I just read an article on wired about how Google is not doing very well monetizing social networks (synopsis: traditional Google ads don’t work on SNs). It’s a quick read and doesn’t say too much other than hinting that someone thinks there is an answer - but it’s a part of a very interesting problem. Despite the fact that social networks do a great job of getting users and keeping users on their sites for extended periods of time they haven’t really figured out the best way to turn users into dollars.
I won’t pretend to have the answer and I think it is different depending on the type of social network - a network that includes localized content obviously has different monetization opportunities than a network that has a more generalized focus. However, it seems to me that the focus really isn’t in the right place. Text ads work on search because they are almost the exact same thing a person is looking for when they do a search - if you’re searching you’re looking for links to relevant content, and that’s what text ads provide. When you’re on a social network you’re looking for information about people and things you care about. That’s not as easy to monetize - you can’t expect one of your “friends” to pay so that their photos are given priority over another one of your “friends.” It’s tough because you don’t care who views your content on most social networks that aren’t for businesses. This changes when you either have a social network that people are using for business, or when you let others develop on your platform. Let’s face it - I hate platforms - but I also think they might just be the best way to monetize social networks.
When facebook added the developer network and then the app platform they created something that they can get businesses to pay for. It’s all free now, but if Facebook charged fees for setting up apps, fees for premium placement of apps, a fee per user, or any other fee based on their apps platform - companies (and some people) would pay it. The true value of facebook NOW is it’s ability to expose new ideas to a large audience. You can’t monetize the content created by individuals for their “friend” individuals - you can monetize providing companies access to a huge network - and I won’t be surprised to see it.
But… what do you think?
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April 21, 2008 at 3:16 am
Wogan May
Traditionally, websites can monetize traffic. So yes, the idea that social networks are hard to monetize is probably valid.
However, sites like Facebook do control massive amounts of user information - most of it personal. And that’s probably the best commodity that social networks can trade.
I would imagine that marketing companies might pay for lists of email addresses that suit a certain demographic: 14-25 year olds living in Northern America with Greenday as one of their favorite artists. Suddenly (for example) ten million email ads for Greenday’s new album is sent out, and most of them will probably purchase within 24 hours (obviously). Imagine the profit potential on something like that.
That would be one way of using the type of information on SN profile pages: highly targeted marketing. But this isn’t really accessing the network or the traffic it generates - it’s accessing the user-submitted data, and it’ll probably be a source of contention.
I’m sure that any study group out there would be able to find new (and better) ways to turn users into money. Personally, I’m one of those people that believes that the old models of online marketing just don’t cut it anymore. People have become too immune to the current norms.
I’ll have to chew on this one a little more, though. It’s too early in the morning for me to be constructive.
~ Wogan
April 21, 2008 at 9:01 pm
JDA
Hmm… a good thought, but if any site sold your email address you’d have a mass user revolt. That’s not to say you can’t deliver targeted ads based on the info - but that hasn’t been working too well (I’ll take a stab at my thoughts on that another time).