And the New Revenue Model Is…
By Andrew Frank | November 18, 2008 | 5 Comments
Ted McConnell, the general manager-interactive marketing and innovation at Procter & Gamble Co., affirmed a growing chorus of comments on this blog and elsewhere that social networks and UGC might not be so good for advertising after all. (At least the kind of advertising associated with brands in mainstream media.)
As reported in AdAge, the event was the Digital Non-Conference, a program by Cincinnati’s Digital Hub Initiative presented by the Ad Club of Cincinnati, and his remarks included these:
“I think when we call it ‘consumer-generated media,’ we’re being predatory,” he said. “Who said this is media? Media is something you can buy and sell. Media contains inventory. Media contains blank spaces. Consumers weren’t trying to generate media. They were trying to talk to somebody. So it just seems a bit arrogant. … We hijack their own conversations, their own thoughts and feelings, and try to monetize it.”
While it’s not a company policy, but rather a personal preference, Mr. McConnell said, “I really don’t want to buy any more banner ads on Facebook.”
He went on to cite Facebook applications as “potentially valuable” for advertisers…leaving open the question of how social networks might significantly monetize that opportunity. He also added that, while acknowledging that the targeting “is fantastic,” it makes him uncomfortable, sticking a pin in one of social media’s strongest claims on advertising value.
If McConnell’s comments reflect mainstream advertiser thinking – and mainstream advertiser budgets – then what are the options for social media? Here’s a rundown of some of the possible alternative strategies:
- Attract brands and advertisers like P&G by making social media look more like MSM. License and promote more professional content and monetize it with video advertising. This appears to be a big part of MySpace’s strategy.
- Cultivate advertising’s long tail. After all, that’s what Google does (for the most part). Take the model of self-service PPC search and figure out how to make it work in social networks (but beware of dangerous ideas like “Beacons”).
- Add more embedded ecommerce to the mix and try to build up commissions and transaction fees, either through third party affiliations or internal social storefronts.
- Go after the research side of marketing budgets. Figure out how to leverage proprietary data services to capture some of the rising spending on social media monitors (as we’ve been discussing), but be very careful about trust and privacy in the process.
- Try to push premium services with the “freemium” model. Emulate LinkedIn’s premium subscription concepts.
- Move beyond marketing entirely and pursue enterprise IT budgets with social platforms and applications. Study Amazon and Google and “the cloud.”
These ideas are not mutually exclusive, nor is the list collectively exhaustive. Each has merits and challenges, and no one can do them all.
The big question remains: is it enough to meet the high expectations we put on social media only a year ago? Or is more disappointment inevitable?