CATEGORIES
- NYC COVERAGE
- WEB STARTUPS
- WEB NEWS
- CONFERENCES
- WEB TECH JOBS
- VENTURE CAPITAL
- MICROSOFT
- INTERVIEWS
- ADVERTISING
- VIDEO
- ALL TOPICS
- ALL COMPANIES
CONTRIBUTORS
My Life on Facebook as a Woman and Why Social Network Advertising Doesn’t Work
Last weekend I joked around on Twitter regarding the ads I see on Facebook on the left menu. As a single man in my 30s, the ads are always sexual in nature — some examples: "Hot Singles Waiting For You" and "30s Singles Looking for Love", etc. Apparently single men in their 30s are only interested in sex says Facebook. I wondered what women see in that spot so I changed my sex as a test. As a woman the ads were much more general. Sure, some are around sex with singles ads, but as a woman I am also presented with a variety of more general ads. Weight loss ads seem to be the most popular because clearly men have no weight issues (??) along with "mature 45+" singles ads coming in right behind. This week I will try female married and female widowed — any bets on the ads that will be displayed?
This afternoon Charles Hudson said that social networking advertising will be harder than we think. Hudson notes that he’s used Twitter and Facebook as social shopping tools outside of the advertising to gain insight from his friends. This model he says hurts both services because they didn’t capture a piece of the pie.
For 10+ years I’ve said that most times when a service tells me they can’t get advertisers, it winds up being more about their lack of ability to sell ads rather than lack of inventory. In Hudson’s example, both Twitter and Facebook could slap an affiliate code on the links that go out to the merchants and earn revenue on the transaction. FatWallet has made a very successful business this way and just think about how much larger Facebook is. Why any link from Facebook to Amazon would go out without an affiliate code is beyond me. And there are hundreds of other ways Facebook and other social networks can generate revenue. Cheesy bottom feeding CPM ads only hurt the image of the company.
Since day 1 with Facebook, I’ve been shocked at how poor the ad quality is. For a company that has a $15B valuation, their ad sales teams plain suck. Do you seriously mean to tell me that all they can sell for a man is sex ads? Facebook knows more about me than many of my friends do, and should be able to easily provide ads that benefit me along with providing a strong revenue stream for Facebook.
While I agree with Hudson that social services will be used in some ways that the service might not be able to monetize, the truth is that so many of the social networks do a piss-poor job of bringing in relevant ads. Most of the social networks talk to their users about what they want in a service, but never talk about the ads they would like to see. Why is it so scary to have this type of conversation? Frankly I don’t know. But I do know that Facebook is wasting super cheap CPM ads on me for dating services while there are so many other types of ads that I might actually be interested in.
We are the freeloading victims of our own abuse.
The idea that we are all so hooked on free Social network sites Facebook & Myspace, and near dependant on Google mail, Yahoo and MSN leaves us all up the creek without a paddle. We are only too willing to let these sites crawl threw our private data and yet we seem surprised that anyone can make money out of targeting us with a bunch of useless adds.
Apparently the only way to make me part with hard cash on myspace is to show me a young women in a tight pink T-shirt who endlessly ties her hair up! Facebook is slightly more cynical: after showing me 4 or 5 adds of breast implanted T-shirts it tries the gay add?
If anything like these adds appears in an inbox or as a friend request we are given the option to report it, mark it as spam or block it. Cashing in on clients seems to be a jealously guarded business as you’d expect, but the content is neither here nor there. We are the freeloading victims of our Social network’s paying clients/sponsors.
Allen,
Great discussion on social networking monetization.
At PubMatic, we recently launched the PubMatic AdPrice index (http://www.adpriceindex.com), which showed that social networking monetization is among the poorest by vertical, at less than 40 cents eCPM (net eCPM to the publisher for sales to ad networks only). As several major online companies (Fox, Google) and Charles Hudson have noted, social media monetization may be harder than expected.
I believe there are two key reasons for this:
1) Targeting. The AdPrice Index showed that small sites monetize much better for ad networks and advertisers than do large sites. This is because small sites have a much more targeted audience by their very nature, for the most part. Think of the expected demographic behind a targeted site like hotrods.com vs. a large social networking site like Facebook or MySpace. In general, there is significant improvement in targeting that needs to happen before a large site can be carved up into user specific audiences and well monetized.
2) Session duration. Social networking sites are known for having among the largest page views or ad impressions per session, at over 50 page views per session for some social networks. Most ad networks find that the first couple of page views monetize well, and after that there is a steady deterioration in monetization. As a result, there are fewer advertisers and fewer well paying advertisers willing to pay for the majority of secondary page views and impressions.
To the extent that social networks can learn from the implicit and explicit data that you leave on their site, the better they can target ads. At some point though they will run up against privacy limitations. It will be interesting to see where the line gets drawn.
- Rajeev Goel
Co-founder, PubMatic
http://www.pubmatic.com
facebook is an open ad platform with no exorbitant minimum spends and such. plus it as cpc pricing. if it were profitable to run amazon affiliate ads – u bet that someone would have figured it out by now and would be running them.
the truth is that affiliate ads *suck* as far as monetization is concerned. do the math. take a 25$ average transaction on amzn + 3% conversion rate + 0.05% ctr + 5% commission. it works out to a payout of $0.018 RPM. And i am being generous (3% conversion is unheard of).
the unpleasant truth seems to be that those god-awful singles ads have a high enough payout to be worth someone to be running them. and the amazon ads don’t.
I rarely check my Facebook, but I know what you’re talking about. Myspace is about the same. They know I’m single and Catholic and try to sell me Catholic branded dating, but they clearly don’t care about Catholicism because they’re simultaneously selling noncommittal sex on the same affiliate program. The shocker was Planned Parenthood advertising on my Myspace page on Christmas.
Allen: while it is a little bit surprising that social networks, with all of their data, aren’t doing a fantastic job of targeting, the real reason social network advertising won’t work is that targeting is only one part of the equation.
If you target the right person at the wrong time, the result is still the same as if you had targeted the wrong person. I have argued that social networks don’t provide the ability to hit consumers at the “right time” because the advertising is not very compatible with the activity users are engaging in (socializing/entertainment). Throw in the fact that these networks likely have a higher proportion of users in demographic groups that are less likely to click on ads and it simply exacerbates the situation.
When it comes to Charles Hudson’s example, it’s impossible for Facebook to inject itself into every transaction that may be “influenced” by activity on the service. After all, the “link” may not be provided through Facebook, the purchase could take place offline or through an online retailer that doesn’t offer an affiliate program, etc. Suggesting that Facebook could reasonably get a piece of all this action is no different than suggesting that the major webmail providers (Hotmail, Yahoo, Google) implement similar systems so that users who are influenced by something in an email generate revenues for the provider. Very unlikely to ever happen successfully.
Facebook’s approach with Beacon is probably the type of approach that is realistic for a social network but even beyond the privacy implications, I think it fails because personal recommendations are not a mechanical, formulaic phenomenon and that’s what Facebook was trying to turn them into.
Some of my past thoughts on this topic can be found here.
(wops if there is a second comment empty, please delete.)
They are not just very poor with in platform advertisement, they are also really simple and ineffective with other advertisement.
Currently Facebook in its effort in Germany to gain users does seem to buy name combination on German Google adwords for usernames from the Germany network or with strong ties to it.
http://www.google.de/search?hl=de&q=nicole+simon&btnG=Suche&meta=
If I search for other names like yours
http://www.google.de/search?hl=de&q=allen+stern&btnG=Suche&meta=
there is no such result. The usage of the names of users for this purpose seems not only to be against current law but other than that you do not allianate your possible multiplicators that way on an already saturated market.
To go back to your case: I do mainly see kind of relevant ads but it may also be that this up until now are the only ones booking it – as in dsl providers, freelancer oriented, buy a laptop and stuff.
Myspace advertises baby websites to those who are pregnant and expecting but also insults them with birth control ads right next to them…they have to fix the targeting a bit to be less ridiculous!
Hey Allen – Really good piece and agree totally (Did I say that??).
Wait until you’re a day over 49 and watch the targeted stuff you get. Yuk! I could only imagine if I was female :)