Commentary

LogIn: The Day After Tomorrow

Now that we're all so connected, it's time to think about the next steps

Writing about social networking feels so last year. Millions of people spend millions of hours connecting online. The leading sites are now worth billions and are open to advertisers. This social graph tsunami destroys current online advertising models as consumers spend more time socializing or creating their own content and less time on content sites with traditional brand advertising.

End of discussion.

Well, it's been a while since anyone has given so much power to a graph, and there is probably a good reason for that.

The furor over social networking resembles the first wave of hype about search marketing. There was a time when people believed that search-based advertising would marginalize online advertising. That didn't happen. Today search plays an important role in online plans, as smart marketers have wrung the inefficiencies out of their buys and now spend less to achieve better results. Online advertising, while still evolving, is far from dead.

The impact of social networking could be similarly anticlimactic.

Like the predictions about search, those for social networking are based on several flawed assumptions. The first is about human beings and brands. Those of us in the business love the brands we work on. We lie sleepless at night plotting their growth, and weep at the loss of a share point. Average consumers, however, are not quite so smitten with the brands in their closets, laundry rooms and refrigerators.

There are certain brands and products that inspire allegiance and action. Movies are certainly at the top of that list, followed probably by automobiles. Then there are brands such as Harley, Apple, certain sports products and retailers. These brands have generated naturally occurring, global multi-channel consumer communities for years.

Then there are most other brands. They have fans, but of indeterminate number and varying degrees of involvement. Exactly how much do these folks want to be associated with the brand, and for how long and how much time will they actually invest? And can you count them in millions like a site audience?

Last, there are a whole group of "low interest" brands, including products essential to our lives, that don't inspire anything more than the next purchase. A large group of advertisers (with their budgets) fall into this category. For them an investment in social networking sites would be at best wasteful and at worst detrimental.

There's more about human nature that fans of the "social graph" choose to ignore. For every fan of a brand, there are at least 10 detractors. These consumers may be even more active, passionate and driven to share their views and brand experiences, as negative and critical as they may be.

How do the advertising managers of the social networking sites work this factor into their CPMs now that the sites are being sold as platforms for brand advertising with its very different objectives?

At the core of the social graph's presumed staying power is the belief that everyone will eventually spend the majority of his online time on social networking sites. Even if they do, the actual quality of this time is undefined. Consumers can be logged-on, but actually tuning in to something else on their desktop. The value of the eyeball, and thus the CPM, has yet to be determined.

There's no argument that social networking sites are here to stay, just like search. And like search, they will find a place in the marketing mix of most brands. Beyond that, let's be generous and say this social graph may not be cut in stone.

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