How Skyrock Made Social Media Profitable

 

EDITOR’S NOTE:

I wrote this piece back in 2009, whoa! The stats are way out of date, so why republish it? The answer is that it’s an old favourite. How Skyrock used and monetised social media was 10 years ahead of its time, so sit back, chomp through your popcorn, as the world (now led by Vice) copies and catches up to where Skyrock’s already been.
 
We don’t talk about it much in Australia. Most people I ask have never heard of it. It pales into insignificance alongside higher profile Facebook and Twitter counterparts, especially when it comes to Australian media coverage.

But I’ve already introduced you before to Skyrock in a previous post “Skyrock, Where Teens Play” (hat tip to the web archive). In this post, I’m going to explain a bit more why I think you should divert your attention from Facebook or Twitter for just a moment, long enough to get to grips with Skyrock and how it is being used in European branding.

But first, let’s step back in time to its not-so-humble origins.
 

THE SKYROCK BEGINNINGS.

The Skyrock Story started in 2002.

Skyrock started life in 2002 as skyblog.com, a blog platform that had been built as part of the No.1 FM radio station in France for 18-25 year olds. It was founded by its current CEO Pierre Bellanger and while radio might differ from the Internet, Bellanger believes the essence of both mediums is the same.

“Both represent popular free expression of the new generation. The main difference is that the radio makes cultural code choices and the Internet makes computer code choices.”

In 2007 the blog brand was abandoned, and users were transitioned into a full-blown social networking platform, one that today flies along under the Australian radar largely because of its European origins.

But unlike its American counterparts, (Bellanger says that Facebook is more complementary than competitive with Skyrock, although both share some common social features), Skyrock provides us with a remarkable case study in how a popular social media platform can be turned into a successful commercial venture.
 

NUMBERS TELL THE STORY.

But first the stats:
• 39 million accounts, including :
• More than 26 million blogs with 33,000 new blogs added every day
• 17 million+ individual profiles with 35,000 added every day (there is a small overlap between the two categories)
• Users have created more than 650 billion articles, loaded 580 million pictures and 37 million videos.
• Skyrock had more than 24 million unique visitors in June 2009.
• And more than 7.7 million pages viewed (also in June 2009).
In fact, if you’d like to dive a little deeper, check out the Skyrock Statistics, June 2009, (Comscore). (Report thanks to Pierre Bellanger, CEO, Skyrock.)
 

HOW THE FRENCH TURNED SOCIAL MEDIA INTO A PROFIT.

In 2008, the Skyrock group generated €38m in revenue; half coming from its radio operations, and half from the internet; with an ebitda of approximately €7m (€5-6m generated by the internet). Its internet operations revenue is up 42% for the first half of 2009 versus the same period last year (the radio side is up 22%).

(As a privately owned company it isn’t obliged to release financials, but Bellanger was asked to correct any inaccuracies before this story was posted so I’m off the hook for inaccuracies.)

The big question is how they managed to turn a profit when other higher profile platforms struggle. The answer lies in advertising (nothing unusual there for the Internet) – but not any old advertising model.

What appears to be the key to the success of Skyrock is a unique advertising revenue model that has been based upon the principle of better control – control over both content and channel.

The model works like this:

Skyrock designs marketing campaigns for advertisers, which it runs through its platform. The campaigns usually include the creation of mini-sites that are operational for a limited time, and that include tailored content designed to create brand appeal to Skyrock users.

So Skyrock is, essentially, akin to an advertising agency that is uniquely positioned to be able to create and place its generated marketing content through its own platform on behalf of its clients.

It’s a nice model indeed, even if some ad agencies treat it with raised eyebrows, as its direct relationship with advertisers might leave media buyers feeling somewhat redundant in its wake. They have reason to be nervous, the Skyrock client list reads like the Who’s Who of advertisers. (insert image)

The Amazon equivalent of data mining, in the social media world, revolves around understanding who is friends with who. Links, relationships and affinities matter. If John Smith clicks on an ad, Skyrock will serve the same ad to all his friends. The result is a dramatic increase in the likelihood of click-through and this accelerates the spread of the advertiser’s message.

“There is no average result to that community leverage, it depends of many parameters” says Bellanger. “But we know that it improves inventory management for the publisher, shortens the time to get to the targeted number of responding contacts for the advertisers and enhances the relevancy of the ads for the reader.”

And when you control the content and the channel, and the teams needed to create and place the content, you can work with formidable speed. And alternative media channels may not be able to keep pace.

“On movies”, says Bellanger, “speed is key. The buzz has to be spread as fast as possible after the film’s release. So quickly amplifying the world of mouth is essential. Not only we are able to tell a film distributor ‘we can serve you 200,000 people aged 18-25 in region X’, but we can do that in two hours”.

Best of all, though, and what makes Skyrock a unique and exciting case study is that it has clear billable streams. In short, it is a member of an elite group – it is actually profitable.

Revenue is derived from the design of the campaigns, plus the per-day billing for impressions on the platform plus the technical services that support each campaign. Even customization is supported by clients. Its in-house teams can produce sophisticated client sites swiftly and cost-effectively – and this makes them very attractive to advertisers that want rapid results.

Of course, this is not the reason why the social platform itself is successful, although it is the story behind the money in the bank.

The Internet is easily measured which is part of the appeal of any Internet channel. The Skyrock proposition to advertisers rests on its ability to better engage with its users – after all, it knows them better than anyone else – and thus it is able to encourage greater levels of advertising participation with its young audience. And once you’re done with the data-mining, then it’s time for their creative department to kick in.
How Skyrock Campaign Encourage Youth Participation.

According to Bellanger, the key ingredient that makes Skyrock so appealing is that they never considered young people as young people, but rather as adults of young age.

“On Skyrock.com you are anonymous and make yourself known through your creations and expressions. So you can create an identity and have several, you can discover new friends – those who are publishing that resonate with your state of mind. You create an online network of affinity friends. Everything is open access and public, millions of people are there with fantastic creativity linking with each other.”

And it is upon this user-generated platform of creativity that the business moved into high gear with creativity of its own. And to get the necessary cut-through, it runs campaigns that are different from mainstream activities.

For example, when the French Army wanted to improve its image and increase enrolment, the Skyrock team built a reality TV show called “Full Immersion” where young men, unfriendly towards military life, borrowed military lives for a period of time.

Casting was performed online through Skyrock, successful candidates were enlisted into a unit, and camera crews followed them. As with any reality show, the candidates had their ups and downs, with the cameras rolling, and the traffic poured in.

The results were so pleasing that the French Navy leapt aboard (excuse the pun) to follow suit. A broadcast TV network even bought rights to a short reality show.

Or when a major French bank, La Caisse d’Epargne, wanted to be the first youth banking website in France, Skyrock built www.ecureuil.fr. The goal was to become the first youth banking site in France. It became the market leader within two years.

And this is just the tip of the iceberg. Advertisers include banks movie distributors that want to fill cinemas, sports shoe and apparel brands looking to engage with youth markets, mobile phone companies who want their phone accounts. If there was a brand of widgets for teens, they too would find a way to be promoted on Skyrock.
 

WHAT’S NEXT?


So, what’s next in the Skyrock Story?

The deal (when Yahoo! had agreed to buy Skyrock’s internet operations in late 2007) collapsed once Microsoft declared intentions to acquire the search engine. The company has moved on. According to TechCrunch, Skyrock has a strong valuation if the opportunity arises for its owners to consider another sale. (Not that they are in any hurry to sell.)
So a couple of months back, Skyrock created Springbird – an umbrella brand for its advertising unit and tailor-made campaign operations. (Brush up on your French, though, the site isn’t written in English.)

Plans for mobile communication and the deployment of mobile-based couponing that is redeemable at point-of-sale are already underway. In 2010, French teens will be cashing in on savings by scanning barcode images that are stored on their phones.

“We expect teenage brands to be amongst the first adopters,” says Bellanger, who has plans to roll the technology out first to France, and then further afield to other French-speaking markets.

 

THE FINAL WORD

ME:
Pierre, if you had three top tips to share with marketers, both qualified and aspiring, what would those things be?

PIERRE BELLANGER:
• You learn nothing through words but through experience: if you are interested in social media, experiment! Never consider that you know a service because you have read about it.
• As a flying ballet dancer, make your work disappear, just the grace, the simplicity and the elegance of the service must remain.
• Listen.
 

Want more?

Check out more of my posts on social media and digital marketing.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Comments: no replies

Join in: leave your comment