Surprise, Surprise, Social Networking Ads Suck

from the as-expected dept

One of the questions that came up last week in Edinburgh was whether or not social networking sites were really the big moneymakers they claimed to be. In the discussion, what we agreed on, was that the social networking sites had done a good job in doing an “upfront” monetization, with MySpace getting a guaranteed ad deal from Google and Facebook getting a guaranteed deal from Microsoft. However, all the details suggested that on the backend things were pretty ugly. It’s not hard to figure out why. Ads work on Google because people are looking for information. They do a search, and if the advertisement shows information that helps with the query, that makes everyone happy. However, when it comes to a social network, usage is quite different. People aren’t looking for information about products — they’re looking to communicate with friends. In that environment, ads are seen as an intrusion — which is the exact opposite of ads in a search world. That explains why Facebook was so focused on its Beacon offering, which was designed to try (rather unsuccessfully so far) to make an advertisement about communicating with your friends.

With all that said, I estimated that within a year, advertisers would begin to back away from social network advertising, unless some new, more effective, mechanism was found. I figured it would take about a year, because the mindset of advertisers would still be focused on just getting ads on these “hot properties” and it would take some time before they realized that no one looked at the ads. Apparently, my estimate was wrong. Brands are already staying away. At least, that was a major point behind Google missing its earnings estimates. It seems unlikely that this situation will get much better, unless social networks really do come up with a different form of advertising. They need to recognize that simply throwing up ads doesn’t work any more. An advertisement can’t be intrusive. It can’t be annoying. It needs to be relevant and wanted.

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Companies: google

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Comments on “Surprise, Surprise, Social Networking Ads Suck”

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17 Comments
Vincent says:

Myspace has an interesting form of advertismets

Myspace have a lot of the advertisement profiles. As I am typing this, there is one for zune that even tom posted a bulletin about. Often these special profiles add special features to your own profile, such as the zune profile offers a zune skin to your myspace music player.

It was a simple idea, but it works. I have learned about 300 and Cloverfield through these myspace advertisements, and I went to watch both movies.
However I do suspect the real money in running myspace is in the user statics.

Josh says:

Anothe reason

I think another reason social networking ads don’t work too well is the ad placement. Advertisers are bit wary: they don’t want their ads next to questionable “user-generated” material, like someone’s naked pictures or racist comments or whatnot. Also, you can’t base your ads on user content either. Someone’s profile might mention they want to date men, but maybe only as a joke. It’s hard to sort out genuine content from crap people put out there.

Scott Rafer (user link) says:

Huge numbers of pages, low rates per thousand.

Ads on social nets are simply a different beast. Search ads and affiliate programs work elsewhere. Everyone is unreasonably expecting “new and sexy” to be the same as “high eCPMs.” Google spoiled us all and mis-set our expectations.

http://www.techcrunch.com/2008/01/31/how-much-is-a-facebook-ad-worth-lookery-guarantees-drum-roll-125-cent-cpms/

EffectiveIM (user link) says:

Boy, did I get that one wrong...

You miss the point totally.

At least “business application” above me, in all his brilliant marketing subtlety, gets it.

What if you are selling a product or service (for yourself or someone else) that makes you $1-5K a conversion. (And before you say what product or service – think financial products, trading, foreign exchange, insurance, health industry…

…try to bid on keywords related to those industries now on Adwords – you’ll be paying $20+ a click for spots 1-3.

Here you have a platform to target ANY geographical area of your choice, peoples interests or sex and you get absolutely FREE branding at 30c a click!

You reckon that “sucks”? That my friend is a marketers wet dream.

Here are some ACTUAL statistics from a Facebook ad:

Cost Per Lead: $25

1: 20 Leads per Conversion

1 Conversion = $5,000

The only problem with social networking ads is that real marketers still haven’t gotten onto them yet. But they will. And when they do – watch out. Spending on Facebook and other social networking ads is just going to get bigger.

And as social network sites continue to grow exponentionally (traffic wise, popularity) and it becomes more and more difficult to get any sort of meanigful traffic from Google or ROI (SEO or PPC methods) – social media marketing is going to get even bigger.

Sunny says:

Re: Boy, did I get that one wrong...

Hey effective, made a very valid point, sounds quite interesting!!! do you mean doing untargetted advertising on sns because to me the biggest concern perhaps not on facebook but most other sns is the correctness of user profiles. However if we look at the ways to monetization of SNS, they are a plenty.

EffectiveIM (user link) says:

I wouldn’t be too concerned in correctness of user profiles on social networking sites. Google has been getting away with this for years using their content network and what they say is “contextually targeted”. If you do a placement-targeted Report to see where your ads are showing on Google Adwords content network, you’ll soon see lots of rubbish sites running your ads.

Don’t worry too much about being “targeted” either. People are USED TO ADS. They are not going to click on them (in Facebook) unless they really WANT to see the message.

That is the point. If they WANT to see the ad – how is that untargeted?

You only pay for clicks. You get Free branding and you get to target using available demographic profiling. I’d say that’s targeted!

Social Networking Butterfly (user link) says:

Got Niche? Social Newtorking is a niche thang...

It’s not the type of site, it’s the niche of the marketing. The problem with google ads on a social networking site is that google ads will show content related to whatever is on the site and with 300 people saying “i like xyz” google doesn’t always get it right on queue.

i think people would be better off marketing a product related to the niche of the age or demographics of the users.
unfortunately, this takes a coordination effort between the site and the advertisers.

i see ads on facebook that are unrelated to what i want all the time. i have a telecommute site and i tried to get ads to advertise my telecommute site and they turned it down saying they don’t want ‘home business opportunities’ ummm..hello? these are jobs! but what do they know. they see my anti obama postings all over facebook and continue to shovel ‘obama stimulus package’ ads down my throat when i continuously mark those as offensive to me. good job facebook.

find the niche and a system that uses the niche wisely and you’ll find more clicks.

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