I recently read a great post by Mathew Ingram at Gigaom, where he asks himself “What happens to advertising in a world of streams?”
He wonders “as we consume more and more content via real-time streams that come to us through Twitter and Facebook and newer platforms, how does that affect advertising? Everyone wants their ads to look like just another form of content, but that’s a lot harder than it sounds. As appealing as these kinds of services are for users, however, they still have to be paid for somehow, which raises the question: What happens to advertising in a world made of streams?”
I can tell you, Mathew: Really bad things already has happened! As a matter of fact, bad things for everyone who’s involved. Bad things for the users/visitors because they never asked for it, and mostly they don’t want it. Bad things for the advertisers because they don’t get as much attention and click through they want, and the conversion rates of these very few clicks, are too bad. And not at least bad things for the media, because none of their stakeholders nor customers are really happy anymore. And the media do suffer, big time.
And that’s not just in the new world of streams, that’s what has happened in a world of all kind of media, at least the ones that people doesn’t pay for; the media which gets their revenue from ads. And that’s the great majority of all media. Social or not social.
Recently, I had a lunch with the Editior in Chief for Aftonbladet, the biggest newspaper in Sweden. He said that social media is not a threat to his web media outlets, when it comes to traffic. As a matter of fact, quite the opposite; they’ve never got as much traffic to their digital outlets like these days, some of it from social media. But he totally confirmed that the business model for his web media are completely broken. And that’s a huge problem.
“Advertising has lost its power”, he said. And social media is not an exception. Giants like Twitter and Facebook seems to be quite desperate as we speak. As far as I can understand, they’ve tried different kind of advertising models since the very beginning, without success.
Lara O’Reilly wrote in MarketingWeek that “this week both Facebook and Twitter have announced the roll out of new services and guidelines to boost their appeal to advertisers, which could come at the cost of alienating their users. Facebook is currently testing a new ad format to appear in the newsfeed that will see brands’ page posts appear regardless of whether that user or their friends are fans of the advertiser’s page or not.”
Brittany Darewell, InsideFacebook, says: “This ad unit will look just like a post from a page that a user is a fan of, except it will include a “Like Page” button in the top right corner and the word “sponsored” at the bottom, according to a screenshot provided by Facebook. Previously, a page could only advertise in News Feed if users already Liked it or if they had a friend who did. This latest test, along with the mobile app ad unit announced last week, show Facebook is no longer limiting News Feed inventory to entities that users have already connected to.”
“Meanwhile, Twitter is clamping down on third party developer use of its API as it looks to encourage users to use its official apps rather than services like Echofon and Tweetbot. Twitter wants developers to focus on creating analytics apps instead as it looks to boost its appeal to advertisers”, says Lara O’Reilly.
Mark McGrath, Technorati, says: “What started as friendly advice towards independent developers six months ago has turned into a clear-cut formal decision to exclude the involvement of third-party apps. Looking to follow in the gold-coated steps of Facebook, Twitter is trying to establish itself as a social media powerhouse that can be sustained by ongoing advertising revenues.”
And most of the people did condemn these social media immediately. The unofficial Facebook blog “AllFacebook” listed some of the opinions in its post: “What Others Are Saying About Facebook’s News Feed Ad Testing”
Dan Seitz, Uproxx, says: “Oh, please. We know what’s going to happen: Users will hate it, and Facebook will roll it out anyway, because that’s what Facebook does. If this sounds desperate, that’s because it is. Common stockholders have very little control over Facebook directly, but they can do one thing to make Zuckerberg listen: Sell.”
Luke Brynley-Jones, Our Social Times: “Facebook and Twitter are both pushing users to the limit of what’s deemed socially acceptable — for one obvious reason: Each incremental incursion into your privacy represents a potentially lucrative new income stream. What’s interesting is that they are doing this under the radar. Even large, unwieldy corporates learn from their mistakes.”
But some of them are quite optimistic after all, like Josh Wolford, WebProNews: “Of course, this is just a test, and Facebook runs hundreds of tests every month. But something tells me this one will stick. It’s a clever way for Facebook to expand ad revenue and an improved way for businesses to expand their reach on the network.”
But in the end he says: “But of course, it’s also Facebook getting one step closer to selling straight-up advertising on the site.” And we all know what “straight-up advertising” means, right? FAIL.
What if they did choose a subscription based funding instead? Jonathan Slonhum wrote for JeffBullas.com where he asks himself: “Should You Invest in LinkedIn and Forget Facebook?”
He says: “Marketers everywhere are trying to discover how to monetize social media. But some social media sites can’t even make money from their own users. Facebook has been in the news recently for failing to live up to its business promise. LinkedIn, however, has performed remarkably well in the same difficult sector.”
And furthermore: “…ad revenue alone will not be enough to power the company going forward. Facebook needs a new and effective business plan if it is going to avoid failure. Originally, LinkedIn made most of its money through advertising and $9.00 premium subscriptions. However, the last two years have seen the company shift to a focus on monetizing the massive data they’ve collected. With information on thousands of workers and job seekers, they provide corporate recruiters with one of the best recruiting tools on the market.”
The latest talk of the town when it comes to microblogging social networks is App.net: “…a real-time social feed without the ads” wich “puts users first”.
SFGate’s Benny Evangelista says: “Twitter and Facebook, the two giants of social networking, have stepped up efforts to generate more advertising revenue to prove to investors that they can be profitable. But what if there was an alternative, ad-free social network that relied on other revenue streams, such as charging access to app developers or becoming a for-pay service? That’s a question a fledging social network called App.net hopes to answer.”
The App.net founder Dalton Caldwell, replies: “I have no idea if this is going to work, but it is something I care about passionately,” and adds: “I think there is a market for it.”
Maybe, Dalton, maybe, you’re right. At least, I did pay the $50 fee for the first year. And at least, I believe media which can’t charge users for what they consume, should think twice… But I guess, that’s not the answer Mathew looking for when he asks: “What happens to advertising in a world of streams?” And I’ve already told you, bad things has happened.
But also good things. Because some of the former “advertisers” are now starting to act like good citizens. They do socialize with people that matters, in a way that people use to do. They’re now part of communities. They’re now listening to and learning from their buddies or at least their connections. Yes, they’ve got their own opinions and purposes. But they’re also influenced by their community. And as a part of the community, they’re using the same communications tools like the rest of the members of the community, and as members they contribute with stories and services that really make sense to their network. Like all members. And that’s a hell of a difference compared to what traditional advertisers do. Because these advertisers will never ever be a part of the community.