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Social Networking Sites Still Struggling With The Whole Monetization Thing
from the underpants-gnomes dept
The history of social-networking sites has largely been dominated by two trends: first, no matter how popular a site seems to be at any given moment, it's probably living on borrowed time. Second, no matter how much traffic a site pulls in, it's going to have a really hard time monetizing it. While the likes of Facebook and MySpace have resisted the former thus far, the latter remains a big problem -- as it has been for some time. Given this history, it's hardly surprising to see an NYT story this week about how little success marketers are having on sites like Facebook. They're finding that banner ads get ignored (again, unsurprising), while their efforts to do "social advertising" aren't bearing much fruit. The article mentions the Facebook page for Procter & Gamble's 2x Ultra Tide laundry detergent, which has attracted 471 fans, and 9 responses thus far to the question "Your Favorite Place to Get Stained?" It's hard to imagine what the P&G marketers expected, but it really doesn't seem surprising that people wouldn't flock to affiliate themselves with some laundry detergent. While some brands do attract that kind of attention, overall, the evidence says that people don't necessarily have a lot of interest in using social-networking sites to interact with brands, while many social-media efforts by companies aren't trusted and are seen as little more than shilling.
This is a big problem for social-networking sites as they continue to struggle to justify their massive valuations with real revenues. Part of the problem seems to be the marketers' mindset and how they see social networking or blogging as some magic sauce that will instantly boost sales and gloss over bad products. The challenge facing Facebook and its ilk is twofold. The sites need to better develop their marketing offerings beyond ineffective banner ads, but do so in a way that doesn't annoy users and trample their privacy, as they'll end up doing more to damage their advertisers' brands than boost them. But the bigger challenge is changing marketers' mindsets and getting them to understand how best to interact with users online. While the sites might see their role solely as selling advertising space, they must be the ones to take a leadership role and help educate and enlighten marketers, if only to help ensure their own survival.
Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.
