1. Advertising not working in social networks sounds like a recommendation to me.

    I remember downloading Mosaic right at the beginning and not seeing any ads! Seemed pretty cool!

    Ads didn’t make it cooler. But they helped ensure VC’s would put money into tech.

    So QED – the reason we need a business model is so that people will want to invest. Most of the geeks that I know are like most of the songwriters that I know… they would do what they do regardless.

    (Full disclosure, though: I am an investor in Vquence, a company that is developing metrics capabilities for socialized video. Why? Because brand managers need solid information to justify investing in campaigns within social networks. And the information that is out there at present is not very helpful)

  2. aye its just that advertising is the worst revenue model. there are better ones that have VCs jumping for joy.
    MySpace makes 2.17 per year per member and only have advertising for revenue. CyWorld (SKTElecom) with nearly as many members, make 3x that (Habbo, 17x that, less members) and both have zero advertising. Makes one think no?

    Only NineMSN thinks the future is in video ads 🙂

  3. From the link to an old blog post that I gave above:

    “Advertising tends to be outperformed by other revenue streams. CNN Money found that MySpace makes $2.17 per member per year from advertising, whereas South Korea Telecom’s Cyworld (90% of South
    Korean’s in their teens have signed up) makes $7 per user per year ($300,000 per day). However in SKTelecom’s Cyworld case, there is NO advertising, the revenue is from virtual goods.”

  4. What ever happened to other ROI such as brand recall and engagement?

    That’s exactly where online advertising went wrong. The main ROI is measured in clicks, not recall/brand awareness, not positive view of company, etc. So essentially online advertising shot itself in the foot – no other medium has to make people buy on the spot.

    You don’t get junk mail in your letterbox and immediately run out to buy a TV. But that’s what online advertising expects.

  5. Social media is not designed for advertising but rather it is designed for marketing, and you need a long term marketing plan. You are correct that is you send advertising message to the people within a social media site it will not work. You need to develop a relationship with the people within your network of people and begin a long term marketing plan that will span; 6 months to a couple of years depending upon your market. Social media is not a quick sales medium!

    Direct advertising within a social media setting will not work. You will get the general 0.01 to 0.05% response, but my clients are finding that if you build a relationship with the people within the social media network by providing useful content to them, they begin to trust you. Social media is all about providing useful content to people to build that relationship. Let me ask you; is a long term relationship more valuable than someone who clicks on an ad? We think so!

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