Ads and Social Networks, an explosive combination?

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.

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This entry was posted in Facebook, future of advertisement, Google, Microsoft, on-line advertisement, social networks and tagged , , , , . Bookmark the permalink.

4 Responses to Ads and Social Networks, an explosive combination?

  1. Pingback: Favorieten en bookmarks voor 4th October tot 7th October » Cafe del Marketing

  2. Pingback: Favorieten en bookmarks voor 4th October tot 7th October

  3. Ads are fundamentally one-way blasts that depend on machine intelligence to make a best guess from available data. It is stupid at best to do Contextual Advertising in a social network, and lose the forest (i.e. market) for the trees (i.e. eyeballs). A frequently used communications network is ideally suited for Contextual Marketing – e.g. engaging with subscribers/customers by service providers in a subtle but clear way. Think about Realtors, Coaches, Recruiters, Advisors, etc. – they are typically engaged with their clients in multiple dimensions of life. They all have a need to “pimp” their profiles – exactly what social networking sites should do – but the pimping depends on the facet of life they are engaged in. There is no need to do external Ads – these service providers ARE the Ads!

    LinkedIn doesnt get it either even though they provide a service registry and networking – they are so boring and just not exploiting the power of two-way communications.

  4. Alexander van Elsas says:

    Hi Srini,

    I think that the combination of a free service, which is compensated by monetization via ads is what is wrong here. There is no such thing as a free lunch. Someone has to pay for the servers running the service. We really need fundamentally different business models to break out of the “value in the network”thinking. Do you have ideas about that?

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