We are anectdotal animals - we like to reduce very complex and uncertain times to simple rules or conclusions. Talking heads on cable make an industry out of it; political candidates show as little nuance or doubt as possible. Such abstractions, however gratifying in the short run, usually are the No. 1 cause of people missing a major trend that's right under their noses.
I should not be surprised that our industries have come to the conclusion that social media has failed as a vehicle for advertising. That's right, game over. Rupert overpaid for MySpace, and anyone thinking Facebook is worth billions confuses large audiences with real business models.
There is some provocative evidence to support this. As a PubMatic study concluded: "Among the verticals, social networking led the plunge, with monetization dropping 47 percent, from 37 cents in March to 19 cents in April, below January lows of 22 cents. Entertainment monetization dropped 17 percent from 40 cents in March to 33 cents in April. Gaming and sports were down marginally (4 percent and 5 percent, respectively). Technology remained relatively flat at 83 cents in April vs. 82 cents in March, but is still off January highs of 92 cents."
News Corp's president and COO Peter Chernin recently noted, "We remain incredibly optimistic about social media. But there are specific challenges: No. 1, tons of inventory. Lack of scarcity creates a liquidity challenge. Working on bringing big brands aboard. No. 2, people who are visiting social networks are there for different reasons, different uses. Figuring out how to target. No. 3, what's the value of a 'friend'? Tying to figure out new metrics to communicate with marketers."
What an amazing statement. "Tons of inventory" is a classic, old-media confusion of size versus quality - we all covet some size, but qualified scale is what rules today, no? People go to social network sites for "different reasons." Isn't that what critics said back in the day when they claimed "no one will want to see ads on search"? Isn't the "value of a friend" found in simply offering them a product or service they actually need or enjoy?
A not-so-quiet revolution is happening throughout the Web, where highly vertical engagements - down to incredibly narrow needs of users - are driving the greatest audiences. We have dozens of highly targeted, condition-specific sites at healthcentral.com, including some powerful social tools, as we compete against generic health portals. Ning has enabled over a quarter of a million individual, highly targeted vertical social sites offering rich engagements that marketers should be salivating over.
And, as common sense would dictate, getting the right ad message to the right engaged audience equals useful information to the engager and astronomically better performance for the marketer.
As Chris Anderson, whose book, The Long Tail,and blog, longtail.com, should be regular reading, notes on his Ning-built robotics site, DIYDrones: "Last I checked, display ads on MySpace were going for a rock bottom $.013 ... The AdSense ads we run ... generate an average 'effective CPM' (CPM after Google's cut, which can be as much as 50 percent) of $3.60."
It's not that social media doesn't work - it's that generic social media with generic, old-style interactive ads doesn't. And, by the way, crusty interactive ads really don't fly anywhere now.
If you scratch just a bit under the surface, you will find that most of
what happens on MySpace, etc., is
relatively low-quality, untargeted or poorly targeted (hence un-useful) typical interactive advertising. And marketers themselves are still scared to be
innovative here, unnerved by the masses, and use old metrics without thinking about the other benefits they're getting.
Put the right message in front of the right people at the right time - without annoying users, but rather making useful and engaging experiences for them. The lines between social media and all media are blurring anyhow. So it really is a matter of a little more creativity and elbow grease by marketers and the environments to find products and services for new engagements and to target those efforts usefully. Vertical and vertical community sites offer this opportunity now.
Christopher M. Schroeder is president and CEO of The HealthCentral Network Inc. (schroeder@thcn.com)