Let’s assume for a moment that there is a direct relationship between audience delivery and advertising revenue potential. Based on this premise, it would be easy to predict social media is poised to capture an increasing share of future advertising spending. (See my November 2011 post, “Putting social media in perspective.”)
In April 2012, Facebook announced it had 901 million users and would likely break the billion-user mark before the end of 2012. Twitter reported in February 2012 it had more than 500 million users, albeit only 140 million were active.
With all this audience, is it safe to assume social media will capture a significant share of advertising revenue? A number of interrelated and double-edged factors suggest the answer is no, social media will never meet expectations.
Peter Cohan’s recent Forbes.com article, “Why Groupon Is Over and Facebook and Twitter Should Follow,” suggests social media is a “dopamine delivery system.” Dopamine is a brain chemical that makes people feel pleasure and plays a major role in the brain system that is responsible for reward-driven learning.
Cohan suggests that “a cavalcade of social media pings, including daily deal emails, Tweets, and texts,” is one of the reasons for social media’s popularity and audience growth. He also points out that dopamine, “like any drug,” takes even bigger doses to achieve the same pleasure. A Facebook post that generated 10 “likes” yesterday needs to deliver 20 “likes” today to generate the same pleasure. He suggests Facebook may not be “delivering enough additional dopamine, which may explain its slowing growth.”
At the same time this is happening, social media sites are aggressively searching for ways to monetise their audience delivery. Twitter announced last week it will allow advertisers to target ads to their users based on their interests. A Twitter user that follows a number of sports teams or athletes, for example, will receive sports-related advertising.
A large percentage of social media site users — all hopped-up on dopamine, no doubt — seem to be in denial about their relationship with their social media site. They fail to realise they are not the customer, they are the product.
As social media sites start introducing more ads targeting behaviour and/or interests, they likely will reduce the pleasure users derive from their social media experience. As more targeted ads appear, the creepier the social media experience will become for some, driving them to less intrusive (less advertising) social media sites.
Sometimes just the knowledge that a social media site is being commercialised can drive away audience. Take, for example, MySpace, which was purchased in 2005 by News Corp. for US$580 million and sold for 6 cents on the dollar in 2011 for US$35 million to an online advertising company based in Orange County, California. ComScore reported in June 2012 that MySpace audience has declined 13% to 29.3 million users over the past 11 months. As social media sites increase their efforts to monetise audience, there is no guarantee their audience will stick around for the ride.
When it comes to social media, the relationship between audience delivery and advertising revenue potential seem to be out of alignment. It is clear that marketing in a social media environment requires different cultures and practices. (See my February 2012 post, “Interactive marketing requires different culture and practices.”)
Several years ago, a friend likened social media marketing to being invited to a neighbourhood cocktail party and showing up with a table to display and sell your products. What seems to be clear is that social media faces an uphill battle when it comes to meeting advertiser and audience expectations.