Social Applications: Monetizing The Road Connecting Madison Avenue And Palo Alto
In truth, most of the time that's where it feels like my office is - at the intersection of Advertising and Technology. My job is to help marketers tap into social media's powerful communities. But more importantly, my job is also to help the creators of social media and the applications that knit them together monetize their work.
For all its marketing promise and community net worth, social media is not a sustainable ecosystem right now. More than new advertisers testing the waters, more than fresh rounds of venture capital hiking up valuations, more than another wave of ingenious startups with a new approach and a breakthrough model, even more than another runaway success viral hit, what social media needs right now is monetization.
In order for social media to survive, advertisers need to find it more rigorous, more expensive and more strategic to do business there, not less. Since when is a greater cost of entry the short road to growth? When the other way is so clogged with clutter that it's virtually impassable, and ultimately rendered obsolete.
The success of widgets didn't just prove that widgets work; it validated social media as a marketing platform. Soon thereafter, Facebook applications emerged. Dubbed simply "applications" by their creators and fans, they evolved in functionality to take advantage of the social aspects of Facebook and the other social networks on which they run. Instead of a single person interacting with a widget and then, serially, spreading the word by uploading to their own site or sending to a friend, Facebook applications soon began inviting simultaneous consumer interaction.
These applications enable people to interact with each other -- with dozens, and even hundreds of other people at once. At my company, we call them "Social Applications," partly to distinguish them from those other applications that Microsoft and Intuit stamp out and sell in shrink-wrapped boxes at CompUSA; but also to underscore their unique, well, Social capabilities. Social Applications like Scrabulous and WarBook are not merely exploiting social connections; they are enabling them.
At first, Social Applications might not seem as appealing as widgets to an advertiser, as the interaction is consumer-with-consumer instead of consumer-with-brand. But the longer view reveals a huge opportunity for brands. Enabling genuine social interaction can be as rewarding to a brand as entering into individual dialogues with customers. The challenge of scale is easily overcome, and the social context casts a warm glow over the underwriting advertiser.
It is the social aspect of these applications that makes them so powerful. The viral engine of Social Applications creates scale, but it's the context of familiarity and community that the brand behind the application engenders that yields the strong associations. With Social Applications, advertisers are empowering personal connections, not hijacking or interrupting them.
The learning curve on building and launching Social Applications has been predictably steep, but the rate of monetization has lagged. It can't. Not any longer. The days of building whimsical Social Apps just to prove their viral nature and eyeball-gathering potential must quickly end, and developers who persist are killing their own golden goose.
The greatest threat to the long-term marketing effectiveness of Social Apps is the near-term irresistibility of social apps. A frenzy to rack up eyeballs and installs and interactions and page views will only clutter the platforms they reside on and cloy consumers, rendering even the most promising of applications little more than social spam.
No, the industry's focus on Social Apps needs to be on monetization (change to "effectiveness for the advertiser"). I could argue that the valuation of companies like Facebook and Bebo depend on it, but more relevant to the rest of us is that marketing depends on it. Social networks are not a legitimate marketing platform unless the cost to participate in them is significant enough to thin out the experiments, banish the hucksters and mitigate the clutter. Price is tantamount to perceived value, and when the cost of competing for eyeballs in the social space is effectively $0, it's not long before price is tantamount to actual value as well.