight.

12. The Twitter Underground Economy: A Blooming Business

13. 13
Mitt Romney’s Fake Followers
Barracudalabs says,
 The number of Romney’s followers # of Mitt Romney’s Twitter followers
increased 17% (or 116,922) on a single
day Jul 21, 2012, going from 673,002 to
789,924
 25% of these followers are less than 3
weeks old (created after July 17th2012),
80% of them are less than 3 months old
 23% or about 1/4 of these followers have
no tweet
 10% of these account has already been
suspended by Twitter
Distribution of creation time of Mitt Romney’s Twitter followers
Source: barracudalabs

14. 14
Barracudalabs study on Fake follower
Dealers - Those users who create fake accounts and sell fake profile/followers/re-tweets
 The average price of buying 1000 followers is $18
 A Dealer can control as many as ~150,000 or more Twitter followers
 A Dealer can earn as much as $800/day for 7 weeks of selling followings if they can control 20,000 fake accounts
(estimated on several random fake accounts reaching 2000 followings in 7 weeks and assume each following
involved a minimum $20 purchase)
 In addition to selling followings from these fake accounts, there are numerous opportunities for expansion into other
services: selling tweets/re-tweets to earn additional profits
Abusers - Those users who bought followers (most of which are fake) in order to look more popular or to use the
accounts for selling ads
 There were 11,283 Abusers identified (each has at least 470 fake followers)
 The average Abuser has 48,885 followers
 53% of Abusers have 4,000-26,000 followers
 75% of abusers have set a URL in their profiles (compared to 31% for random Twitter users)
Fake Accounts - Those are created by dealers for selling followings or tweets business
 There were 72,212 unique fake accounts identified
 61% of these fake accounts are less than 3 months old
 Average age of these fake accounts is 19 weeks or about 5 months
 55% of fake accounts have ~2000 followings
 The average number of following for a fake account is 1,799
 The oldest fake account @krails is created on Jan 15th, 2007
Note: Barracudalabs study, beginning in May 2012, on 90,000 purchased Twitter followers from eBay and another website
searched from Google Source: barracudalabs

15. 15
Who’s faking it? - Top profiles & Fake followers
Good followers Inactive followers Fake followers
19% 28% 26%
33% 35% 34% 34% 29%
41% 39%
34%
37% 39% 38%
39% 41% 38% 44%
38% 39%
47%
28% 28% 35% 35% 33%
24% 21% 22% 22%
@ladygaga @justinbieber @katyperry @BarackObama @britneyspears @YouTube @twitter @cnnbrk @facebook @espn
# of twitter
32,072,739 31,408,120 30,006,608 24,450,328 22,466,002 20,699,287 15,111,494 96,21,787 6,080,824 5,641,094
followers
@kashifrox 431,222
@TeamGoOnline 104,850
@illalskratch 103,053
@yuvongoess 86,126
@PartyHop 32,423
@movie_tshirt 28,467
@JELLYWAX 25,290
@KidsFacts_FR 20,107
@GirlsFactsFR 18,609
@GalaxyClothing 16,777
@ipungski 12,553
@moon555 11,018
@globeflashInter 10,166
@leemaaarston 6,019
@BEATSHuntCom 5,158
@freedrull 5,022
Source: statuspeople

16. BBC story questioning the value of "likes" on Facebook pages

17. The BBC reported the results of its investigation of the effectiveness of advertising on Facebook, and while it 17
did illustrate some valid concerns, such as fake profiles, the questionable tactics used in its made-up
advertising campaign overrode several of its other findings.
Campaign Reports/Findings Questions
 The BBC’s Technology Correspondent,  Within 24 hours, VirtualBagel had  Who are these people in some countries
Rory Cellan-Jones set up a Facebook acquired over 1,600 likes, despite the who are clicking in an apparently random
page for his small business to test how fact that the page offered no products way on thousands of Facebook adverts
people would interact with his and no interesting content. After four and earning the network a small fee each
‘meaningless brand’. Called “VirtualBagel days, it was "liked" by nearly 3,000 time?
Ltd” people
 Is Facebook worried that there seem to
 With very basic information: "We send  Nearly all of the "likers" came from India, be a number of fake profiles in certain
you bagels via the internet - just Egypt, Indonesia and the Philippines. but countries generating fake "likes" and so
download and enjoy.“ just about nobody in the US or the UK devaluing the worth of its advertising
system?
 The ads targeted widely at users across  As per Facebook insights report the page
the US, UK and a number of Middle was most popular in Cairo, with 75% of  Is the network being as active as it
Eastern and Asian countries "likes" coming from 13 to 17-year-olds. should be in addressing a problem which
is generating lots of revenue for its
 And also under 45-year-olds interested in  click-through rate - was 0.55%. That had bottom line?
cookery and consumer electronics, (as generated nearly 3,000 "likes“ over four
per Facebook potential audience of 112 days.
million customers)
 One user, who called himself Ahmed Ronaldo, listed Real Madrid as his employer, and
 The campaign ran for $10 (about £6.50) featured the footballer Cristiano Ronaldo as his profile picture. Also he likes more than
budget per day 3,000 other pages.
Source: BBC

18. Thank You
© Salorix  All Rights Reserved  Confidential