Monday, December 03, 2007

Established media will have last laugh in social networks

There remains a reliance on clicks on ads on the web. It's the core revenue stream for most building digital enterprizes. Even social networks.

And yet, as Dana Boyd points out, they only engage a tiny percentage of the people/audiences/communities in question.

Some highlights from her post (which references Dave Morgan's blog post about AOL's survey):

"Ninety-nine percent of Web users do not click on ads on a monthly basis. Of the 1% that do, most only click once a month. Less than two tenths of one percent click more often. That tiny percentage makes up the vast majority of banner ad clicks."

"Who are these “heavy clickers”? ...they look at sweepstakes far more than any other kind of content. Yes, these are the same people that tend to open direct mail and love to talk to telemarketers."

You could conclude that banner ads aren't reaching anyone new. The same old people are just being reached through mutliple channels. And they aren't any more likely to buy as a result.

Whatever the case, it's pretty clear we need something better.

While there is an increasing understanding that community, not content, is king, this understanding clearly hasn't reached as far as what we do about advertising.

For example, the exponential growth of social media is often judged successful because it means loads of people (users/eyeballs et al) are being dragged together in a huge fishing net of their own making. And there they are expected to flap helplessly, mouthing breathlessly, while the factory ship slaps banner ads all over them.

This mentality comes from the Property Developer approach to site building. If you're building it with a view to selling it on, all you are likely to consider is catching those fish and getting them to market before they go rotten.

Even the mighty facebook has suffered from this. The site's lean towards opt-in as default (which has driven its viral growth and that of its apps) came unstuck when it was applied to their Beacon advertising model (where opt-out as default would appear to have been the preferred option for freedom loving fish). Watch video below for how the privacy rules have changed in response.

And so, the idea that capturing the fish in your net (to sell to the next guy) is your prime function is seriously restricting the value creating capabilities of social networks as we have experienced them. It is seriously restricting the amount of thought being given to this.

If you build your social functions with a view to staying with that community for the long run the question of what replaces banner ads (and indeed, what replaces advertising) becomes much more important to you. The rest (the gathering of a huge audience to banner-ad at) is just smoke and mirrors.

So it is left to those of us who have long-established relationships with communities - which we wish to continue - to really activate the power of the network, to understand and implement the new ways in which value can be created - to forge the new business ecology.

It matters more to us. We aren't the ones selling our communities.

Established media is therefore very well positioned to end this story laughing loudest.

Will it be engagement marketing, will it be marketplaces as conversations, will it be the co-creation of products and services, does all this amount to the same and still require a lifeboat of banner ads?

Probably. What is certain is that it will be different from business as usual.

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