Targeting based on mindset helps ads break through
links for 2007-12-06

Are more ads on social networks inevitable?

iStock_000004415349XSmall.jpgOne of the biggest questions on my mind with all of the hype surrounding Facebook (and the ramp up by marketers) is how they plan on making money. There are some ads on the site now (the lack of ads is one of its redeeming points) and Beacon seems to have loads of potential even though it was poorly launched.

Facebook seems to be leading the way among competitors in opening up the platform for developers and that's a key to growth and future revenue. But they're still not making any money outside of investments. Most of the other networks, however, are still more closed and are heavily advertising dependent. Just take a look at these examples of Facebook vs. MySpace. I've removed the portion of the page that I control and left in the ads and other default pieces.

Facebook without my contentMySpace without my content
facebook_blanked.pngmyspace_blanked.png

Given that example and the obvious focus that MySpace places on ad space, take a look at this chart from eMarketer showing the share of traffic and ad impressions for MySpace and Facebook. Note that MySpace has twice the traffic and 6.5 times the ad revenue of Facebook.

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Now, let's look at how eMarketer expects ad spending on social networks to progress. Though the anticipated growth is leveling out, it is gaining attention from marketers as a viable outlet.

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Taking all of that into account, is throwing more ads on a page the answer? It seems to get more revenue in the door, but it's far from adding value to the users. Click through rates are also notoriously low, so the value isn't really there for the advertisers either. So what's the solution? Here are some options that we're already seeing, but are sure to see more of:

  • Creating rich, branded applications
  • Helping users centralize data into one place
  • Connecting people from multiple networks around a passion
  • Localization and hyper-targeting

What have you seen that gets you engaged with a brand?


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