Can Social Media Really Be Monetized?
Social sites like Facebook and MySpace have long struggled to effectively monetize the social networking space. The Internet’s watering holes have tempted advertisers with an engaged and captive audience. But advertisers have seen minimal success with users who balk at unwelcomed and overt advertising tactics.
An article over at Wired today asks Is Social Advertising an Oxymoron? One interactive marketing executive points out the problem with advertising on social media sites: “Who said this is media? Consumers weren’t trying to generate media. They were trying to talk to somebody… We hijack their own conversations, their own thoughts and feelings, and try to monetize it.”
Facebook Connect is a new feature of the most populous social networking site, which aims to let users take their social networks with them as the surf the Web. Participating third-party Web sites allow users to connect to their Facebook identity and circle of friends while on the site. For example, with Facebook Connect a user could alert her friends to the fact that she is watching a video on Hulu.com (one of the latest partners to jump on board) and invite them to watch along with her. Apart from the innovative access given to users to easily share interesting finds and stories, Facebook is hopeful that the new feature will lead to advertising revenue from partner sites.
From The New York Times:
A survey last week from the research firm IDC suggested that social networks were a miserable place for advertisers: just 57 percent of all users of social networks clicked on an ad in the last year, and only 11 percent of those clicks led to a purchase, IDC said. [...] This is where Facebook Connect could help. [...] Facebook has detailed information about its users: their real identities, what they like and dislike and whom they associate with. With a member’s permission, it could use that data to help other Web sites deliver more personalized ads. Similarly, those sites could tell Facebook what its users are doing elsewhere, helping to make its own ads more targeted.
Will it work?
When you visit The New York Times Web site, have you ever noticed the bar at the top of the page inviting you to join TimesPeople? I’ve been hesitant to join because I don’t like broadcasting my activities to others and I’m reluctant to add another social network to my ever-growing list. Facebook Connect would eliminate the latter concern while limiting such broadcasts to a small group of people that I actually care to share my interests with. From the user’s perspective, Facebook Connect doesn’t sound like an altogether bad idea.
But can it really be leveraged by advertisers? Possibly. We’re starting to see more and more attempts, anyway.
One interesting case study of social media monetization comes from the Times itself. In a recent campaign, The New York Times asked its Facebook followers what the first act of the president-elect should be when he takes office. The message reached 68.3 million people and resulted in a staggering jump in the number of Facebook fans for the news organization. According to the story, the number of fans multiplied three-fold, from 49,000 to 164,000. That could be three times more eyeballs reading Times stories and, importantly, Times ads. This is reflected in the fact that the publication saw a four-time return on their investment.
Several other darlings of the social space, like YouTube and MySpace, are also trying their hand at programs designed to improve monetization of their sites. MySpace touts its detailed user demographics and YouTube leans on its engaging content. Most social networks worth an advertiser’s consideration can boast impressive traffic stats and that coveted audience of expendable-income-laden 18 to 40 year olds. But only time will tell if advertising to people in their cozy social space is worth the effort after all.