One of our main items in our predictions for 2009 is the fact that the vast majority of social media startups will shut down.  Hearing a major advertiser like P&G highlight the challenges of social media, you tend to understand why we made this call.

Quoting Ted McConnell, general manager-interactive marketing and innovation at Procter & Gamble Co.:

“I have a reaction to that as a consumer advocate and an advertiser,” he said. “What in heaven’s name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?”

‘Who said this is media?’
He went on to apply a similar standard to the broader world of consumer-generated media. “I think when we call it ‘consumer-generated media,’ we’re being predatory,” he said. “Who said this is media? Media is something you can buy and sell. Media contains inventory. Media contains blank spaces. Consumers weren’t trying to generate media. They were trying to talk to somebody. So it just seems a bit arrogant. … We hijack their own conversations, their own thoughts and feelings, and try to monetize it.”

While it’s not a company policy, but rather a personal preference, Mr. McConnell said, “I really don’t want to buy any more banner ads on Facebook.”

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Uncomfortable about targeting
But while he appreciates the power of targeting afforded by Facebook, Mr. McConnell said, it also makes him uncomfortable.

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“So the targeting is fantastic,” Mr. McConnell said. “You can do really amazing things. But I’m not so sure I want to be targeted like that. … I don’t think everything every consumer says to someone else and writes down is somehow monetizable by the media industry.”

Inventory explosion
More broadly, Mr. McConnell said he believes marketer dollars will continue to flow online, but that won’t necessarily be a boon to online publishers, because online display inventory continues to grow faster than the dollars going after it.

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“Fragmentation thwarts artificial scarcity,” he said, noting that CPMs for rich media have held up somewhat better.

More on this matter:

- Connecting the Dots: Why Social Media Fails at Generating Revenue
- Why Social Media and Advertising = Fail
- Dark Cloud, Meet Social Media. Social Media, Meet Dark Cloud
- Social Media Hype Train Continues
- When Will Social Media Get It?
- Why Social Media and Beacon Are Doomed to Fail and What Facebook Should Do
- Social Media Growing Pains

Don’t be so sad… there’s a silver lining out there… it just doesn’t involve UGC.