FT: Ad-free Ello pitches itself as the anti-Facebook and goes viral

This is an article by Hannah Kuchler and Shannon Bond of The Financial Times in which I shared my POV on the potential success of Ello as it challenges FaceBook and other SM brands:

http://www.ft.com/intl/cms/s/0/85ad65e0-48e4-11e4-9d04-00144feab7de.html?siteedition=intl#axzz3EzniDkED

A new, invite-only social network dubbed the anti-Facebook because it promises it will never sell advertising is witnessing a flood of interest from users who are wary about how their data are being used.

Ello does not release user numbers but says it is getting 40,000 requests an hour to sign up.

The simply designed black-and-white site borrows some functions from its social media rivals – such as the terms “friends” and use of the “@” sign – but is trying to break the mould with its business model.

There are two kinds of social media businesses: ones that rake in advertising dollars, such as Facebook, and those that hope to in the future, such as Snapchat, the messaging app that is getting ready to roll out paid ads. The data collected from users has fuelled the digital advertising sector as marketers try to use it to target ads to the right people.

Paul Budnitz, co-founder of Ello, said: “When you eliminate ads from the picture, you also get rid of boosted posts, data mining, ad salesmen, and all kinds of other practices that are invasive on a social network.”

He believes users will pay extra for certain features on top of the free basic Ello product. “We have thousands of people writing in requesting features they would be willing to pay for. Buying a feature now and then for a few dollars is a great way to support an ad-free network,” he said.

Dean Crutchfield, an independent branding consultant, said staking out a position “in opposition” to Facebook’s advertising driven model may resonate with younger consumers who feel that “other social media is not really giving us what we want” and who are less receptive to traditional marketing.

But advertising industry executives were sceptical.

“It’s a nice idea for those who do not want advertising interfering with their social interactions,” said Marla Kaplowitz, chief executive for North America of MEC, a media buying firm owned by WPP, the advertising group. “But how do they make money?”

Another advertising executive echoed this view: “You’ve got to ask, where is the revenue?” The executive suggested that Ello might follow Netflix’s path and eventually charge subscription fees from members.

Will McInnes, chief marketing officer of Brandwatch, a social media analytics company, said: “No entity can remain ad-free forever and most businesses, social media or otherwise, often have to face their investors and do what’s best for their bottom line.”

Traffic on Ello, which launched in April, began to build in mid-August and is particularly popular in privacy-conscious Germany, according to Alexa, the web analytics company. US users make up nearly 40 per cent of visitors, with 12.8 per cent coming from India, 4.5 per cent from Canada, 4.3 per cent from the UK and 3.5 per cent from Germany.

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Author: Dean Crutchfield

In an award-winning career spanning two decades, Dean Crutchfield has created, built and re-invigorated some of the world's most iconic brands.

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