12 Feb 2008
Google’s latest earnings report revealed a bit of a slump in ad growth, something that Google CFO partially attributed to “social networking inventory not monetizing as well as expected.” Google, of course, has a huge ad deal with MySpace, runs their own social network, Orkut, and has been pushing to get Facebook app developers to include Adsense ads. They didn’t elaborate exactly which social network advertising wasn’t working out as planned, but many have seen this statement as indicating that MySpace advertising isn’t doing well.
There’s some likely reasons for this, both of which point to the need for marketers to use new techniques to reach social network users. Google’s ads are optimized for the searcher. They perform well in search engine result pages and on pages with high search rankings—pages that get lots of search traffic. The people hitting these pages are looking for something, and if they don’t find it on the page, they’re inclined to click on the ads to find it.
Social networking users are focused on a task when they’re on Facebook, MySpace or other sites. They’re busy socializing and finding people. Because they aren’t looking for something, they’re less likely to find something interesting enough in an ad to break away from what they’re doing.
In search, the ads represent a way for the user to accomplish their tasks. In a social network, they represent a distraction from the task at hand.
Google does have some experience placing ads in task-oriented applications, so this difference in use behavior shouldn’t have come as a surprise to them. Their mail product, Gmail, evaluates email messages as you read them and places contextually relevant ads along side them. Email is very task oriented, and although I’m not privy to the click through rates on ads in Gmail, I’d be surprised if they were very high. In fact, Google apparently places the value of a single Gmail user at around $50 per year. Through their apps for domains feature, a domain owner can host their domain’s email addresses through GMail for free. Or they can pay $50 per user per year for upgraded service. Features include the removal of ads from Gmail. If Google were making considerably more than $50 per year ($0.13 per day) from Gmail ads, this price would likely be higher.
Google guaranteed MySpace a minimum level of ad payments, regardless of how the ads perform. How did Google’s experience with Gmail advertising affect their negotiations of that minimum payment?
Another factor in under performing social network ads is banner blindness. Regular users of a site will develop an intuition about where the content they’re looking for will reside. They stop scanning navigation, design elements, and advertising, instead focusing on the content.
What a Facebook user sees.
For social networking sites, this means that ads appearing outside the normal content area, or even in a consistent location within the content area will tend to be ignored.
Sites that show ads to regular readers as well as occasional readers tend to see much higher click through rates from occasional readers. Regular readers often skip by the ads without even noticing them. When Matthew Haughey experimented with disabling ads for logged in users of MetaFilter, he saw this first hand.
Overnight, the click-through rate increased. The overall impressions went down, but non-members were clicking much more than frequent visitors. For a pay-per-click model like Google Adsense, this meant I lost virtually nothing by turning ads off for the most frequent visitors, and the numbers increased for what did get served. [Emphasis is mine]
I do the same thing on this blog. Most of my search traffic is to blog entries that are more than two weeks old. Most of my regular readers read blog entries within the first week of publication. I place ads on blog entries that were published more than two weeks ago, but forgo ads elsewhere.
On a social network, however, substantially all of the traffic to the pages is via members.
Contextual ads haven’t performed well on certain types of content. Matching an ad to the contents of a page works well when the user is searching for products or services, but not as well on related concepts. Ads also tend to appeal to a broad audience, without diving deep into narrowly defined target markets. For all the talk about the internet’s ability to precisely target advertising, contextual advertisers still take a broadcast approach, choosing keywords that define as large a market as possible.
This broadcast targeting falls down when matching against more niche content. When reading about Apple’s stock on an investment site, you’re often going to see ads for iPods and other Apple products. Simple keyword matching tells us this is a good match, but an investor isn’t looking for Apple products and this ad won’t receive a high click through. Likewise, due to the generalized nature of contextual ads, an online community of baseball enthusiasts will tend to have ads about general baseball and sports topics. The enthusiast won’t be attracted to these generic ads for baseball products.
On social networks the content is created by individuals and read by their friends. Social networking pages are often hidden from search indexes and are available only to individuals in a person’s network. They don’t get any of the search traffic that proves so valuable in blog advertising. Instead, your social network pages are viewed primarily by people that have similar interests to you.
This results in general ads for products and services being shown where specificity would provide better results. My son the skateboarder sees ads for board shops and "Skateboards on Ebay" when on his skateboarding friends' profiles. He has a skateboard and already knows which skate shops he likes to visit. Even if he sees these ads, they’re not going to attract his interest.
A marketer wanting to reach social network users needs to try some new tricks. Broadcasting contextual ads with your Google haiku isn’t going to cut it.
©1999-2013 Adam Kalsey.
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