Social media - which includes user generated content and those found on social networks - will never get advertising money. I am glad to see more and more people come to their senses and realize this.
Much the same way that investors were bamboozled once with B2B plays (remember the skyhigh prices of Ariba, Commerce One?) and wireless opportunites (Helio anyone?), social media is not monetizable.
eMarketer talks about the growth of UGC and asks can UGC generate revenue?
Nope. To quote Andrew Keen, author of Cult of the Amateur, said in a Newsweek interview, “Nobody wants to advertise next to crap.” Keen is a critic of social media, but even those who see the value thereof are starting to admit that its value is not necessarily based in advertising.
In fact, most agree: ”Advertising revenues against user-generated content are modest, and they are expected to stay that way for some time”, says Paul Verna, eMarketer Senior Analyst and author of this latest report.
“Given the size and level of engagement of the audience, advertising revenues around user-generated content will not approach the level one might expect,” says Mr. Verna.
Nevertheless, eMarketer anticipates US user-generated content advertising revenue will reach $824 million in 2012, up from $162 million in 2007.
Sure, that’s why you are seeing ad networks generate revenue: treading to no man’s land. But considering that US online ads were $25B in 2007, focusing and getting so jazzed up on $162M is foolish.
But that’s why it’s called the greater’s fool theory after all.
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April 21st, 2008 at 11:57 am
I can’t see it your way on this. It’s low-CPM inventory to be sure, but volume matters. We’re making our new ad network function just fine. Now that we have enough volume to work with (100M impressions daily), our network eCPM is going up almost a penny a week. I bet it’ll top out below $.20, but we can be profitable at that level and pay publishers the far majority of the proceeds. That’s good enough to bother by far.
April 21st, 2008 at 12:01 pm
Scott I actually agree with you that IF you can get volume, then you can win. However, with volume plays, you better hope you are #1 or #2… whereas when it’s not a volume play, then you need not be #1 or #2.
Either way, I think you have a shot to make Lookery #1 or #2… the challenge is lack of standardization, common metrics etc. in the short term. The other challenge is obviously how marketers will use social media in the mix. You have to ensure that your strategy is right and that you guess how social media is to be used… those things are related but not one and the same.