Why Time Spent Doesn't Necessarily Equal Ad Revenue

• Comment (5)
• Recommend (15)
• Tweet
• 

The Internet (or at least the part frequented by marketers) is suddenly abuzz with the realization that time spent online doesn’t necessarily translate into advertising revenue. No surprise the most-cited example is Facebook, which soaks up tons of time but has only a fraction of the revenues of Google, with a smaller share of our online activity.

The reason for the difference, of course, is the way people use Facebook and Google -- specifically, the goals they have in mind when they visit the site. When people visit Google they are going to search for something, and when they are searching for something, there’s a fair chance -- though far from certitude -- that they might be in the market to buy something. Thus search provides a channel, and their search terms provide clues, for selling them something with paid advertising for products in that category.

By contrast, people who visit Facebook are doing so with the goal of -- well, doing any number of things: catching up with friends, engaging in virtual agriculture, idly browsing strangers’ profiles, and so on. They are less likely to be searching for specific things, less likely to be on the way to buying something, and therefore less receptive (in general) to advertising.

This is demonstrated by the fact that Facebook ads tend, on average, to have very low click-through rates. While it’s popular nowadays to criticize click-through rates as obsolete, fraudulent, or otherwise inadequate, the fact remains that there is still no better way of gauging consumer interest in online advertising, or indeed advertising in general.  It’s what makes the ROI of Google search ads more measurable than, say, TV advertising -- and it leaves little doubt that both display and search advertising on Facebook are relatively ineffective.

Ironically the problem for Facebook is its own success, in my humble op-ed: by building such an effective forum for online socializing, Facebook has made a medium so compelling that it actually distracts from the advertising placed against it. People are too busy hobnobbing or playing games to spare any thought for commercial messages delivered alongside. Even when ads are targeted with information drawn from the user’s profile and online activity, the fact is the user is still simply less likely to be in purchase mode when they are on Facebook than when they are using Google, and therefore less likely to pay attention to ads (however well-targeted).

Essentially, marketers have mistakenly assumed that there would be a halo effect, with interest in social engagement somehow spilling over to commercial engagement; in other words, Facebook is fun, so it must be a good place to advertise. In fact, it’s the other way round -- a reverse halo effect -- as social engagement draws attention away from commercial messages; by contrast, search  -- not exactly a “fun” medium – is nonetheless very effective because, well, it works. The fact that less time is spent on search overall is simply a tribute to its efficiency.

Is there a solution -- some brilliant way to actually translate time spent online to advertising share? Please share your thoughts in the comments section!

• Comment (5)
• Recommend (15)
• Tweet
• 

5 comments on "Why Time Spent Doesn't Necessarily Equal Ad Revenue".

1. Shelly Kramer from V3 Integrated Marketing
   

   commented on: June 5, 2012 at 1:29 p.m.
   Bravo Erik. Search=intent. Fun=fun. Search=want to find/buy. Facebook=fun. I was just thinking of this today as I was writing a post ... thanks for saying it so well. Shelly @shellykramer
2. Christopher Stephenson from Insight InSite
   

   commented on: June 5, 2012 at 3:43 p.m.
   Excellent insight Erik. Time on site has varying value dependent upon the nature of the site. FB is not equal to WSJ.com When on Facebook, or any medium where someone is engaging friends, family or highly personalized content, they are not in a "buying" mode and not in a mode where commercial messages resonate. However, when on a news site, I'm consuming information and much more open to and prepared for messages from advertisers. Hence, 30 minutes per day on WSJ (vs. the current 4 min average) would be of MAJOR import to the Journal and it's advertisers. So its not just time, but type of content.
3. Keith Trivitt from MediaWhiz
   

   commented on: June 5, 2012 at 3:53 p.m.
   Great points, Erik. I think part of the issue, as you address, is that marketers wrongly assume that what works in the traditional ad space (i.e., lots of engagement and "viewers," like in TV, translates to instant ad success on social networks) has been proven, time and again, not to be the case, or to be terribly short-sighted and wrong-headed. But what this points to more broadly is the need for a major rethink among marketers and brands about how we go about developing social ads and our expectations of the outcome and value. In short, we need to stop thinking that Facebook, Twitter et al are going to be THE absolute, 100% only future of digital advertising. I think they are both going to be huge players for marketers and brands for years to come. Instead, we need to respect social networks for what they are (as you rightly note, amazing engagement platforms that are almost too good at developing deep engagement opportunities), recognize their advertising opportunities and limitations and develop the best and most profitable strategies for how brands can effective reach, engage and motivate customers. That requires a shift in thinking among marketers that each has its value, when used appropriately and effectively, and each is very different and unique from the other. In other words, what works on TV or in print doesn't work online, so let's stop talking like that is the case. Keith Trivitt Director of Marketing and Communications MediaWhiz http://www.mediawhiz.com/
4. Joshua Gold from Primetime
   

   commented on: June 5, 2012 at 6:02 p.m.
   Hi Eric, Im a Phd Candidate and have done some work in neuromarketing, particularly brand memories. One thing I was looking at in my research was the Elaboration Likelihood model. Ultimately this states that there are central and peripheral routes to persuasion. When the argument (principal content) is relevant to the search then this is relevant to the central channel and the person will be more receptive to the message of the ad. However if the ad message is not relevant to the content then it must take the peripheral route. This is done through more exciting elements such as interactivity, pretty people, role models, lights, sounds and repetitive sales pitches. Ultimately it needs to feed more into the emotional impulsive elements to make an impact.
5. Ravi Kiran from Friends of Ambition
   

   commented on: June 10, 2012 at 1:39 p.m.
   Eric, I agree with Keith's comments. Sometimes, in comparing different platforms and media choices, we tend to ignore that it's how we as marketers use them that makes the difference. In my view, Google and Facebook are not directly comparable, except by forcing similar expectations on both. They have their respective roles and Facebook's monetization possibility may not be in the option they have tried best so far. I am a firm believer that if you are a platform where people spend time, sooner or later it's possible for brands to benefit from that and give you money. The 'mobile debate' apart, I feel Facebook's best is yet to come, and the biggest guy on its way is Facebook itself and how marketers learn or are 'taught' to use it.

Leave a Comment