Reason being, it seems like all I hear about when it comes to social media is how to monetize the site, or how to generate revenues, and how to make it profitable. It's definitely the hottest topic of discussion in my own life, as we try to monetize social casino content through various mobile channels. But then I read the Professor of Operations and Information Management at the prestigious Wharton School, Eric Clemons, post that states, "People don't trust ads....people don't want ads...people don't need ads" and I could not help but immediately think of how the online titans like Facebook and Google will fare in the future, let alone all the small mom and pops that are trying to grow up and make it. It just seems to defy logic. But then again, his reasoning seems sound, but there is one additional point of consideration that really makes it sound that I would like to add...
In addition to online users not wanting it or needing it, I think the current social users primarily want to interact with friends, but they also get distracted easily, and the latter is what really limits the amount of time a company can advertise. 30-second ads like viewers see during the Super Bowl are not acceptable in social circles online, because users are not willing to even consider such a length ad. They quickly move onto the next link, image, sound bite, you name it, and thus advertisers have extremely limited attention spans with which to work in the first place. And to the previous point, Randall Stross is spot on when he cites, "Members of social networks want to spend time with friends, not ads." These two points coupled together will spell the ultimate demise of traditional advertising techniques in the social media age.
If that is not enough to convince you anecdotally, then consider this article from June 2012 that empirically shows how ad funded internet models drained over $40B of venture capitalist money between 2002 and 2012. At the time the article was published only an estimated 5% of global mobile revenues came from advertising. And as the number of mobile and table users continues to exponentially increase, that does not bode well for those companies. The author, an executive advisor to large and emerging tech firms and advisor to venture capital firms, summarized his position with the phrase, "Traditional online advertising is looking like a $40+ billion money drain." Wow. That really does say it all.
Though it is quite interesting to me how the COO of Facebook, Sheryl Sandberg, spins it and states, "The goal of our advertising business is to get users to interact." That would make sense given that Facebook is the world's most dominant social media application and platform, but it sure sounds a little fishy to me. It's obvious Facebook is pushing ads, because it helps to keep their investors happy and make the company most profitable, as evidenced by the over $1.5B in revenues it earned last quarter that was propelled by ads.
But the underpinning lesson in all of this is that all social sites, and titans like Facebook included, need to be weary about their users' preferences and behaviors. Trying to chase the money by continually monetizing the site, which can easily ultimately inhibit the user experience, can just as soon chase away the users themselves.
Marketers need to seek new ways to promote awareness, bolster, and advertise their brands in this new web world.
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