Last week I wrote a post about the quest for major advertisers to figure out Social Media. With tens of millions of current users across the US and around the globe, and extremely high stickiness levels, social networking sites are easily one of today’s hottest mediums. What new marketing and revenue opportunities does this present for advertisers? It's still early days, but there is excellent thinking in this area.
StrawberryFrog has executed 'Social Networking campaigns" both recently and even before there was Facebook or Twitter. For example, much of Asics Onitsuka Tiger's success is due to StrawberryFrog's Social Media strategy written back in 2000. Sure in those days it was about maximizing informal P2P social networks vs targeting members belonging to manufactured sorts of network like Myspace. But it is proof that this medium is incredibly effective. OT is now a world class brand that has grown and grown without spending the kind of TV commercials money that the major sneaker brands have spent. Even Converse today feels more mainstream with their strategy to go mass market on TV vs. using the new social media tools at their disposal. Here is some of that earlier OT work.
But getting back social media again, if you're like me, you will have noticed an incredible rise in the number of articles and blog posts about Social Networking and Social Media of late. Today, I read a thoughtful post from Adotas which suggests that the challenge of monetizing ad space on social networks isn’t related to a lack of inventory.
The main point in the article below is that social networks won't make as much money selling adspace as they will selling - you guessed it - your behavior. It looks like a Darth Vader approach of trying to find a way of making money from Facebook by selling your online behavior and searches. Yuk.
"While leveraging their own audience member data via increased ad content relevance (behavioral targeting) will undoubtedly reap short-term benefits for social networking communities, the long-term monetization opportunity lies with the monetization of purchase-intent data, which they will either need to buy or acquire through partnerships."
Adotas says that: While social networking sites have terabytes of monetizable data, the reality is that much of that data is irrelevant for advertisers. Why does it matter, for instance, who consumer X is friends with? True, one person could be recognized as ‘influential’ over others but what does it mean? Does it mean that when someone is looking to buy a DVD, they will ask that person for his or her opinion? What are the odds that, even if asked for his or her opinion, that influencer bought a DVD recently and has any idea what DVD his ‘influenced’ friend should buy?
Take the most grandiose effort so far, Facebook’s Beacon - where do they get data as to prospects’ purchases and purchase intent? They get it from advertisers’ sites. If they knew consumer X was buying a cell phone, then why did they need the advertiser data?
Leveraging social networking sites’ audience member data is a ‘low-hanging-fruit’ approach that will inevitably lead to enhanced ad space monetization for those sites. Nevertheless, there is a better solution that stands to benefit consumers, advertisers, and the sites themselves.
It all comes down to purchase-intent. When a user goes to Google, or any other search or vertical site for that matter, and types in “Laptop” or “Car Insurance” or “flight to Atlanta,” in most cases they are declaring their intent to purchase one of the aforementioned products in the near future. This is one of the main benefits of advertising on a search engine or a vertical site. Google’s success stems from it being the world’s #1 aggregator of consumer purchase-intent data.
Internet users spend roughly 5% of their time declaring purchase intent (i.e. searching) on search results pages that seize approximately 40% of Internet ad spending, and 95% of their time browsing ad-supported content (i.e. social networking sites, news sites, Web-based email sites) that are mainly unsold or sold for relatively low rates and difficult to monetize via contextual means.
While leveraging their own audience member data via increased ad content relevance (behavioral targeting) will undoubtedly reap short-term benefits for social networking communities, the long-term monetization opportunity lies with the monetization of purchase-intent data, which they will either need to buy or acquire through partnerships.
The enhanced targeting that the acquired data will provide will enable social networks to deliver better targeted campaigns that maximize advertiser ROI and the networks’ own effective CPMs. This is because purchase-intent data has been proven to deliver results.
On that note I offer a word of advice to Facebook and Myspace. Facebook – you were right to reach outside your properties for purchase-intent data. You were wrong as to the way you used the data. Rupert Murdoch – I have no idea whether and what shape a partnership with Yahoo will look like but I would advise both Myspace and Facebook to partner with a company or companies that can provide you with access to lots of purchase-intent data– data that will be instrumental for monetizing your ad space.
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