Advertising on Social Networks = FAIL?

There are more than 200 million people using social networks such as Facebook, MySpace and Bebo but it’s becoming increasingly apparent that social networks as an advertising platform are a dud.

According to eMarketer, ad spending in the U.S. on social networks will be $1.17-billion this year, and only grow to $1.64-billion by 2013. That kind of growth is a long way from the bullish approach many people had about social networks last year when Facebook was all the rage, and Microsoft poured $200-million into Facebook for a teeny-tiny stake.

So, what’s happening? Why have social networks failed as advertising vehicles?

Maybe it has to do with the audience and how they’re using social networks. You’re mostly talking about a multi-tasking, fickle (aka no loyalty), fast-moving demographic that uses Facebook, MySpace, et al as an entertainment/communications tool. It may be this audience pays little or no attention to advertising even if it’s innovative or viral.

Perhaps social network users are online so much and exposed to so much advertising that when they use Facebook, for example, the last thing they want to do is engage with advertising. All they really want to do is use the service and communicate with friends.

Admittedly, this thesis is difficult to embrace because the social media audience is so large and, potentially, advertising-friendly. For advertisers, social networks represents a huge opportunity to deliver targeted messages given the analytics happening behind the scenes.

But what if advertising on social networks doesn’t work well? What if it doesn’t resonate with users as well as everyone had hoped.

That’s a reality social networks and advertisers may have to accept.

For more, check out the New York Times, which looked at Proctor & Gamble, the world’s leading online advertiser, is using Facebook.

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