Social Networking’s Advertising Dilemma: Which Came First, the Ad or the Consumer?
by Kara Swisher
Posted on December 15, 2008 at 8:40 AM PT
Another day, another article about how social-networking advertising has a steep uphill ride to get to any kind of decent pinnacle of profitability.
This time, it’s the New York Times’s Digital Domain columnist Randall Stross weighing in yesterday on the experiments going on between Facebook and the world’s largest advertiser, Procter & Gamble (PG).
Unfortunately, Stross did not appear to actually talk much to either party about the specific results, except to make his own nonscientific determination of two seemingly lackluster advertising efforts around P&G’s Tide and Crest brands on Facebook.
Thus, to my mind, the article represents the high-water mark of the Facebook-Is-Dead theme. This is characterized by the theme of the hot social-networking site running out of money and doing down rounds from its once-touted $15 billion valuation (a valuation that was fiction then and only more so in this weak economic environment).
That plot was, of course, preceded by the Facebook-Is-Immortal story, in which the start-up could do no wrong.
BoomTown did not buy the latter, as readers of this column will recall. But I certainly don’t accept the former either.
Instead, hopefully, we can now reset all our expectations and keep it simple: Facebook has impressive growth and terrific products, which everyone should admire.
Now, it and other sites like it have to come up with innovative ways to monetize their services.
And that is not impossible, as the article in the Times–which would surely trade Facebook’s challenges for its own in the ad market, I would guess–insinuates.
How does it arrive at this conclusion?
By referencing a sizzling quote last month by Ted McConnell, manager of interactive marketing and innovation at P&G, of course, who said at a conference: “I really don’t want to buy any more banner ads in Facebook” and also, “I don’t want to be best friends with a brand…It’s just stuff.”
Along with this less-than-smoking gun, the article also lists all the alleged problems of advertising in a social-networking environment, most of which are very old news for anyone paying even the slightest attention over the last year.
To wit: People on social networks like to hang with friends rather than brands; ads on member homepages are cheap, but no one looks at them anyway; to get people to pay attention, you need to fork over too much or do dumb prize contests; consumers are not interested in being brand ambassadors; and, of course, advertisers don’t like putting their brands next to possibly nutty user-generated content.
While a P&G spokesperson later told the Times it was committed to its “strong” Facebook relationship, Stross ended with this zinger: “When Facebook convinces advertisers to stage Super Bowl-sized entertainment every day, its future will be assured.”
Thanks for the heads-up, except the premise could not be further from what it will likely take for the Facebooks of the world to succeed.
Rather than think on these kinds of mass terms, the ad industry is going to have to get used to a much different paradigm if it wants to reach young consumers. It is a Twittery, SMS-rich, Super-Poking world, in which the message will have to be drastically changed to work.
And it is incumbent on Facebook and the ad industry to come up with new kinds of ad formats–yet uninvented–and new means of engagement.
Now, Facebook–which never met a buzzword it did not trot out too early–is using this “engagement” term to try to excite advertisers, which it should not do before such a thing actually works.
Instead, it has to slowly and quietly make inroads on a variety of fronts, much as Google (GOOG) did way back when it was not profitable, and then tout the results.
Until Facebook does that, though, expect more of the same it-won’t-work mentality across the landscape.
That is, until it does work, of course.
Comments
Evaluating the social landscape in Palo Alto and on the Web, one thing seems to be clear…”What now?: Growth is slowing, “what do we do, now?”
Glad you asked…:)
(:…Well the most used application on the web is email. What’s teh #2 visited website across the entire www? Yahoo! Mail. Why not create a free email service, and call it Facebook! Mail?
Grab eyeballs, because that’s what it’s about in advertising, impressions, eyeballs, audience. The more users you have the more companies want to advertise. Zuckerberg, model Facebook! Mail on Yahoo! and do everything Yahoo! Mail does but better. Next, build a search engine, do everything Google does, but better. Let me know when you’re done, and then we’ll leverage that social network of yours and make even bigger bucks. ~Sun Tzu~
Posted by Sun Tzu at December 15th, 2008 at 10:09 amOnline vs print, explicit ads vs stealth marketing, “search” vs everything else.
I think we are obsessed with picking a winner that vanquishes all the losers.
Experience teaches us that rarely does a new thing kill all the old things, at least not for fifty years or so.
I hate the concept of stealth marketing, but I’m quite sure there are people being paid to tell me they’ve tried this product or that and how wonderful it is (lesson: pick your “friends” carefully).
I often think we shouldn’t need advertising at all, if we can just search for “pizza” whenever we want one. But then I think of all the times when an ad (in various forms) alerted me to a product I didn’t know existed, and of course, MUST HAVE!
I think now more than ever there is a need for ad agencies… experts who can advise everyone from a local coffee shop to Starbucks how to get their message out there, and the answer is now and will be for a long time: “every which way” with the expert being responsible for tuning the mix and, hopefully, demonstrating to the client that they have produced results.
I remain skeptical about Facebook simply because they don’t even do what they do all that well. Although they jumped out ahead of the other “socials” in a few respects, they don’t stand out now at all and in some ways have fallen behind.
Posted by Mac Beach at December 15th, 2008 at 11:46 amsocial networks are geared around “conversations” between contacts. This implicitly makes them terrible for advertising.
It’s like being at a party with friends when someone chimes in “hey, check out Tide”
Posted by Sam Harrison at December 15th, 2008 at 12:08 pmJust wanted to chime in on this debate as the CEO of AdParlor.
From our experience, we have seen brands that have gotten fantastic ROI from their social networking campaigns. A large reason being that we helped them with a comprehensive approach.
It is not just about banner ads.
We need users to be engaged.
One solution is to have a branded application developed, or to brand an existing large application. Creating a fan page can help but should be cross-promoted with the app. Also a banner campaign to an external web site may not be effective – but a banner campaign pushing out a fan page, or even better, a custom application, really does work!
Posted by Hussein Fazal at December 15th, 2008 at 2:14 pmThe more things change, the more they stay the same. Word of mouth is the most powerful form of advertising. Negative word of mouth is upwards of 10 time more powerful than positive word of mouth. Customer service is still the greatest tool in managing powerful word of mouth, but now we have social networks with which to spread the word even faster. So, knowing this, how might we use social networks to promote products and generate revenue? http://www.theCustomerServiceSolution.com
Posted by James Kohn at December 15th, 2008 at 4:29 pm