Dip Coming for Social Media Ad Revenue?

December 11, 2008

MySpace drags down social networking outlook

By Rich Cherecwich

Social networks have unveiled a slew of new advertising formats this year, but they don't appear to be working, as eMarketer has scaled back its social network ad spending predictions for the second time this year.

The latest projection estimates advertisers will spend $1.2 billion on social networks this year, down from a projection of $1.4 billion made in May. Social network advertising will grow in 2009, but only to $1.3 billion, which is down from eMarketer's previous forecast of $1.8 billion.

A large reason for the revised estimates is the poor performance of MySpace. The News Corp.-owned social network, which highly touts its hyper-targeted ads, scrambled earlier this year when revenue fell short by $100 million. Now, eMarketer has scaled back its forecast for ad spending on MySpace by close to 23 percent -- a nearly $200 million difference.

Facebook, which has fought long and hard to prove its ads work, isn't fairing so well either. It will receive $210 million from advertisers this year, which is considerably less than the estimated $585 million for MySpace, and a 21 percent drop from eMarketer's earlier prediction. MySpace and Facebook account for 70 percent of social media ad spending.

My Take

Social media advertising will find its level. The key to an effective financial model will be to tie the cost of the media to the results it delivers. And allow the businesses to set their rates.

With social media this is possible.

Cutting Through the Clutter

Word of Mouth Marketing Prevails In Social Media
Excerpt:
What this image shows is traditional marketing and social media marketing. As you can see the black arrows aren’t penetrating through the circle and the reason is because it is getting harder and harder to market using traditional media. The red arrow on the other hand is social media. You can clearly see that this is penetrating into the market and reaching a certain number of people. These people belong to one group, one community. Say facebook.
If you are taking the right approach to social media marketing, one of these users might go into a different platform and talk about it. You can see from the image an arrow pointing to another user inside a smaller circle.
Now this user might talk about it within their community and then may be hit the other community that he/she belongs to. Social media is simply word of mouth advertising. You don’t pay a dime, you simply participate, become a valuable member and penetrate into the market.
Once you take care of that, each user will carry on the message without them even knowing that they are actually promoting your products and services. Word of mouth advertising has been the holy grail of traditional marketing and it is true when it comes to social media marketing as well.

My Take

Ritu -
“Word of mouth advertising has been the holy grail of traditional marketing and it is true when it comes to social media marketing as well.”

So true.

The current interest in “social media” seems to be a rediscovery of what has always worked for local, trusted businesses. The Web allows national brands to more effectively affiliate with consumers by seeping into their social circles. Conversely, local businesses can use the Web to grow through leveraging the consumer trust they already have.
Your illustration shows the value of breaking through mass media clutter and into the area of trust. Our attempts at illustrating this can be seen on SlideShare.

My Take: Microblogging (pronounced "Twitter")

Imagine a steady stream of blogging posts flowing at you from only the associates and industry gurus whom you select. Now stop imagining because it is real - and takes three minutes to get yours started.

It's called Twitter - and it is a mash-up, if you will, of Facebook, instant messaging and blogging.

How can it help you or your business? That depends on your business and who you're targeting. Seems like most Twitterers are Web professionals or simply have a lot of time on their hands. But if you wish to make new connections, latch onto cutting edge conversations and even drive traffic to your site, then it will work for you.

Warning:
1. it is addictive
2. it can be frustrating - you will go through waves of acceptance from "this is cool" to "this is TOO much" to "Oh - now I get how to do this..."
3. you will be shunned for overt self-promotional-ism. Better to sit and watch a spell - get a feel for the protocol and etiquette before diving in.
4. it can steal time from other Web activities, so be looking to re-adjust your mix. Example - I find it more difficult to create blog content when I am in rapid fire Tweet mode.

So give it a whirl. You can "@" me (lingo for sending me a direct "tweet") at timtracey

- - Tim

Social Media as an Ad Vehicle - "Is it working?"

Is Advertising On Social Networks Working

Posted on December 7th, 2008 by dhirender

Even as traffic to social networks increases, a revenue model still seems to elude most of them.Advertising is pretty much what most social networks depend on, and it doesn’t seem to be working.

According to this eMarketer report, more than one-half of the US population surveyed uses social networking sites, but the ad dollars have not followed. More than 75% of social network site users logged in at least once a week and 57% did so daily. Moreover, more than 61% of those users spent more than 30 minutes per session on social network sites, and 38% remained parked for 1 hour or more.

However, only 57% of social network site users said they clicked on an ad in the past year, compared with 79% of all Internet consumers. Despite phenomenal growth, social networks have yet to reach online advertising nirvana—that heady place where behavioral targeting tools aim for specific groups with offers specially tailored to members’ interests. It’s a place where marketers are able to serve ads, promotions and offers to friends of friends based on a pal’s recommendation, and where word-of-mouth marketing spreads like a flu virus in January to create waves of self-selecting consumers eager to interact with marketers.

My Take

“Is Advertising On Social Networks Working?”

For some - yes.

It will work for every business when their social network IS their advertising.

Social media is growing due to its increased acceptance and its pervasiveness (mobile, etc.) As it replaces legacy media (print ads, Yellow Pages, etc.) it will replace advertising and become the
default form of search.

It will succeed over algorithmic “search engines” because it incorporates trust - not just ratings. It also supports affiliation and as such is a vehicle for involving the members in a relationship
with the service providers.

Social Superiority

Maximizing Social Discovery Opportunities on the Social Web
Posted on November 28th, 2008 by Jackie Peters

Excerpt: Social media has fundamentally changed the way that people discover products, services and content.

The social web has amplified and magnified word of mouth to increasingly expanding proportions. Prior to the social web, if I were to like a product or service enough to talk about it, I may have mentioned it to 5 or 10 people, and maybe 1 or 2 or them would have then told their friends. But now, being hyper-connected means that when I talk about something favorably, or negatively for that matter, I’m potentially telling thousands or even hundreds of thousands of people.

Passive social discovery happens when we casually observe information streams emanating from our social circles and pick up on something that strikes a chord. For example, I may see a friend of mine link to a blog post, or become a fan of a product on Facebook and
as a result I have discovered something new.

Active social discovery happens when information is actively requested, or “crowd-sourced.” For instance: I want to know the best place to get lunch in Santa Monica, so I post a question on Twitter asking my followers and solicit a response.

In my view, social discovery represents an amazing opportunity for brands and individuals alike. So how can brands take social discovery into account as they forge pathways within the social web?

1. Listen
2. Know where your community, ambassadors and mavens are
3. Share something, contribute, be relevant!
4. Give your content “social lube.”

My Take

Jackie Peters pegs the "passive" and "active" functionality of social media based search. This distinguishes social media from Web 1.0 advertising which is active - i.e. you conduct a search for a product and get results based on the search engine's algorithm. Social media is more powerful because it integrates it into our real-life relationships and daily offline conversations.

Choose “smart”: It’s not WHO you know – it’s who THEY know

You’ve heard the contractor horror stories.

When it comes to big ticket repairs or remodeling, home owners can be at the mercy of unreliable or unethical businesses.

Homeownership is expensive. In a typical year you can face thousands of dollars on improvements.

Here’s what we’ve done around the house over the past year:

Driveway repaving $3,000

New paver walkway $1,500

Custom cabinetry $2,200

New ceiling fans $ 450

Deck refinishing $ 300

Interior design $4,000

Oil burner maintenance $1,500

Considering how quickly these costs add up, the value of a trustworthy contractor is clear. So, how do you find them?

Word-of-mouth is the most trusted source of consumer information. Each of the seven contractors I hired were recommended via word-of-mouth. And because of their top notch service I have recommended each of them to others.

Do you want to get the most value for your home improvement dollar? It’s easy.

If you’re already a Member of YouGottaCall.com just invite a few of your trusted local businesses to connect with you. While you’re at it invite a few of your friends and neighbors. You’ll be amazed at how your “Connection Engine” grows.

With you Connection Engine working for you, you won’t need to rely on luck. You’ll have more peace of mind – plus you’ll benefit your favorite charity each time you use the network.

Former Google Exec Praises New 'Referral Engine'

Often referred to as the "godfather" of Google's AdSense technology, Gokul Rajaram, former product management director for Google AdSense said, "Word-of-mouth marketing and affiliate marketing are two of the most powerful and effective marketing techniques today." He added that combining these two technologies has the potential to "revolutionize social network monetization and significantly enhance ROI for marketers, while providing valuable information and services to users from people they trust".

My Take

Mr. Rajaram's remarks were specifically aimed at a new "referral engine" geared toward online purchases for national brands. But this observation by an industry leader and pioneer is a strong endorsement of YouGottaCall.com's patent pending business process.