Social Networks (SN) are desperate for strategies to monetize and advertisers are desperate for ways to reach this huge highly engaged audience. However, it may be that because of social network behavior that most ad models in social networks will not work or worse, run the risk of destroying what users love about them. Can successful ad models be created? Can you market to intent in SN? Can you determine interest? There are many more questions than answers but marketers need not sit idle.
Emergent Ad Models
According to Nielsen 90% of activity in Social Networks is Voyeuristic. People aren’t searching for a resource. They are searching for something to look at. This makes it highly unlikely a formal transactional model will emerge. The intent in social networks even in search is just not there. This is just the nature of searching for people vs. products and services and the behavior of lurking where the goal is not an exchange of anything of value outside the network.
If social network behavior isn’t valuable to cost or pay per action (PPA) marketers is it valuable in a contextual sense to brand marketers? We know from AdSense that publishers can make money from contextual advertising but large piece of that is by duping users into MFAs (made for adsense sites). There has been some success with contextual ads for lead-gen but its few and far between and not enough to drive a long-term ad model unless these budgets become brand budgets and attribution metrics outside of click data are created, validated and agreed upon. It looks unlikely that a performance based model will emerge even from contextual.
What does the future hold? CPM buys seem to be the answer for now. This has to be a disappointing realization since there is much more value in transactional models where auctions can be created and real value can be attained. This also leaves tons of money on the table. Besides not creating new inventory that most PPA and CPC marketers are dying for the brands that buy CPM are already moving into the more comfortable video units. Video also has more long-term potential as an ad platform than social as it’s easy to see behavior becoming transactional and the reach of video extending.
The Value is in the Platform not the Network
Considering the behaviors and intents of the audience the value in existing SN looks to be twofold. Using the network as a listening device and more powerfully, using it as a distribution channel. The bottom line is that people do not use networks like Facebook to communicate with marketers. In addition, there is not an implicit user understanding that marketing helps support the network. Therefore, marketers are walking a dangerous line trying to infiltrate this world on their own terms. The only way to enter this world is through the terms of the network’s audience.
The model then is not for Ford to advertise on Facebook. The model is for Ford to build their own Facebook for car enthusiasts. As with other advanced marketing strategies success is dependant on the technology platform created and the openness allowed. Consumers need to be brought into the creation of the social marketing assets without fear of their “devaluing the brand” and the platform must also facilitate the ability for consumers to push out these assets whenever and wherever they want.
Creating platforms that facilitate the creation, consumption and distribution of UGC can be incredibly successful. Interest and awareness will migrate from these platforms in the social networks. The awareness will be authentic, will create buzz and allow for the viral nature of these networks to be leveraged. Again the key here is not the content. Users will take care of that better than anyone. The key is the technology.
Marketer Created Platforms
A case study is a marketer driven community is one I helped create for Tokyopop. Tokyopop is the world’s leading publisher of Manga. It is well established as a commercial publishing entity. In the Spring of 2006 it was not leveraging the social nature of Manga. There were many upstart sites that were leveraging this and creating incredible reach and influence over Tokyopop, its titles, characters and ultimately success. The strategy was not for TP to interfere with this dynamic. It was for them to “host” the party. This would create a closer relationship with their audience, build trust by allowing negative opinions to be posted and listen at close range to what is important and emergent in the minds of its audience. Most importantly the social nature of the site created new value in Tokyopop to its audience.
In July of 2006 the new social Tokoypop launched. In the first week an incredible 18,000 pieces of UGC were uploaded — drawings, pictures, videos, fan fiction, reviews and more. That first week an entirely different dynamic was created between TP and its audience. The website went from being commercial to being helpful. It actually helped expand interest and create intent. Release dates were no longer marketing speak but helpful information to the community that spurred dialog – an ongoing real-time focus group. New authors were discovered. Incredible value was created on both ends. Due to the viral nature of like-minded people popularity of this publisher created platform grew.
What happened in July? For some reason in July of 2007 Tokyopop decided scrap the user centered design and strategy and to steer away from this inclusive approach. You can see the effect on their site performance. The greater effect is now the messages about the newest titles aren’t reaching nearly as many people. Inclusion has become exclusion. The party however is not over. It has only moved from Tokypop to somewhere else where it has no value to them.
Hosting the Party
For Social Networks the monetization questions will continue. As PPA and CPC markets grow and new inventory is created the value in CPM models will continue to decline. Since no one clicks on display and fewer take actions off the click there are real questions on the value of these platforms to advertisers.
People are influenced less by marketing then they are by their social groups yet the goal of marketing is to influence behavior. Marketers need to create platforms where these messages and behaviors can collide and create a big-bang that will disseminate them virally through the existing social networks.
At the moment brands are too scared, agencies are too conservative and the party is elsewhere. There’s no reason it has to be. People don’t have an innate hatred for brands and products. In fact, it’s usually the opposite. The recording industry should have created MySpace, the television industry YouTube, publishers RSS…the list goes on but it’s never too late to cede control to your audience and let them take you places you’ve never been and will never go without them leading you. If you don’t someone else will.
Speaking Note: I’ll be keeping this meme going by speaking this Saturday at CommunityNext Platform Conference on the session Metrics & Targeting along with Jesse Farmer of Adonomics and Donald McLagan of Compete.com, and moderated by Chris Moore of Redpoint Ventures.
jonathanmendezblog.com 
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