While listening to a panel of industry professionals talk
about how best to view social media as a business at yesterday's Advertising
2.0 conference, it suddenly clicked as to why so few are doing this successfully.
The panelists debated for over an hour on the way people socialize online, and the best way to use social media to sell ads, and came to the
unspoken conclusion that no one agreed with each other. This made for an
interesting panel -- but cast an ugly cloud over the idea of monetizing social media.
The first disagreement arose over the inner workings of the
social network in terms of whether different demographics use them for
different purposes.
"One of my big observations
is the Facebook crowd isn't really interested in meeting new people unless
there's a solid connection," said Jeff Taylor, CEO and founder of Eons.com, a
social networking site for baby boomers. "If it's about a 'Me' network, in my
world, you go in, build a profile, it sits there, and nothing happens. Groups on
Eons are dynamic and really important."
Some of the panel nodded along -- but not Josh Bernoff, VP
and principal analyst at Forrester Research Inc. "I have a real problem with all
these generalizations of people by age," he said, adding that there are also 18 year-olds who join social networks to be part of a niche group, and 50 year-olds who join
them because a few of their friends did. "If you concentrate on that, you're
missing the point."
And, according to Bernoff, several advertisers are missing
the point if they advertise on Facebook simply because they're trying to reach
the most people: "It's not really about
advertising on Facebook. That's the weakest way to use this stuff. It's about connecting
people who are interested in the same thing. We as media people, as
ad people, have all been trained to think in terms of mass. 'Where can I reach
7 million people in such and such demographic?' To start here you start with
individuals... Treat people as actual human beings."
Echoing that sentiment, and trying to keep a bit of peace on
the panel, was Conn Fishburn, director of social media strategy at Yahoo Inc. (Nasdaq: YHOO), who described
the data they're gathering from people as a gift because it allows advertisers
to target consumers more personally. "Our
goal is that advertising becomes less invasive and more of a value," he said.
Not so fast, said Linda Goldstein, partner and chair of the
advertising, marketing, and media division at Manatt, Phelps & Phillips. "If you sat across from the FTC
and said it's a gift they'd look at you as if you were coming from Neptune," she said. "They
see it as incredibly invasive."
The panelists continued to disagree about things like whether
companies should moderate message board comments about their brands,
and whether companies need to launch participatory ad campaigns or treat ads as
media. The ultimate conclusion was that there's much for individual brands to
figure out before leaping into social advertising... but not much time.
"This isn't an ad campaign. This is the beginning of a
transformation of how your whole company runs," said Bernoff. "So think about
it first... but your competition is doing it right now."
The monetization of social networks is Web 3.0, but that monetization will not come as a result of marketing "to" the social network, but rather by the organization of it as a money-making workforce for both the network and the individual.
I think they're not making money! If I had to guess they're making losses - but with a huge potential.
I think context advertisement is the way to go - but how to get there without selling-out their users is still to be seen.
I don't know if you've seen the EPIC 2014 movie - not the comedic satire from Hollywood. It was release in 2004 by Robin Sloan and Matt Thompson. It depicts a creative way of looking forward. The movie touches on privacy and copyright issues as well as a "googlezon", created from the merger of Google and Amazon to create the "Google Grid" where they match user preferences with actual products.
* Just as a comment: remember the movie is fictional, anything beyond 2004 is purely based in their imagination.
But the question that comes to my mind is that how are the social networks currently making money ( if they are making money)?
Traditional online advertisements have not been very successful in the arena fo social networks but some other techniques have also been tried like trying to selling things via recommendations. For example, I may be interested in a product recommended by my friend or a community. Similarly there have been some other techniques as well. How much these techniques have been successful??
I think there is still some room for "a little intelligent" online advertisement. Just as the gmail delivers advertisements based on the message being explained there can be room for some companies that can deliver advertisements by interpreting the mesages being exchanged on the social networks. For example, if I am wishing some one Happy Birthday on a social network then I may be interested in birthday gifts?
Thank you Nicole! I am so grateful to read your post! I am relieved to find out that the efforts to monetize my visits that have been unsuccessful is because they really don't know how to market to me. (Not that I am just a bizarre online visitor.) Heck, even my own friends on facebook cannot figure out how to get me to join a group or revolution or anything on facebook, and they KNOW me. It is really not a surprise that big marketing firms don't really know how to reach me. Besides, how could they? With the ability to manufacture my own personality to be the [da-da-da-da! Super hero!] How can they expect that their message will be on point?
Even a blind squirrel finds an acorn now and then, so it does stand to reason that if they throw enough (substance of any kind) on the wall, some of it will stick. But at what cost? Millions of dollars per second of a super bowl ad, hoping I was watching the super bowl to begin with, and hoping secondly that I am not watching on my TIVO or DVR, skipping over the commercial breaks.
I hope that some day I can figure out how to monetize social media, and that I can tell you how to do it too, so we can't say that nobody knows!
In the information age, as long as you have a strong base of users who are willing to share their most private issues you'll be ok - not even ok, you'll be rich!
Google started out without a clear business model and it took them some time to finally figure it out. But that didn't limit their efforts – they just had a clear vision, that everyone followed. Facebook, to name one of the many social networks has a very strong base of users who add as many things as they can to the site. From my profile, to my friends, to what I like, pictures, videos, pages I visit… I mean, you name it and Facebook (along with the third-party developers) probably have an application to help you with it.
The problem now is making money from that – without forgetting about the vision (which I’m pretty sure has the user as the #1 priority). The most obvious business model is one of the community model (based on loyalty, where users have a high-investment of time and emotion). The use of contextual advertisement as the main tool (subscription-based social networks really don’t cut it).
The technology is there and like almost everything else, that isn’t the problem. The real problem is that users aren’t ready for that – or the ones that speak the loudest aren’t ready for that. Having Facebook or MySpace or Orkut partner with some retailer to offer me a product they took from the things I like, or that a friend likes can be perceived as the company selling out – but at least I wouldn’t mind if instead of seeing vitamins and “meet new young people” ads I would get a suggestion to go to Amazon to check out the new deals for SLR cameras. The ads are going to be there, let’s just make them useful.
One thing which always get advertisers excited about and crack up their adrenalin to fever pitch levels is crowds and little wonder then the annual scramble for Ad slot on superbowl. With the increasing popularity of social networks like Myspace and Facebook which together boast of a whooping membership running into several millions, one needs no survey to be reminded that 21st century crowds are firmly lodge into these networks.
You know that and so do I with increasing satisfaction because we are confident that we can find a community online who share our likes and to a lesser extent our dislikes. But such knowledge is proving to be a frustration for advertisers, a frustration similar to that of an hungry lion who can only but sniff around a potential prey. They have employed various strategies to harness these crowds with relatively little or no success and even the "dinosaur" of online advertisement, Google is finding it hard to monetize YouTube.
So when a major company comes knocking at your online space in the name of social networking, you better know as i do now that those annoying TV ads you've run away from have been disguise as your online friends!!!
The problem with Web 2.0 Social networks is they are part of the 'web' that we are expected to ‘go to’ to be social.
We are already social (and have been since Web 0.0) and we form social groups centered on our gym, favorite bar, or workplace.Then there are the social networks if not centered, then glued together by favorite Artifacts. A Ferrari Users Group, Benetton customers, Harley cycles, Royal Caribbean Cruise, whatever.
When the Web 2.0 technology becomes embedded in the devices we use in our gym, workplace, auto, motorcycle or whatever- then the monetization of the network will be obvious.
It becomes blatantly obvious when a social netwok goes corporate doesn't it? Unless that's the transparent purpose (e.g. help design the next generation skateboard) it won't last. Treating your community members as leads or impressions instead of peers is a losing strategy.
Many "social networks" remind me of that old Silly String commercial with a bunch of generals and dowagers standing around talking about the "motion of the ocean" until a bunch of cool people come in and give them silly string to spray on each other.
"Chatting" and other networking has succumbed to the rigid formalities of the workplace, hierachies of who can say what to whom have been established, whereas way back in the late 90s was the complete absense of barriers.
So, now, maybe we need to hire some Party Planners or get some Social Network MCees to stir the conversational minestroni and keep it from sticking to the bottom.
Just putting up a Cold Fusion template and saying "here, put your marketing data in so I can exploit it" no longer qualifies as Social..in my book.
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