Comments on: What if they stop clicking?

By: Tobias Schwarz

Tobias Schwarz — Fri, 27 Nov 2009 07:02:47 +0000

Interesting read – facebook, btw, has announced in September they’re free cash flow positive

http://www.insidefacebook.com/2009/09/17/facebooks-big-advertising-experiment-drives-new-revenue/

http://www.insidefacebook.com/2009/09/15/facebook-reaches-300-million-monthly-active-users/

By: Shorting Toxic, er, Social Media -- Garrick Van Buren .com

Shorting Toxic, er, Social Media -- Garrick Van Buren .com — Fri, 27 Nov 2009 02:39:48 +0000

[...] quality. Sound familiar? It’s just like Wall St 2001-2008.” – Umair Haque “What if the social internet as we know it is being built on sand, on ads that almost no one l… Comment | Trackback URL Short Link: Add a [...]

By: Rick Burnes

Rick Burnes — Thu, 26 Nov 2009 23:18:25 +0000

I think you answer the question you pose in the headline in your second paragraph. I expect that what you describe as “alternative revenue streams” will become primary revenue streams for most social networks.

Advertising is not a viable solution for Twitter and not a complete solution for Facebook. I imagine both will begin charging businesses for Freemium features that provide more data and control. There is enormous revenue potential here because Twitter and Facebook are becoming a significant organic (non-advertising) marketing channel for many companies.

By: » Even If They Don’t Click MaisonBisson.com

» Even If They Don’t Click MaisonBisson.com — Mon, 23 Nov 2009 16:22:22 +0000

[...] Zuckerman’s recent post, What if they stop clicking? points out the difficulty of building a business on ad revenue. He points to statistics that show [...]

By: Casey Bisson

Casey Bisson — Sun, 22 Nov 2009 02:20:44 +0000

Google has apparently been tracking people who are presented (but don’t click) ads, then make a visit to the advertiser’s site within a month. The company started reporting the numbers to advertisers this fall, so I can only imagine the stats make ad spending feel better.

http://adwords.blogspot.com/2009/09/announcing-view-through-conversion.html

The bigger problem with ad-supported content, however, is the internet itself: old newspapers were discarded, but old web pages get new ads for every visitor. And, as you mention, Demand Studios is pumping out thousands of new pages a day. The scarcity of print made ads more valuable, while the abundance of content on the web forces us to develop the very skills we use to ignore ads and other irrelevant material.

By: Sher N

Sher N — Sat, 21 Nov 2009 03:45:05 +0000

Hi Ethan,
Interesting discussion, as always. From a world class shopper, net & brick and mortar, the ads which work inform with content. This is largely missing on all banners and most net ads. Products are diverse, I need to find what I need for my household in a time limited environment, with allt he good business infrastructure in place, from selection, to delivery, to reliability of product, etc.

It is, really, still early days on the internet and society is very mixed, even in the US and EU. I would like your thoughts on the above and also to know if you have considered family mobiiity in buying patterns, even with internet penetration at elevated levels. Website stability and design are far from uniform(we do not have a cash register being a cashregister even in format yet. Here’s a question I’ve asked before and one still in need of thought and discussion: where is legal jurisdiction over the internet located?

My personal choice is a new court but that is for another discussion.

By: Chris O'Brien

Chris O'Brien — Fri, 20 Nov 2009 23:14:49 +0000

Ethan:

Fascinating post, and I wish I had more time to write a longer response. But out here, I’m probably the opposite of you: I spend a lot more time thinking about biz models for Web companies, and less (though still some) about the social activist aspect. That said, one of the ways to all think about this is not to define social networks as one category. When I think about Twitter vs. Facebook, I think about open vs. closed networks.

Twitter has thrived, as you mentioned, because it is open, not just because anyone can join. But because it has a totally open API. That means they’ve built a platform that means most people never have to Twitter.com. And in fact, traffic to Twitter.com is declining. I spend all day on Tweetdeck, but how can Twitter monetize that through advertising?

On the other hand, while Facebook is closed, the average time people spend on the site is huge. I believe time spent on Facebook already exceeds time spent on Google, though overall Facebook traffic is lower. That means engagement is high, and advertisers like that. That was (once) true of the print newspaper where people lingered, and so were more likely to see the ads (which advertisers like) even if measurement is poor in print.

This is all to say that I think it’s hard to lump all social networks together when we think about biz models. In general, Web advertising has failed to deliver on the promises people thought it had in the 1990s. Even Google is starting to see the amount people will pay for click declining, although revenue is up because traffic and number of advertisers continues to grow. That tells me that even those text ads are becoming less effective than they were (or than people thought they were).

By: Dustin

Dustin — Wed, 18 Nov 2009 16:10:12 +0000

Great piece. There are couple of things I would ad. First, regarding Facebook, there scale is likely big enough to keep the servers running by churning a long time with optimization. With the right ad-based experiences inside the network it is possible to keep the numbers up as long the marketer does not use the standard Click and Go model of advertising. The challange for a marketer (who sell a product) is wrap their head around the fact they have to now sell an experience about their product rather than the product itself. That is very challanging and can be expensive.

I am also very curious

By: Fernando

Fernando — Wed, 18 Nov 2009 15:40:36 +0000

Ethan, I am glad you touched upon these issues (and did so in such an interesting way). Just a few comments:
1. The study of online advertising has been left to industry stakeholders. There is a saying, attributed to former German chancellor Konrad Adenauer, that goes ?politics is too important to leave it to politicians?. I would say the same about advertising research.
2. I agree with Bo that social networks are not a good ground for advertising and perhaps we should think of them as non-profits. I am afraid though that the ones we have today are too vested in the commercial model. And the key question will be what kind of revenue model (if any) is going to make them viable, and at what price to their users. We have become accustomed to a commercialized public sphere (mass media), will we also get accustomed to a commercialized private sphere in which friendships are vehicles for commercial interests?
3. Google has created the impression that advertising online works great if you ?just? happen to find the right formula and that clicks are the way to measure and sell ads. I have the feeling though that Google?s model is so unique that it will be very difficult to find anything similar in the near future. The issue of clicks is very interesting, because advertisers have happily lived without them for decades. But because they are an option over the internet (and they are easy to measure) everyone wants to look at them. However, we (everyone but Google) are still trying to figure out what those clicks mean and how much they are worth.
4. Then there is the issue of who pays for content and services. With previous forms of advertising, the section of the audience that watched the ads and bought the advertised products was actually paying for everybody?s enjoyment of the content. To the extent that online advertising becomes more and more targeted, we need to understand what?s going to happen with these types of ?subsidies?.
I could keep going (there?s so much stuff in this post), but I am sure we will have a chance to revisit all these issues soon. Thanks!

By: Brain Food 11-16-09 « Confluence Culture

Brain Food 11-16-09 « Confluence Culture — Mon, 16 Nov 2009 19:47:19 +0000

[...] ALERT: If you are like me you never click on banner ads. So how does the internet make money? And what happens when people stop clicking? Tagged with: antediluvian, leonids, loofas, oily peanut butter, [...]