On May 26, the Frankfurter Allgemeine published an interview in which Google CEO Eric Schmidt admitted that social networks may not be a suitable venue for online advertising. While many of us have already come to this conclusion, Schmidt’s acknowledgement is newsworthy because it’s the first time that anyone with such status in the industry has conceded that some popular sites where people spend a lot of time may not necessarily be good places to advertise. So what does this mean for sites like MySpace, Facebook and Bebo?
In the interview in the Frankfurter Allgemeine, conducted by Holger Schmidt (presumably no relation), the Google CEO stated, "The web 2.0 architecture is not necessarily a revenue opportunity. This is not where the money is." While this may not be music to the ears of Mark Zuckerburg and other Web 2.0 entrepreneurs, I personally think Schmidt is entirely right, especially when it comes to traditional display advertising, or, for that matter, applications like Facebook’s Beacon. (See my previous post here.)
Schmidt’s assertion follows a significant drop in the number of Facebook’s users which can variously be attributed to…
• Boredom – do I really want to know that Jorge was eating a bacon sandwich on Tuesday?
• The lure of the new – maybe I should try TeeBeedee: "the online community for people over forty who know that life is still to be determined."
• Residual annoyance at Beacon’s blatant attempt to monetize our private lives – although so far the only thing I have learnt from Beacon is that one of my friends in NYC eats too much take-away food.
Alexa.com suggests that while Facebook’s daily percentage reach is still increasing (and has recently overtaken that of MySpace), the percentage of page views is holding steady. This suggests that new users are less active than the ones who might be moving onto other sites. I know several people who feel that the presence of "old people" on Facebook is curtailing their desire to display all aspects of their private lives with friends of their own age.
Eric Schmidt does hold out hope that someday there will be advertising products that will work on social networks. He said, "The advertising has to be more entertaining, more interesting, more immersive compared to what we have today. That is my opinion. We are not there yet but I am optimistic that it could work very well."
I believe that his assessment is absolutely correct. The successful model for advertising on social networks probably reflects advergaming more than traditional formats. Most people enjoy playing with the various applications on Facebook, but they are pretty simple to use and rarely engage attention for long. A more immersive and challenging experience is required.
So what might that immersive experience be? Suggestions please.
(9 votes, average: 4 out of 5)
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June 12th, 2008 at 8:30 am
Thank you for the insights. I enjoy how your post triggers some realistic questions that we may not be able to answer yet today.
In fact your post actually triggers more questions which I cannot answer completely today as a researcher: how does the research industry needs to change in order to be able to offer immersive and challenging survey experiences, away from the traditional focus group and (online) survey?
June 12th, 2008 at 8:49 am
Hi Emiel,
You pose a good question. My belief is that while it is desirable to make research as engaging as possible there are trade-offs to be made in doing so. For instance, Millward Brown has developed the IdeaBlog in order to leverage Web 2.0 capabilities and it has been well received by participants (as well as yielding useful information). The combination of free-form discussion and interaction combined with ratings seems to work well and the investment in setting up and monitoring the project pays off. This balance might be more difficult to achieve with a quantitative approach, particularly if representation is an issue.
Nigel
June 14th, 2008 at 1:10 pm
[…] a real simple way to define Spam: namely a marketing message that is irrelevant. As people like Nigel Hollis talk through the inability of marketers to effectively use social networking, an obvious question […]
June 14th, 2008 at 1:14 pm
See McDonald’s ARG, or this from BMW. http://www.rampenfest.com.
This is using online media to enhance the brand. Online media is hard not to do without asking for someone to click. Because that person is so close to buying. But just because they could buy, doesn’t mean they want to.
Interactive, or online advertising, has so far been almost entirely about asking for the order. But perhaps it’s better to just ask to be a fan and give them reasons to stay fans.
June 23rd, 2008 at 10:43 pm
[…] be good places to advertise. So what does this mean for sites like MySpace, Facebook and Bebo? More. Posted by icontract Filed in […]
June 24th, 2008 at 7:44 am
Good question. Facebook, more than any other social network, is built following an MTV approach: attention do not spam for more than 30 seconds and all the application reflect that model. The consequence is that sooner or later booredom will catch your attention…..
Schmidt p.o.v. sounds deliberately low profile but it is the sign that advertising, as we can define it today, has no role to play in social network as well in the web 2.0.
To me an immersive experience is when you feel comfortable with an environment, no matter its shape.
Furthermore, today corporations try to squeeze products in the web 2.0 context but tomorrow, if not earlier, they should start to produce products from the web 2.0 and the new consumers.
July 6th, 2008 at 11:51 pm
Hi Nigel
I have a very firm view on this subject based on broad agreement with your opinion. I will declare my personal interest up front, but I believe there is a more ‘immersive experience’ to be created based on three hypotheses:
1) I think there are inherent challenges with targeting display advertising in a web 2.0 environment because the user’s expectations are set higher than normal. However, I think the more niche social networks provide renewed opportunities to dial-up the relevance of pushed messages.
2) I think new ‘advertising’ or ‘commercial’ models need to be developed based around the user’s journey and mindset.
3) I think web 2.0 environments might present better sales opportunities not for ‘brands’ but for ‘businesses’ - homebased, small, small to medium sized.
I can elaborate on these points respectively based on what is being created at http://www.comotivate.com
- Specific goal-related teams created and actively maintained which provide highly qualified audiences for advertisers
- Intra-team gift-giving opportunities at key stages of goal progress in which affiliate commissions replace display ad revenues
- Registered coaches or experts invited into the team by the team owner to help members progress will receive a share of the revenue generated by that team’s purchase activities or exposure to ads.
The site is live but in BETA at the moment and these hypotheses are yet to be tested, but if comotivate is to survive it will need to not only attract users, but commercial partners who understand that the future of social networks is to ’support’ the awesome power of communities rather than ‘milk’ it.
Two further assertions:
- Social networks must mature beyond the mere empathy offered by a vertical niche to provide more of a differentiated value exchange
- Social networks must optimise their mobile presence to be in a strong position when the west catches up with the east.
Nigel, thanks for being provocative!
July 9th, 2008 at 9:00 am
Hi Matt, thanks for some great feedback. I love the distinction between supporting a community and milking it. I’ll check out comotivate in more detail but it looks intriguing.
Best, Nigel
July 17th, 2008 at 6:04 am
At the risk of taking the conversation beyond its original scope, I think web 3.0 may present new opportunities, depending on what models are empolyed by the social networks and adservers for embracing the pull-based personalisation the new era promises. I wonder whether the idea of people actively choosing what kind of adverts they are interested in (as opposed to our inferring it from their behaviour) would change their attitude to advertising they see - i.e. perhaps they would take a much greater interest in it. Could there be a system whereby people teach their ’smart agents’ what kind of advertising they are interested in by rating the adverts they see? Clearly there are potential flaws - for example if a campaign specifically needs to target people not interested in a product - but it seems like ceding more control to the eyeball could elevate its attentiveness.
July 17th, 2008 at 8:34 am
Hi Alex,
I suspect that people would definitely be more receptive to pull-based communication provided it did not degenerate into blatant selling. They would also be more likely to pass ads along to others who shared the same interests.
To your point, I have always wondered about the degree of inertia that is implied by the use of intelligent agents, how do you get to learn about something new that better meets your needs than your current choice? And how long before agents actually become standard? I have been hearing about them for years but my own smart buddy has yet to arrive!
Cheers, Nigel
August 6th, 2008 at 3:50 pm
User generated content and social networks
One way that I see the web as being an effective advertising venue based on already existing infrastructure is user generated content. With the advent of websites such as Youtube and the prevalence of “viral” videos, the new generation of consumers demands more control over what they take in and how they take it in.
In regards to Facebook, one application based on user generated content which comes to mind is the “bumper stickers” application. This application allows users to create their own bumper stickers and “stick” their friends’ profiles with them, where they will be seen by both their friend who received the sticker and everyone else who views that profile page. As a popular application, bumper stickers seems to have had an advertising side effect without specifically being an advertising avenue. Simply browsing through the “most popular” stickers shows that there is a sizeable number of user created stickers that essentially promote products and are passed around because they are found to be particularly relevant or humorous. A recent example is the proliferation of stickers related to “Mamma-Mia” around the time the movie came out. Though I don’t know if any market research has been done regarding the effects of such messages, I can say from personal experience that a few people I know became more interested in the movie as a result of the bumper stickers being passed around. I doubt that by themselves the bumper stickers would have persuaded someone to watch the movie, but at the point that they generated enough interest for someone to seek out more information (from myself, an Abba fan who has seen the movie) and ultimately watch the movie, the stickers were effective in promoting sales of a product.
As a recent college graduate and avid facebook user, my personal experience is undoubtedly not representative of the entire population, but as long as such content generates positive images of a brand I think that it is a medium that has much room for growth and should be looked into more closely. One interesting question is whether such messages would be effective across industry lines, especially for brands which have no immediate challenges but are simply looking to increase status and/or enhancement.
Though I don’t think that the bumper stickers application itself will be particularly viable as a marketing avenue, I think that through user generated content a lot of the inadequacies of social networking marketing can be overcome. Some companies have already begun attempting to incorporate the popularity of user generated content through video submission contests, etc., and I think that there is a lot of potential to be had in combining the idea of user generated content with social networking. Finding a suitable formula will take some trial and error, but in lieu of extensive adver-gaming platforms I think that utilizing users themselves will prove itself as a strong marketing agent.
August 7th, 2008 at 6:20 am
Hi Kevin, thanks for the comment.
Since you are an avid Facebook user - I would describe myself as an intermittent user - perhaps you could comment on the use of display ads on Facebook. I can see that bumper stickers are a fun way to interact with people but does anyone even bother to look at a display ad?
Thanks, Nigel
August 7th, 2008 at 3:51 pm
I do not know the actual number of clicks that any particular display ad generates, but from off-hand experience I’m led to believe that people do in fact notice display ads that are done well and have a relevant message. It would be interesting to see a quantitative study done on this topic.
The display ads I refer to, however, are the ones on profile pages, whereas display ads within applications are basically disregarded.
My impression is that these ads are often not relevant and do not demand attention away from the application. My example of the bumper sticker application is that the concept of user generated advertising holds a lot of potential in overcoming attention/relevance deficits and that the importance of marketing within social networking sites should not be disregarded.
August 19th, 2008 at 3:43 pm
[…] So if push targeting is unlikely to ever become the Holy Grail of advertising on social networks, maybe we should be looking at the idea proposed by Alex Johnson in response to this post. […]