A catch phrase will go here soon.

The problem with social networks: they suck for advertisers.

3/21/2006

Was just trading emails with some folks about social networks.

The big problem with social networks is the business model. It is clear that users are not willing to pay for social networking sites like MySpace, Facebook, and Friendster. If any of these sites started charging they would be replaced with a free option. That leaves advertising as the business model.

However, when people are on social networks they have two choices:

1. Interact with people: flirt, find a date, find a mate, hook up, make friends, etc.
2. Click on advertisements.

Very few advertisers are going to be able to beat out the desire for people to hook up–unless of course they have a better way to hook people up with other people. For example an advertisement on MySpace for Match.com that says “meet people in your zip code” might actually convert well since folks are in the “hook up” mindset.

Compare that to people being on a vertical content site like Autoblog. When you’re on autoblog you’re in “consume auto information” mind set. As such, you’re highly likely to click on an advertisement from VW or BMW. Reading the ads in a car magazine is as interesting–many times–as reading the stories. Sometimes the ads have better information, and they certainly have better photography.

This takes nothing away from social networks and their amazing traffic. However, the fact is social networking is a bust for advertisers today. We’ve seen this before with chat rooms, listsrvs, message boards, and email clients. They are amazing for traffic, and they are horrible for advertising.

If social networks are going to work for marketers they are going to have to nuke the current model for advertising and do something much more creative…. creative enough to trump the value of hooking up.

I’m glad I’m not in the social networking business… then again, it would be a challenge, and I’m always up for a challenge.

  • http://www.netyab.com Allen J.

    I have seen similar posts before but I never thought that small advertisers would have any chance on competing with the big advertiser specially on sites like myspace, facebook, or netyab.com

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English Bulldog

Hello, my name is Jason. Welcome to my blog on the interwebs. You can reach me on twitter @jason and by email at jason@inside.com. My Skype is jasoncalacanis, and my mobile phone is 310-456-4900.

I only pick up numbers I recognize, and in terms of emailing me, the best strategy is to write short, blunt and to the point requests. I can quickly respond to short messages, and many times I simply don't have the time to read five page pitches. In terms of taking meetings, I only do that after reviewing an actual product (not a business plan). So, the best time to ping me is when you have mockups or an alpha site. I don't read business plans, and I've never written one.

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