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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.
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.
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This will never happen, there is nothing to justify the price paid for MySpace for example, the valuation was faulty and no amount of "fancy accounting" is going to make them into a good investment. These are the AOLs of tomorrow . . .
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seems to me...
A trendy way to use facebook and myspace is for commercial advertisement. You have a commercial level for those companies who want a broad audience... let them pay to get their ads out instead of the social network.
BUT, the cost has to be reasonable for a 14 or 15 year old (even though the audience spans a lot broader range). Do a dollar a month, or something easy to afford for the first level... If you gouge them, then it will certainly fail.
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Re: seems to me...
Feels like a good way to start would be by finding a way to see how different demographics interact or perceive different products or brands, and sell that information on to advertises (nothing to single out an individual = no privacy issues).
Normally its done with sales questionnaires, but there must be a more subtle way to approach it, particularly when you've got such a large audience spending such a great deal of time on your site.
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They have figured out a revenue stream...
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ZUCKER shoulda took the $1 billion a few years ago..
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They did this to themselves, so I feel no pity for them.
Now the "MySpaces" of the internet can't seem to adjust to finding ways to capitalize on revenue, and I feel no pity for them, especially having gone the ad route to begin with.
Web hosting costs have come down so much, a decent host plan will cost $99/YEAR. With this, there's absolutely no damn reason why websites should run ads (HINT, Techdirt!). They SHOULD give their content away at NO COST, which is the entire intent of the internet.
Making money on the web gets harder every day because people don't expect to pay for information. "Services", no matter how unique, will quickly die if there is a fee for them because someone will eventually duplicate the service and offer it for no monetary cost.
So, how does a website generate revenue successfully? By offering OFF SITE services which can be charged (selling items, consulting, etc.). The "MySpaces" of the world don't really have much to offer offline, so they continue to find ways of making money online. It's this stupidity in which these sites live on borrowed time, especially when the "audience" is always looking for something better, which is usually provided, given time.
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Sponsorship
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Things change...
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The revenue is out there, it just requires some very careful thought and a very low price threshold.
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Re: They did this to themselves, so I feel no pity for them.
Yeah, you can run something like MySpace on that.
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South Park
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The underpants-gnomes department is definitely full of win.
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Re: They did this to themselves, so I feel no pity for them.
For an example of what those $99 hosting companies can handle, go to most any link with more than 15 Diggs that isn't a major corporation...
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Re: Re: They did this to themselves, so I feel no pity for them.
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Re: seems to me...
Sure Flickr only charges $25 a year, but can you see that succeeding, profitably, on a myspace level? If Myspace was charging, they probably would be expected to reduce or eliminate most of their advertising. And 14 and 15 year olds aren't going to pay $25 for Myspace and another $25 for facebook, etc.
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None of you know what you are talking about.
Myspace was valued at $4billion about 3months ago, based on actual earnings not eyeballs, which seems like a reasonable valuation when it is generating $1billion in revenue.
Please read up on your information and data before making sweeping statements like "This is a big problem for social-networking sites as they continue to struggle to justify their massive valuations with real revenues."
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Tiers are working
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Social network finances
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social networking & money
Think of the money, dont be scared to ask for it and treat it as a business and any social networking site can work.
Mid March sees the launch of Bainzy, see how we have done it.... Thats the way ahead...
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