According to the latest figures from Hitwise (Feb 2009), Facebook does as good a job as Google for referring traffic. Access to the huge audience and rich user data that social networks offer, plus the fact that it drives clicks, makes Facebook very appealing to brands. The question is, how can firms unlock this potential?

The key to monetizing social networks lies in engagement. We know that much. However, it's time for marketers to go beyond the superficial "brand" engagement that's already available in any social media site. I'm talking about deep, personal engagement through real dialogue with users. Brands need to join the conversation -- but to do that, they first need to understand the conversation and figure out whether they need to be involved. They need to understand what is being discussed, where, when and how.

Sophisticated understanding

This is easy to say, but not so easy to do. Publishers have been looking at advertising as a means of monetizing social networks for some time now, but missteps such as Facebook's Beacon highlight the challenges they face.

A key barrier is the way users think about social networks -- people see their online space as something quite private and this, coupled with a lot of media attention around online privacy, has led people to have an immediate and negative emotional reaction towards advertising on social media.

This is an understandable, and yet unreasonable reaction -- social networks are ultimately providing a service that needs to be paid for -- just like TV and just like radio. If social media sites started charging subscription fees, imagine the outrage from the user base.

The trick lies in understanding the conversation going on and identify where brands can engage the user with highly relevant, targeted advertising that actually enhances the user experience. We know that not all dialogue in social media is commercially relevant, but when they are, marketers have to be ready to engage with the user with an offer that is suited to that interest and mindset at that moment when the dialogue is happening.

Understanding the conversation is not about identifying keywords. It has to be much more sophisticated. If someone is talking enthusiastically about going skiing in Utah in March, they will react positively to skiing advertising and specific ski travel offers that fit their timing. If, however, they are talking about how they hate the cold weather and just don't understand why their friends spend money on skiing and winter holidays, those same skiing ads will have the opposite effect. This creates an experience that is bad for the user and bad for the advertiser. That's why the technology used to understand the conversation and to serve the ad must be sophisticated enough to understand the nuance in language. Just latching onto the keyword "skiing" is not sufficient. This is why current efforts are falling short.

Fear of the unknown

The sheer volume of largely unregulated content makes it very challenging for publishers to monetize social networks. Brands want to participate, but they simply can't afford to take the risk of exposure next to offensive or inappropriate user generated content. What's the solution? Once again, understand the conversation. If you can really understand what's being discussed -- dynamically, as the content is actually being created and as the conversation is actually evolving -- then you can make instantaneous decisions whether or not to serve an ad at all -- and, if so, which ads, which creative and which promotion to serve.

The opportunity presented by social networks is too large for brands to ignore. They want and need to participate. To make this happen, publishers must provide advertisers with insights into the meaning of all the content on their site. Only by having a true understanding of content can brands engage users with relevant and useful ads that enhance -- not detract -- from the user experience.

Technology needs to evolve to understand the meaning of content in real time, and provide ad servers with the information they need to ensure highly relevant, premium ads are served to users based on their own expressed interests, desires and intentions.

Tips for publishers and ad networks

The key to monetizing social media from an online ad seller's perspective is to understand your content. Arm your online advertisers with a full appreciation of the meaning of text. Go beyond existing tools that rely on categorizing content according to keywords or assessing brand safety based on samples of content.

Explore Natural Language Processing and computational linguistic technologies that are available today, which can delve into the significant topics, attitudes and pending decisions within any text to remove the guesswork from brand safety and targeting decisions -- enabling social networks to further enhance the user experience and realize their financial potential.

This commentary is insightful. I recommend it to others.