Just ran into several posts mentioning that Google has stopped an experiment with ads on their social network Orkut. Google claims it was only an experiment and that the ads only appeared in 1% of the pages shown. According to the Wall Street Journal, the experiment was stopped after a protest from a non profit group in Brazil which was offended by the combination of offensive content and ads.
There is some speculation about whether or not ads are lucrative in social network and the fact that Google has stopped the experiment might suggest it is not lucrative business.
I think it is a very risky strategy to use ads in Social Networks. As I have written earlier the user of a social network is spending most of his time either looking at other people’s profiles, or updating his own. These activities, and the perception of the user that his profile is his own personal space do not make a good combination with ads.
I predict that if the ad pressure of social networks such as Facebook will increase that users will slowly turn their backs on the service. That is precisely why Microsoft should not be investing such large amounts of money in Facebook. Instead, it would be better to think of ways to increase the value of the service for the user, in such a way that both the user and the advertiser will meet their goals. Easy to say, very hard to do.