IN ANNOUNCING THEIR FOURTH QUARTER 2007 earnings, Google attributed their weaker than expected results to difficulties in generating revenue from ads served on social networking Web sites.
I have heard many people tell me that they believe that ads underperform on social networking sites because users are not open to or interested in ads while engaging with social networking sites.
Are users ever interested in seeing ads?
Apologies to my friends on Madison Avenue, but users are never really interested in seeing ads. Users will tolerate advertising if it enables them to experience content for which they would have otherwise had to pay money.
Perhaps the problem with advertising on social networking Web sites is related to the receptiveness of social network users to any advertising message and the relevancy of the ads.
Let’s be honest – primary users of social networking sites – often referred to as Generations X and Y – have been challenging marketers for years, regardless of the advertising medium and vehicle used. This has led marketers to embrace newer areas of marketing, including product placement and word-of-mouth marketing.
In terms of relevancy, there is no excuse for serving irrelevant ads on social networking sites because social networks enable marketers to target their advertising better than on any other advertising vehicle or medium other than direct mail. Social networking sites enable better targeting than most other forms of online advertising because of the user information submitted when signing up for the site, and because of the social connections made on the site.
Looking for Syracuse University graduates who are working in online advertising? No problem. Want a first time home buyer or expecting parents? Pretty easy.
The challenge for marketing on social networking websites is to walk the fine line between a perfectly targeted ad and being big brother. Facebook learned this lesson the hard way with their failed Beacon advertising program.
But there is also another solution.
Why not target the same user with a delayed ad after they have left the social networking website?
Why not serve the future home buyer or parent a behaviorally relevant delayed ad 2 hours or 2 days after they visited their favorite social networking website?
With today’s technology, it’s possible to serve behaviorally targeted delayed ads without violating the user’s privacy. The ad network or exchange documents one-time user events and serves personally unidentifiable ads to users, all without data integration, cross-site information transfer, or the creation of user profiles.
Truth be told, it’s a lot easier said than done. But by using behavioral targeting and allowing for delayed gratification, marketers will discover the key to ad monetization on social networking sites.
Zohar is the CEO and founder of eXelate (www.exelate.com), the creator of the world’s first exchange for targeting data.