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.
8 Replies to “Can Social Media Really Be Monetized?”
Great Info and the article so for..
In my point of view in all social media site twitter is a great sites for online advertising and business. antd the others like Facebook and my space are also worthy.
Social media ads work. Executives claiming otherwise haven’t experimented sufficiently, read sufficiently or have some other issues holding their shops back.
WHo claimed it was media? Well, a “media-buy” is really just fancy talk for putting your message alongside something else the user was really interested in (the news, a sports event etc) … just like their conversations. OMGZ!!
The problem isn’t really one of users that are unresponsive to advertisers – it’s that advertisers seem to be refusing to treat people on social sites as robots whose only purpose is to help them get a decent conversion rate.
If social networks are going to be used for this kind of one-way advertising, efforts have to be made to target the traffic correctly. We’ve actually had some success with Facebook’s advertising solution. We can target people with specific interests, so it’s something they’d be interested in, and we can make offers they would particularly be interested in.
A successful social network advertising model is one that puts social networks users in control of the advertising messages. When that happens, brands will be inserted in the online conversations of the users. Until then, advertisers will remain frustrated and social networks will continue to offer poor advertising options.
This is an interesting topic. Social media marketing (not advertising) is definitely a boon for the small business owner. But ads on Facebook, and in general, are not really going to do it anymore. How can Facebook capitalize on the money small businesses (and other businesses – when they catch up) stand to make from networking through their website?
I think social networks will never be the jackpot of advertising. They will follow a slow progressions of creating better targeted ads by creating platforms which give rich connections to people and the people around them.
I hadn’t thought of that — an excellent point. The ads currently on Facebook do smell a bit spammy and the placement in the news feed seems misplaced, if not irritating. I wonder if the opt-in nature of Facebook Connect, which isn’t actually an ad program at all, will be viewed more positively by users. Thanks, Jonathan!
I think one reason advertising on Facebook isn’t working as well as hoped is because the earliest adopters of the format were affiliate marketers, so the ads immediately smelled like spam. Placement of ads in the news feed certainly doesn’t help, either, because people are busy doing something already when they see those ads. Perhaps advertising on Facebook should be seen more from a branding perspective than an ROI angle?