Facebook Inc (NASDAQ:FB)’s role as a marketing platform for retail during the holiday season is generally under-appreciated by investors, says a report from Citi Reserach by analysts Mark May, Kevin Allen and Nathaniel Brogadir. Therefore, to prove their point, the analysts analyzed data about the engagement of retail on Facebook and other social networks.
Facebook vs. Twitter
The figure depicts the number of Facebook Inc (NASDAQ:FB) fans and Twitter Inc (NYSE:TWTR) followers for the top 10 retail brands in the United States on the basis of their advertising spend in 2012. The number of fans on Facebook for each retailer is more than the followers on Twitter by 45x on average with the average retailer having 10 million fans on Facebook compared to 300,000 followers on Twitter.
However, analysts believe that the level of engagement is what matters rather than the fan base. Another graph shows that on an average 340,000 Facebook fans engage (sharing and talking about) with the top 10 retail brands on a weekly basis, which in some cases more than the combined fan base on Twitter.
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Analysts note that, some of the biggest retail brands are experiencing the greatest engagement on Facebook Inc (NASDAQ:FB) and Twitter, which “bodes well for monetization from this all-important ad category in Q4.”
Twitter expect Hirschle to boost ad revenues
Facebook Inc (NASDAQ:FB) has outpaced Twitter Inc (NYSE:TWTR) in terms of advertising, and retailers look more inclined towards the largest social networking site. These retailers are some of the biggest spenders of digital advertising, and thus are important for Twitter also. Retail spending on digital ads contributed 22% of total spending in 2012, and is expected to swell to $13.5 billion by 2017 from $9.4 billion this year, according to research firm EMarketer Inc.
Twitter recently hired J.J. Hirschle to lure more retailers to advertise on the platform, and he has held meetings with Best Buy Company, Target Corp and other big retailers to select Twitter as the marketing platform, according to Bloomberg.
“Holiday is one of the most important periods and for me, sitting in the retail world, it is the most critical period,” Hirschle said.
Twitter shares surged 2.9% to $40.18 at the close in New York on Tuesday. According to Bloomberg Global Poll, around 68% of the investors expect the stock to fall below its first day close of $44.90 within six months.