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News Analysis 20 Jul 2021 - 6 min read

Social difference: Can Reddit, Twitch, Pinterest, Snapchat and TikTok build Australian data, metrics and sales smarts to nibble Facebook's brunch?

By Josh McDonnell, Sam Buckingham-Jones & Brendan Coyne

There's a big stack to aim for, but do Australia's emerging social platforms have the appetite to invest in local sales, data and research?

So the rise of the second tier platforms is on? Reddit and Pinterest picked Sydney over Singapore for their APAC HQs because they're likely to generate more ad dollars, say insiders. While the likes of Amazon's Twitch, TikTok and Snap may argue otherwise, they will need much stronger Australian data and metrics beyond reach to unlock the biggest advertisers and snack at the tables of Facebook and Google.

What you need to know:

  • Social media platforms are setting up shop in Australia to drive Apac ad dollars.
  • But to make even a dimple in Facebook's revenue, they will need sharper local data, insight, more sophisticated metrics and a major sales push, say observers.
  • But Reddit and Twitch say they are fully aware of what they need to do – and back themselves to expand and deliver.
  • Twitch is also plotting a full funnel play with big brother, Amazon.
  • Meanwhile Snapchat and TikTok appear to be getting brand traction.

Social science

Reddit has landed in Australia and is likely to be followed by Pinterest, which is in market for a country head and research partner lead. They follow Twitch, which hired an AUNZ sales chief last year.

The challenge they may face is convincing big brands to invest ad budgets – given the deep roots incumbent platforms have entwined within agencies and brands and the limited local science behind their ad products and audiences.

One exec with knowledge of Reddit and Pinterest’s plans said they picked Sydney over Singapore to run Apac operations – despite travel restrictions – because it is where they are likely to generate most ad dollars.

But to scale revenue they will need both country managers, sales teams and a research manager, per the exec, mirroring Facebook’s early roadmap.

“They are set up very much in Facebook’s vein, because a lot of [their senior management] are ex-Facebook and they know they need this partnership manager, this research person to feed the sales department. Because although the agencies have a lot of data, quite a lot of them are still reliant on that powerpoint deck that spells out ‘this is why you should buy our media’,” he suggested, “and the agencies need that research deck that to justify their buys to the client.”

While the second tier platforms, including the likes of Twitch, TikTok and Snap, may argue otherwise, they will need much stronger data and metrics beyond reach to unlock the biggest advertisers.

“Some of those platforms are starting to make headway, but often they are using a lot of first party data with not much validation, and very little brand lift and brand attribution type of measurement – whereas Facebook is pretty much self-serve on all that stuff,” added the exec.

“They are getting some support from the US, but the trouble is you can't tap into any Australian data, you can't get a view on the brand lift benchmarks, how do they compare against TV and the like. So it does it does make it harder for the agencies to justify back to back to the client.”

For now at least, he thinks the incoming platforms will struggle to differentiate.

“They all going to be going after pretty much the same market - and without that local data, I think what's going to happen is the presentations are likely to be fairly similar.”

But Australia’s newest platforms disagree – at least on differentiation.

Twitch: Beyond gaming, Amazon in the wings

Ricky Chanana, head of sales for Twitch AUNZ, said the gaming platform is now working with major brands across finance, auto, CPG and entertainment, positioning itself primarily as a digital video buy.

“Part of that is due to the understanding by brands that a ‘gamer’ isn’t a market in and of itself, but a person who is a grocery shopper, restaurant goer, auto buyer – and more often than not with a high disposable income,” Chanana told Mi3.

He positions Twitch as an alternative to BVOD or Youtube that drives incremental reach within audiences where above the line channels are managing decline.

“Clients are starting to see us as part of the media mix when it comes to digital video buying, complimenting the incremental reach. We know 39 per cent of our audience does not watch free to air TV. We give advertisers the ability to gain back that lost audience.”

Meanwhile, Twitch’s big brother, Amazon, is starting to ramp up in Australia after a sluggish start – and Twitch ultimately aims to leverage its audiences across Prime Video and retail, dovetailing its contextual capability with Amazon’s deep audience and purchase data.

“What we are seeing as we work more closely is that Twitch provides Amazon with the top funnel, consideration and brand awareness aspect, while its retail and other products plays extremely well at the bottom of the funnel,” said Chanana.

“We are now working with them to give clients the strategy to work with both – connecting the top and bottom together.”

Chanana said the platform is seeing greater interest in bespoke brand activations, including work with P&G, Dell and Five Gum. Twitch is also driving its own content, such as an Australian version of its Twitch Rivals series, which puts influencers in head to head competitions – supported by EA Sports.

Given PwC’s latest Media Outlook shows strong growth for gaming – 7.5 per cent CAGR from now until 2025, when it’s tipped to reach $4.9bn in Australia – Twitch appears to be in a prime position.

But Chanana accepts that local teams do require local research and data – which is why the firm has “just hired an insights and measurement exec … and that's going to continue driving articulation with measurement insight and then third party data partners”.

He agreed it is “absolutely apparent” that Twitch needs to create roles that can speak the language of the Chief Growth or Insights Officer.

“We will be out in market articulating that and proving our campaign performance and audience segmentation – but also working with third party vendors like Nielsen and Kantar to develop better insights into where customers’ dollars are in different segments,” he said.

Reddit: Not like all the others…

“We don’t see our platform as a social media platform and therefore don’t see Reddit in competition with other platforms,” replied Reddit president and EVP of global advertising, Harold Klaje, to the question of differentiation.

Instead, Reddit is a “community of communities” connected by interests rather than demographics where people “feel comfortable talking about things they wouldn’t necessarily in other [platforms]”, said Klaje. “And, with 40 per cent of Reddit users in Australia not on Twitter, 20 per cent not on Facebook, 23 per cent not on Instagram, Reddit users are truly unduplicated in the sense that they can’t be found anywhere else online,” he stated.

Klaje countered questions about its local data and research capability by pointing to its global partnership with Oracle Data Cloud’s Moat, which he said “provides an added layer of transparency by way of third party verification around the reach and awareness of Reddit ad views”. He also said Reddit’s centralised marketing science team had a staffer “dedicated to Australia”.

With former Woolworths and Amazon exec David Ray last week announced as Australia’s country manager overseeing a team of six, Klaje said it would more than double headcount by the year end, with sales a key focus.

Snapchat: Snackable, but engaging?

Reddit, Twitch and Pinterest are following a path carved out by the likes of Snapchat and Tiktok, which have managed to attract bigger brands to their platforms.

Snapchat (share price up 500 per cent since March 2020) now claims to reach more than 6.3m active users in Australia – some 90 per cent of 13- to 24-year-olds, and 75 per cent of 13- to 34-year-olds.

While local research remains relatively thin, the company has been investing globally.  

Earlier this month, it released a survey into the Future of Shopping, which suggests that half of millennials and Gen Z use their phone while shopping in stores. Earlier this year, it released the Snap Consumer AR report, which looked at the impact of augmented reality on brands.

Locally, the platform has landed partnerships with major brands and events in the past few months, including Hyundai and the Australian Open. Meanwhile, Samsung recently launched a series of documentary shorts on Snapchat to promote its Galaxy A Series smartphones.

“The beauty of the Snapchat platform and a lot of the social platforms of today is that they're increasingly wanting snackable content. So, short form, really quick, tell me your message in less than six seconds, in most cases,” said Hayley Walton, Samsung head of brand marketing, mobile, told Mi3.

But brand marketers are looking for more robust data and measurement.

“A lot of how we measure the success of a lot of our campaigns, particularly on social networks, is engagement, so you can put huge amounts of money behind them and amplify them and that would deliver you reach and eyeballs,” said Walton.

“But the real testament to whether or not a consumer actually takes in your message is more engagement metrics. So how long is the content being viewed for? Is it getting shared? Those are sort of the more tangible metrics that we're looking at to sort of see – if our message is actually being absorbed by a consumer, as opposed to just being flashed in front of them from a reach perspective.” 

John Vlasakakis, head of SEO at Melbourne-based digital agency Next&Co agreed that the emerging tier of platforms have work to do. 

“If reach is the metric then by all means Snapchat, for that age range, will trounce anything else,” he said.

“But if the measure of success if for something more meaningful, i.e. a specific interaction to track, I don't think Snapchat or TikTok are as developed there yet. Reach doesn't really mean much if a memorable moment for the brand isn't created. Memorable micro moments are really what's important.”

TikTok: Doing the brand dollar dance

TikTok last week reported that it hit 3bn app downloads worldwide. While that figure does not equate to active human users (it claims 250m daily average), the platform’s estimated global first half revenues soared 73 per cent to $919m.

Locally, Roy Morgan Research estimated some 2.5m Australian TikTok users as of October 2020, the most recent estimates. However, Mi3 understands the figure is now closer to 3.3m.

The business this month expanded into longer video formats of up to three minutes, potentially taking TikTok into more direct competition with Youtube and Facebook. Early local uptake appears to be driven primarily by publishers uploading programming clips alongside movie and TV show trailers.

The local business has attracted big brands such as Kia, Samsung, Bonds, Dettol, Pepsi and HP in Australia. Media buyers told Mi3 the platform does not base its pricing off users but its own metrics around impressions and click-throughs.

Campaigns also fluctuate based on inventory, with takeovers costing anywhere up to $50,000 per week. Despite yielding strong results for some clients, agencies have complained about “clunky” post-reporting campaign and re-targeting tools. 

As it matures, TikTok is increasingly attempting to move away from its early perception as purely performance media. It now aims to position itself as a brand building platform, tying up with social good campaigns with brands from CPG groups such as Reckitt.  This week, Bonds used TikTok as a key part of its media mix for its latest Bloody Comfy Period Undies campaign, ‘Cheer Bleeders’.

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Josh McDonnell, Sam Buckingham-Jones & Brendan Coyne

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