Madison Avenue still has to find its way to social media, and it will not happen soon

Last week, CNET’s Caroline McCarthy wrote about eMarketer’s data about ad spending on social media sites.

According to eMarketer, the share of social networks such as Facebook and MySpace, was only 5.5% of the total digital ad spending in 2009. That’s slightly more than in 2008, and it’s indeed a bit surprising when listening to both the intentions from marketers and from the social networks themselves.

Especially if you look at how the Facebook’s and MySpace’s of this world try to convince advertisers to spend on their networks. Is it a coincidence that recently Facebook announced it will take care of its own advertising business? 

I’m not sure if the eMarketer data only looked at display ads, however. Remember there is such a thing as PPC advertising and what Facebook calls “social ads” too.

Does ‘traditional’ online advertising work on social media?

Of course, advertising on social networks is far from the only way marketers and businesses can use social media for marketing (or should I say branding?) purposes.

Some even say social network users are less receptive to ads. Has that been proven recently or is it a theory based on the premises that people use social networks do “do things”?

I guess you can say the same about, let’s say, Windows Live Messenger or Hotmail and businesses advertise there too. 

Still, it’s worrying, especially for the social media sites. After all, you can’t run a business without a solid revenue stream. 

Back to the data. News Corp. owned MySpace is on the decline. That surely has an influence on the overall picture of ad spending on social networks. MySpace is expected to drop 21% between last year and this year. The drop is mainly in the US (23%) while the social network site is expected to grow with a disappointing 3% overseas. 

In 2009, according to eMarketer, MySpace took in $490 million in worldwide social-network ad spending; in 2010, it’s projected to be $385 million. 

Is it a coincidence that MySpace CEO Owen Van Natta last week left MySpace, after having been in command of the former king of social networks for merely 12 months? 

The eMarketer data also indicated that Van Natta’s former employer, Facebook, will surpass MySpace for the first time in terms of U.S. ad spending market share. While MySpace is down from 38.4% to 27.8%, Facebook went from 27.7% to 34.7%. 

The growth rate on ad spending for other social networks was very low, going from 26.8 percent to 27.4 percent.

Who will go beyond the IAB formats?

What the future will bring for ad spend on social networks is very uncertain. As Caroline McCarthy wrote: the data from eMarketer date from last December.

In the meantime, we know that Facebook has stopped working with Microsoft (except for search) and that it decided to skip display ads and focus on ‘social ads’. This way Facebook stays close to its social media nature but the big question is whether advertisers will follow.

Let’s not forget that display advertising is still a big part of online advertising but most of all: advertisers are familiar with it. But then again: it’s not because you’re familiar with something that you have to stick with it.

Which advertisers will be innovative and creative and go beyond the IAB formats and traditional forms of online advertising? Or is Facebook dreaming?

And then of course there is MySpace. Should I say that for News Corp’s social network site it’s even more uncertain what the future will bring?

Read Caroline’s article on CNET here.

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1 thought on “Madison Avenue still has to find its way to social media, and it will not happen soon”

  1. While advertising is important to Social media networks, the advertisers will need to develop a balance between branding type ads and customer focused IE sticky type advertising. I think this is a whole new approach to advertising that many companies are not ready to accept. I called it “dialoging” where the ads need to be more informative, products will be accepted and endorsed by the users and company spokespersons will need to be on-line to answer questions as they come up.
    It’s a more intimate type of selling vs just pushing product and info out to the masses and it will be challenging for many, however the ones that succeed will enjoy a much larger market share than their competitors.
    As for Facebook and MySpace – Facebook has a better product and that’s what’s driving its growth vs MySpace. Can MySpace turn it around? Possibly, but they will need to be more innovative then they have been in the past and will need to have a very compelling reason for Facebook Fans to switch, unless Facebook does something to upset its users.

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