The Problem With Buying Clicks In Social Media

by , Jun 23, 2009, 12:00 PM
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Advertisers want to reach people and social networks want to make money from their audience, so all the two parties need is a fair way to exchange. But, creating a marketplace between advertisers and social networks based on selling "clicks" is sure to leave both sides very unhappy. The social networks will be unhappy because they will not be receiving full value for their inventory, as people have a tendency to avoid clicking on advertisements. Advertisers are likely to be unhappy with the quality of the traffic generated by those clicks that eventually occur simply by delivering a massive volume of impressions.

Just because pay per click (PPC) turned out to be the golden goose for Google, does not mean it can solve social networks' monetization issues. And if a recent TechCrunch post, "Facebook Click Fraud Enraging Advertisers," is any indication, advertisers are quickly discovering the challenges of paying for traffic coming from social media.

 

If Google was able to monetize so well using PPC, why can't PPC work in social networks? Because for Google, PPC factors in that people (aka: consumers, aka: audience) might actually want to "click" on the advertisement, therefore benefiting from Google's advertisements. The two main times people come across a Google PPC ad unit are when they search the Web using Google, or when they are on a site that uses Google AdSense. Holding aside AdSense for a moment, when people are using a search bar, they are stating their intention to navigate to another site that might have information they are looking for. In short, they are looking to click on something. If Google's advertisers can provide that "something," then everybody wins -- users are happy, Google is happy and advertisers are happy. AdSense works similarly people's intentions to "click" have to be guessed at, but the same theory applies. If I am on a site that is all about running, I may want to click to another site that has something to do with running. If Google can provide an advertiser that wants that click, then everybody is happy again.

But when you get to social media, the formula doesn't work anymore. Even Google, the uncontested master of PPC technology, couldn't make people click in its deal with MySpace. Here's the simple reason why: If I go to a friend's page and my friend loves to go running, it is likely that my friend will have lots of content on his/her page about running -- which might tell Google, or any other AdSense-like program, to offer me a chance to click on an advertisement about, or related to running. But I didn't come to my friend's page to learn about running; I came to learn about my friend. Therefore I had no intention to click going in, and the PPC model falls down.

Even when PPC ads target me using the data my social networks have about me -- for example, Facebook knows I am getting married in September -- they end up serving ads that they hope are so relevant that even though I had no intention of clicking on anything to do with weddings, they can get me to anyway. It's easy to see the difference between serving me a wedding advertisement when I am searching for it, or when I am on a page about weddings, but how does that translate to when I am on my Facebook homepage? It might be relevant in one way, but it is not relevant in BOTH context or timing. This causes lower click rates; and while some of the clicks that do happen would be valuable, it's just that the total value advertisers and social networks can derive from those clicks isn't enough to make the relationship work.

In the end, selling clicks and traffic when people don't want to click or navigate the Web will inevitably fail.

What are your thoughts? Drop me a line, or just follow the continued conversation on twitter @ www.twitter.com/joemarchese. You can also leave a comment on the Spin Board.

0 comments on "The Problem With Buying Clicks In Social Media".

  1. Joshua Rex from This Is Open
    commented on: June 23, 2009 at 12:25 p.m.

    The Open IMU format goes some way to bridging this void. Ads in social media are banal attempt to monetise an audience. Things is, display never really worked that well anyway - so they have no hope in the social space. The Open IMU is placed as an application in Facebook. We don't see the need to advertise in social media - rather providing a utility is what matters. On the current Open IMU the click rate is more than 40%. There little wonder here - it’s totally opt-in. Where it is relevant, we ad serve the same format as an ad. The CTR here is far higher than industry best practice. Here's a few links:

    As an ad (placed as the top right MPU: http://www.formula1blog.com/

    As an app in Facebook: http://apps.facebook.com/vodafone_mclaren/page

    Same content - delivered in a contextual manner.

    http://thisisopen.com/blog

  2. Jonathan Hall from American Pop
    commented on: June 23, 2009 at 12:29 p.m.

    You are absolutely right. Social Media is a bit of a square peg in a round hole when it comes to direct response marketing. Someone may figure it out at some point. But, for right now, the opportunity for marketers in Social Media is to enter the mind-share by careful communication with consumers grouped together by shared lifestyle interests. The ham-fisted approach of direct response does not work with these groups. A link for click-thru should be only one of many touchpoints.

  3. Ona Kiser
    commented on: June 23, 2009 at 12:29 p.m.

    However, if advertisers offered social apps, which conveyed info about their brand, but primarily offered me a fun new way to interact with my friends - something to share or a game, for example - then I might be very interested in "clicking."

  4. Adam Radcliffe from simpleview inc.
    commented on: June 23, 2009 at 12:32 p.m.

    This is absolutely right on the money. Without Google's search context, the model of paying per click seems destined for continued problems in social media.

  5. Steve Baldwin from Didit
    commented on: June 23, 2009 at 12:58 p.m.

    Good job! The mindsets (and therefore, advertising potential) of the two audiences couldn't be more different.

    Advertising will fail on social networks. Correction: it's already failed. I was tracking the conversations relating to the Facebook Ad Uprising and came across the lament of a guy who had spent $27.00 on Facebook ads. He got 975,000 impressions and 1 click. (I'd try to figure out the miserable CPM for such an ad but I don't think I have a small enough calculator).

    Prediction: social networks will soon charge for membership and the costs will be subsidized by the telecom carrier. "Join Sprint Mobile and Get Facebook For Free" would be a great come on. Otherwise this whole thing will just wipe out within a very short time horizon.

  6. Rick Lavoie from RUCKUS
    commented on: June 23, 2009 at 2:23 p.m.

    You're right, Joe. PPC and social media mix like oil and water because its trying to force fit the older ad world and approach into the new. I'm not saying it can't be done but if it can, no one has figured it out yet. Maybe it should be. We need to establish how social supports brands in new ways like dialog engagement.

  7. Paula Lynn from Who Else Unlimited
    commented on: June 23, 2009 at 3:57 p.m.

    Totally. 2 different uses for 2 different products. The only way social can be monetized will be if the agencies/advertisers shift their focus in using it in the PR mode. Clicks don't count and PR cannot have the same kind of measurable factors. Ouch for some and ouchless for others.

  8. Matt Johnson from uVizz
    commented on: June 23, 2009 at 5 p.m.

    This type of advertising delivers poor results because it doesn't engage the users. When people go to social networks, they interact with friends and family. Ads will be ignored unless they are involved in the interaction. And the only way this is going to happen is if the users invite the ads into the conversations. There's no way for an advertiser to get there without deception.

    This problem isn't new. We saw it over 18 months ago. That's why we built uVizz. uVizz is a platform for social networks where users create and share fun and interesting videos about advertiser's products. When the videos are viewed by people inside the advertiser's demographic, the users are compensated for their roles in video creation and delivery. As you can see, we're engaging and rewarding users for their roles in the advertising process. As a result, the videos are being included in social network conversations willingly. Everyone wins.

    I encourage you to take a look at uVizz (You-Video-Buzz). There's nothing else like it on the market for social networks. http://www.uVizz.com

  9. Tracy Munoz from Archrival
    commented on: June 23, 2009 at 5:34 p.m.

    So doesn't anyone else think the quality of ads on Facebook have a bit to do with the problem? Ads are being placed that are completely foolish and uninteresting - do those people really think that showing Jennifer Aniston looking haggered will make me want to click to find out about a wrinkle reducer?

    I've been getting decent results with our clients using Facebook for well over a year. We're getting the clicks.

    I am curious to know about the man who received 975,000 impression ... what was he advertising, what did his text read and what did his ad look like to get that one click.

    I think the lack of creativity has something to do with it.

  10. Sue Burton from Hydranetwork
    commented on: June 23, 2009 at 7:10 p.m.

    This is exactly the reason that Cost Per Action is a better model here. Advertisers can get the ROI they need to justify the ad spend since they are only paying for the ads that convert to a specific action rather than just a click. The best pages will get the best conversion rate and thus the best payouts. Advertisers will pay when they know they are getting something (ROI) in return.

  11. Robert Mcdaniel from AdOn Network
    commented on: June 23, 2009 at 7:11 p.m.

    I agree with the premise that ctr will be poor with ppc in social media, which negatively affects the total revenue generated. But why are clicks received by advertisers from social media less valuable than clicks from AdSense?

    Even if the context and timing are not ideal, if the user does decide to click on an ad, the user has shifted into the "I'm clicking on something" mode. In both cases (social media context and AdSense context), the user was in the middle of something else and has decided to click and be shown the advertiser's page.

    If the advertiser is paying on a CPM basis, I agree that it won't work. However, if the advertiser is only paying for clicks, it seems like we're beyond the context and timing arguments impacting whether or not a click will occur, and are on to arguments as to why this user may be less likely to convert than a user from an AdSense click.

    Anyone have experience with this? Is the click to conversion ratio less with social media clicks than with AdSense clicks? If it is less, any ideas as to why?

  12. Dennis Yu from BlitzLocal.com
    commented on: June 23, 2009 at 10 p.m.

    Joe,

    The bigger problem is not of selling clicks, impressions, or another pricing model. It's performance to the advertiser, which can only be solved via better targeting and better creative.

    When the advertiser wins, they can afford to pay more-- then the pub wins. The model of selling clicks is not the problem.

    Real advertisers need to see performance to pay more.

  13. Michael Senno from New York University
    commented on: June 23, 2009 at 10:42 p.m.

    Everyone has chimed in with good ideas, and Joe raised a good point. What all this says is nobody knows the right revenue model for online advertising. Look across the board - there is no perfect marketing measurement outside of direct response.

    One thing I did take away is that targeted advertising sounds good in theory - it can be useless in practice if implemented blindly and thoughtlessly.

  14. Ned Newhouse from Conde Nast
    commented on: June 23, 2009 at 10:48 p.m.

    Well if the content is that wonderful as people don't click then perhaps there should not be an ad unit there. I don't buy the argument that because you can't make a contextual match a la Google then the advertising isnt as revenue potent. If that was the case then Time Magazine would only be full of News Ads. We are all consumers with material needs of product, shelter, convenience and safety, the key is to make advertising more targetable on a psychographic, demographic or behavior then all imps clicked or not have imp value even for the adv. As a DM marketer I love cpa but I also see the other side of the coin that says we and the pub need to hit that user when they have the need at that moment or somehow we have to inspire a transaction on that impression. That's tough to turn a one to one medium into TV mass. Targeting, baby targeting.

  15. Theresa m. Moore from Antellus
    commented on: June 24, 2009 at 6:38 p.m.

    In general I never try to post click through advertising on my social network pages unless it directly relates to my products, and as I have access to 15 different social networks I don't feel the need to add any more content than is necessary to do the job. I put my affiliate buttons on my own site. I do try to find correlating links to specific subjects for my books, so the advertising links are meant more as a public service to potential customers. I also have a Google Ad Sense patch on my site, but only where I feel people may want to look. My goal is drive sales, not spam people overmuch, so click ads on social sites is anathema.

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