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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  • Gillian

    Interesting observations, Mark. I think returns-on-investment might be difficult to generate in particular for B2C (consumer brands) advertising.

    One exception might be the business-to-business advertising on LinkedIn. It’s not perfect but I think it has tremendous promise. And the real estate for companies to buy space on linkedin is certainly at a premium.

    (Also, event marketing through facebook has real potential.)

    Anyway, thoughtful piece, as usual.

  • Trevor Stafford

    Have you seen advertising on Facebook? It’s terrible! It’s loosely targeted, tiny, ugly, spammy and static in the same way that web banners are. Of course it isn’t working.

    That said, Red Canary has found success advertising on Facebook — both posting jobs and advertising our salary surveys. You just have to speak the right language.

    For us at leaset, Facebook delivers very good ROI because the ‘I’ is a pittance.

    IMO, it’s not that advertising on social networks won’t work, it’s that both the platforms and advertisers are not innovating.

    The same old one-way-street push-advertising banner crap isn’t going to work.

  • Paulius

    Mark, I think that there is a huge procent of people who feels haunting by social networks. They surfing something about PizzaHut, and all banners are about DominaPizza. It’s thrilling..

  • Xyooj

    hmmm…maybe it’s like TV in its earlier years?
    I’d thought it works in the subconscious level

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