Advertising

There is no doubt that social networks have a conundrum with "monetization". On the one hand they have an incredibly rich source of data about their users, but on the other no-one seems to want to give them much money to advertise to those people. Thus various schemes have been tried (such as Facebook Beacon) to extract that data in more useful (aka intrusive) forms for advertisers. That Beacon was roundly condemned seems not to deter others who wish to rush in where those already burned fear to tread.

Latest up is SocialMedia with FriendRanking:

The company scans data about your activities on Facebook and other social networks, infers who your best friends are, and ranks them. Then the company exploits that ranking to serve you relevant ads.

It does so with something it calls “social banners,” which insert references to your best friends within advertisements.

The idea is that showing you ads that reference your friends will attract your attention and thus make the ads perform better.

CNet explains it thus:

[The] social banner would ask which of your close Facebook friends, among a short list, you’d like to invite to see the movie. Or a social banner might inform you that a friend Jim just ranked Iron Man with three stars, and it might ask to “click here to buy tickets at Fandango.

So, given that people didn't love Beacon a lot, why will this work? Frankly, we don't think it will, but that won't stop desperate SocNets buying it - as SocialMedia's CEO notes, the response rate to standard display advertising on social networks is abysmal. People click on ads about 0.02 percent of the time, because people have started ignoring ads. Given that everyone wants billion dollar valuations, it has to get rates better than that.

But it won't - the Behavioural Economics are against it. Social interactions - the things we do with friends - are "social capital" and we separate those things from "Financial Capital" In fact, introducing the market to our social interactions totally changes the game of the interaction. Lewis Hyde, who wrote on Gift Economies (of which social intercourse is a type) noted that when a primarily gift-based economy is turned into a commodity-based economy, the social fabric of the group is invariably destroyed. Quite simply, pimping stuff is not an acceptable social transaction unless the information is directly asked for.

The dream of course is that by mining your social metrics, you will get Ads that are very relevant and you will welcome them - except they are not, cannot be as not only is this the commercial realm invading the social, but we are simply not "in the market" when we are conversing with friends, unless we directly ask. Not only that, but the Beacon evidence is if people do find that their data is being mined overtly, they get extremely upset (or at least a noisy enough cadre do).

For this reason, any advertising in the space has to have a very light touch - 10 years ago Yahoo experimented with email advertising and found that the only thing that was acceptable was an ad at the bottom of the email. The lesson was not lost on Google, hence Adwords - and its not on Gmail or on Google Groups!

Then again there is a new crop of bubble-valued dotcoms desperate to get (or keep) sky-high valuations despite all rational evidence, so there will no doubt be more (VC backed) toiling in the vineyards of social datamining.

So what will happen in this game longer term?

Clearly there will be continual iteration of the social net datamining play, the belief that the next approach will be sufficiently "relevant" to get under the user's trust radar and hit the economic attention El Dorado. But we predict something else will occur too - every crass attempt will build up the resistance and mistrust, people will start to be more wary and subvert these systems, so the value of what is mined will decrease as the ability to mine rises. It will also push th argument fr personal datastores, obfuscators and so on.....

And what does winning actually look like?

Congratulations, you have managed to subvert social into commercial capital - but guess what, we behave differently in that world - and we will - and its not how people like it, so its highly likely people will just move their social capital elsewhere. It is transferable, after all. And there will probably always be another VC or Offset funded SocNet starting out looking for new eyeballs too, that is willing to be more homely as it starts the journey

Afterthought - here's the thing that gets me with these services - there are a bunch of them being built, VC funding is forthcoming, but its all bad-guy stuff - its not something you would do if left to your basic human ethics after all. So imagine if you wanted to build an anti-Friendranking system, an antidote to antisocial object mining? Its not hard to do, it just reverse these technologies. How many VC's would line up to fund that? There's no money in it, after all - its just useful! Thank heavens for Open Source......

...or rather the same basic story hits Techmeme twice....the one before was on May 14th - see here and was US based, now its gone global.

Cute PR by e-Marketer to get on Techmeme twice in a week by re-releasing basically the same stuff - it doesn't say much about us Techmeme readers, who clearly have the memory of a Dory-fish though

From the Experience triumphs over Hope dept:

Jason Calacanis points to a study that confirms what what we all knew, just that no social marketeer wanted to admit (some wilfully ignored in fact - do we need a blacklist for blogspammers?). Sez Jason:

Social networking sites are probably not going to figure out a way to insert advertising into people's conversations--just like message boards, chat rooms, and IM didn't.

We could have told him that (we did, actually - try here or here). Ever since we have been tracking online Advertising 3 years ago its been clear that its only sites with valuable content that get valuable advertising because (shock horror) they attract quality time from quality people. Serve schlock to schmucks and you make sch....

As the study Jason refers to notes:

"Among the verticals, Social Networking led the plunge with monetization dropping 47 percent, from 37 cents in March to 19 cents in April, below January lows of 22 cents. Entertainment monetization dropped 17 percent from 40 cents in March to 33 cents in April. Gaming and Sports were down marginally (4 percent and 5 percent, respectively). Technology remained relatively flat at 83 cents in April vs. 82 cents in March, but is still off January highs of 92 cents."

Note that small websites (hypothesis - those that target customers with more high-value content) get CPMs an order of magnitude higher - may only be a dollar odd, but thats better than $0.18!

No mention in the study, oddly, of the single most blindingly obvious reason for this state - too much inventory chasing too few Ads. While the number of pages to put Ads on grows exponentially, the number of Ads to fill them does not increase at anything like that rate (given that the overall internet using population is roughly static now) thus the value per page of the online massvertisers plummets.

Maths - strange subject I know, but you can't beat it.

No surprises there then, as they note:

eMarketer has revised its US social network ad spending projections, estimating that advertisers will spend $1.4 billion to place ads on online social networks this year, down from the previous projection of $1.6 billion.

And whay the downgrade?

Today's economy, combined with the fact that social networks are still trying to come up with successful ad models, has led to lowered ad spending projections for the next few years....

....The challenge is that all of these new forms of advertising are more difficult to plan, measure and quantify than what advertisers are used to, and that has impacted spending growth.

It is indeed far harder than traditional media - and there are few benchmarks, examples of good practice etc. The types of people attending London's MeasurementCamp tells you this is a major issue.

I note that the total global value of all Social Media advertising in 2011 is $3.8bn. I wonder how Facebook's going to make the rest of its money to justify that $15bn valuation then?

Rick Calvert responded to my earlier post on Spam where I looked at "Bacn" and "Tofu" and concluded that they were:

"Maybe different flavours, but still spam methinks."

I found Rick's post (and his blog post over here) very good in that they are reasoned and to the point, even though we disagree:

You think wrong. To demonstrate lets compare emails that you get at work. Lets use a clothing store for example.

The first email is for viagra. Thats spam.

The next is from a new clothing line you have never heard of asking if you would be interested in carrying their line in your store. You check out the email and think their style is crap. You would never carry it in your store.

You aren't interested but that's not spam. You are a qualified lead and it is your job to read emails like that.

Same difference for a journalist (and some bloggers who consider themselves to be some variation of a journalist) to get pitches for stories that are relevant to the topics they cover on their blog.

Now if you got those same two email examples given above at your personal email address then both would qualify as spam.

I understand that distinction that some bloggers view their site more as a personal endeavor than a business but you have to realize a casual reader of your blog (some PR flack) may not be able to tell the difference. You have to admit it is on the internet for the world to read. So you just might get some unwanted emails, even a stalker or two.

Make sense?

Sorry for not being more diplomatic. It's late.

Firstly, no worries about bluntness, its totally appreciated and I wish there was more of it, especially if the argument is reasoned like yours is, Rick .

Secondly, I take your point on board re the very honest endeavours of trying to inform a business re new stuff that is relevant in a business sense.

The issue with spam though, and the reason - as Stow Boyd originally noted , that there is now quite a kickback starting - is that:

(i) It is (ab)used for more than the reasonable purposes you describe above, and because of sheer volume and information assymetry its harder and harder to tell good from bad. We've all seen the new messages come in from NewGuy@PRCo.com when we checked the "don't send" box from OldGuy@PRCo.com, or the PR messages from Joe.randomletterstoconfuseyourspamcatcher@Flack.com - ie this is a deliberate attempt to subvert the polite "no thank you" we start off with

(ii) Because social media allows us to now kick back, as Gina Trapani showed, at a far lower transaction cost than before - in fact at the sort of cost that matches the cost of spamming.

In other words, like it or not, we are in an arms race. And the thing about social media is there are a lot of brains out there willing to fight it.

I think the argument that it is in some way my"job" to read material sent to me is incorrect - I know of no society (in western culture certainly) that rewards behaviour where people intrude uninvited to impose their agendas. The issue I see is that this desired behaviour is countercultural, and the only reason that PR countenances this behaviour and tells me I should go along with it is that they want to make money out of me?

From self interest alone the game theory is against the Flack from Day One.

What would I do if I were a PR Co? I think firstly accept that the arms race is real now, and its probably a Pyrrhic victory at best if you win. Secondly, I think it comes to the point I made above about Information Asymmetry - you need some way to prove that you are the genuine article, so that I consensually agree to let you through my door.

Spam, luvverly spam (see YouTube below). Or maybe not for very much longer - it would appear users are using the same social networks PR spammers are using to spam people, but to defend themselves. Lifehacker's Gina Trapani has started a PR spammers wiki where people can register PR firms who have spammed them (link courtesy Stowe Boyd)



Stowe also points to a story by Brian Solis which caught my eye, as there is an attempt to define grades of spam:

Spam is intrusive, shotgun-style blasting that usually favors quantity versus quality – meaning, that it doesn’t take into account your interests or preferences.

Bacn (introduced to me by Chris Brogan) stems from the idea that it is better than spam, but not as good as a personal e-mail. Bacn differs from spam in that the emails are not unsolicited: the recipient has somehow signed up to receive it. Bacn is also not necessarily sent in bulk – Wikipedia.

Tofu (new category – suggested name) is email that is sent individually to people who are pre-qualified or identified as being related to, or interested in, a particular category or topic. Or, they have made their email publicly available on their site, thus intentionally or inadvertently inviting contact. I’m not sure what to call it, but the idea for tofu was inspired by the fact that we can almost make it taste like something else, but at the end of the day, it’s still not the real thing.

Maybe different flavours, but still spam methinks.

The solution usually trotted out to get around all this is to have a "conversation" with the customer, build a rusted relationship etc etc. So if everybody says this, why does no one do it uch? Is it lack of training, newbies on the job etc?

Is it heck. This has happened enough times now for lessons to be learned, newbies to be rapped on knuckles, procedures to be designed etc.

No, its to do with the economics of spam. The transaction costs for a spam message are minute compared to a conversation of any stripe, making the cost of any serious conversational campaign of any volume very costly, so there is a sticker shock. Secondly, the payback of any conversational method compared to good old spam are yet to be proven conclusively. Paying a fortune for an unproven approach is not a good way to win friendly clients, who give PR agencies the money to influence people. And for these reasons the PR companies aren't going to stop anytime soon, though they will always point to their newbies and grovel when outed, and/or argue that "the client made me do it"

The obvious thing to do is to raise the transaction cost of sending spam - but that can be hard to do as it entails effort in sorting out a blacklist.

Hence Gina Trapani's cunning plan - essentially she is lowering the cost of raising barriers to spam by using social mdia herself, thus raising the transaction costs of communicating with someone by preventing the cheapest approach, ie spam, which makes the economics of spamming less attractive. And whenever the cost of preventing X approaches the cost of doing X, the "doing X" bit tends to wither away..

Needless to say, PR fanboi's are upset by Gina's elegant system, I love this line:

Well, by publishing it that way, and not providing any safeguard against people maliciously adding to the list with those that are not guilty, she’s just as guilty as those she condemns. Why? Well, she’s just created a vehicle that can harm others. In fact, it is worse. She has not just bothered people with spam, for instance, she’s created a process that may damage one’s reputation unfairly. Talk about Lifehacking. Sheesh!

Sheesh indeed, harming others no less - boot. foot. other. kick. arse.

I love technology arms races, I wonder where this one is going next..... maybe its time to ask the Vikings (see above video....)

Spam, luvverly spam (see YouTube below). Or maybe not for very much longer - it would appear users are using the same social networks PR spammers are using to spam people, but to defend themselves. Lifehacker's Gina Trapani has started a PR spammers wiki where people can register PR firms who have spammed them (link courtesy Stowe Boyd)



Stowe also points to a story by Brian Solis which caught my eye, as there is an attempt to define grades of spam:

Spam is intrusive, shotgun-style blasting that usually favors quantity versus quality – meaning, that it doesn’t take into account your interests or preferences.

Bacn (introduced to me by Chris Brogan) stems from the idea that it is better than spam, but not as good as a personal e-mail. Bacn differs from spam in that the emails are not unsolicited: the recipient has somehow signed up to receive it. Bacn is also not necessarily sent in bulk – Wikipedia.

Tofu (new category – suggested name) is email that is sent individually to people who are pre-qualified or identified as being related to, or interested in, a particular category or topic. Or, they have made their email publicly available on their site, thus intentionally or inadvertently inviting contact. I’m not sure what to call it, but the idea for tofu was inspired by the fact that we can almost make it taste like something else, but at the end of the day, it’s still not the real thing.

Maybe different flavours, but still spam methinks.

The solution usually trotted out to get around all this is to have a "conversation" with the customer, build a rusted relationship etc etc. So if everybody says this, why does no one do it uch? Is it lack of training, newbies on the job etc?

Is it heck. This has happened enough times now for lessons to be learned, newbies to be rapped on knuckles, procedures to be designed etc.

No, its to do with the economics of spam. The transaction costs for a spam message are minute compared to a conversation of any stripe, making the cost of any serious conversational campaign of any volume very costly, so there is a sticker shock. Secondly, the payback of any conversational method compared to good old spam are yet to be proven conclusively. Paying a fortune for an unproven approach is not a good way to win friendly clients, who give PR agencies the money to influence people. And for these reasons the PR companies aren't going to stop anytime soon, though they will always point to their newbies and grovel when outed, and/or argue that "the client made me do it"

The obvious thing to do is to raise the transaction cost of sending spam - but that can be hard to do as it entails effort in sorting out a blacklist.

Hence Gina Trapani's cunning plan - essentially she is lowering the cost of raising barriers to spam by using social mdia herself, thus raising the transaction costs of communicating with someone by preventing the cheapest approach, ie spam, which makes the economics of spamming less attractive. And whenever the cost of preventing X approaches the cost of doing X, the "doing X" bit tends to wither away..

Needless to say, PR fanboi's are upset by Gina's elegant system, I love this line:

Well, by publishing it that way, and not providing any safeguard against people maliciously adding to the list with those that are not guilty, she’s just as guilty as those she condemns. Why? Well, she’s just created a vehicle that can harm others. In fact, it is worse. She has not just bothered people with spam, for instance, she’s created a process that may damage one’s reputation unfairly. Talk about Lifehacking. Sheesh!

Sheesh indeed, harming others no less - boot. foot. other. kick. arse.

I love technology arms races, I wonder where this one is going next..... maybe its time to ask the Vikings (see above video....)

Spam, luvverly spam (see YouTube below). Or maybe not for very much longer - it would appear users are using the same social networks PR spammers are using to spam people, but to defend themselves. Lifehacker's Gina Trapani has started a PR spammers wiki where people can register PR firms who have spammed them (link courtesy Stowe Boyd)



Stowe also points to a story by Brian Solis which caught my eye, as there is an attempt to define grades of spam:

Spam is intrusive, shotgun-style blasting that usually favors quantity versus quality – meaning, that it doesn’t take into account your interests or preferences.

Bacn (introduced to me by Chris Brogan) stems from the idea that it is better than spam, but not as good as a personal e-mail. Bacn differs from spam in that the emails are not unsolicited: the recipient has somehow signed up to receive it. Bacn is also not necessarily sent in bulk – Wikipedia.

Tofu (new category – suggested name) is email that is sent individually to people who are pre-qualified or identified as being related to, or interested in, a particular category or topic. Or, they have made their email publicly available on their site, thus intentionally or inadvertently inviting contact. I’m not sure what to call it, but the idea for tofu was inspired by the fact that we can almost make it taste like something else, but at the end of the day, it’s still not the real thing.

Maybe different flavours, but still spam methinks.

The solution usually trotted out to get around all this is to have a "conversation" with the customer, build a rusted relationship etc etc. So if everybody says this, why does no one do it uch? Is it lack of training, newbies on the job etc?

Is it heck. This has happened enough times now for lessons to be learned, newbies to be rapped on knuckles, procedures to be designed etc.

No, its to do with the economics of spam. The transaction costs for a spam message are minute compared to a conversation of any stripe, making the cost of any serious conversational campaign of any volume very costly, so there is a sticker shock. Secondly, the payback of any conversational method compared to good old spam are yet to be proven conclusively. Paying a fortune for an unproven approach is not a good way to win friendly clients, who give PR agencies the money to influence people. And for these reasons the PR companies aren't going to stop anytime soon, though they will always point to their newbies and grovel when outed, and/or argue that "the client made me do it"

The obvious thing to do is to raise the transaction cost of sending spam - but that can be hard to do as it entails effort in sorting out a blacklist.

Hence Gina Trapani's cunning plan - essentially she is lowering the cost of raising barriers to spam by using social mdia herself, thus raising the transaction costs of communicating with someone by preventing the cheapest approach, ie spam, which makes the economics of spamming less attractive. And whenever the cost of preventing X approaches the cost of doing X, the "doing X" bit tends to wither away..

Needless to say, PR fanboi's are upset by Gina's elegant system, I love this line:

Well, by publishing it that way, and not providing any safeguard against people maliciously adding to the list with those that are not guilty, she’s just as guilty as those she condemns. Why? Well, she’s just created a vehicle that can harm others. In fact, it is worse. She has not just bothered people with spam, for instance, she’s created a process that may damage one’s reputation unfairly. Talk about Lifehacking. Sheesh!

Sheesh indeed, harming others no less - boot. foot. other. kick. arse.

I love technology arms races, I wonder where this one is going next..... maybe its time to ask the Vikings (see above video....)

Spam, luvverly spam (see YouTube below). Or maybe not for very much longer - it would appear users are using the same social networks PR spammers are using to spam people, but to defend themselves. Lifehacker's Gina Trapani has started a PR spammers wiki where people can register PR firms who have spammed them (link courtesy Stowe Boyd)



Stowe also points to a story by Brian Solis which caught my eye, as there is an attempt to define grades of spam:

Spam is intrusive, shotgun-style blasting that usually favors quantity versus quality – meaning, that it doesn’t take into account your interests or preferences.

Bacn (introduced to me by Chris Brogan) stems from the idea that it is better than spam, but not as good as a personal e-mail. Bacn differs from spam in that the emails are not unsolicited: the recipient has somehow signed up to receive it. Bacn is also not necessarily sent in bulk – Wikipedia.

Tofu (new category – suggested name) is email that is sent individually to people who are pre-qualified or identified as being related to, or interested in, a particular category or topic. Or, they have made their email publicly available on their site, thus intentionally or inadvertently inviting contact. I’m not sure what to call it, but the idea for tofu was inspired by the fact that we can almost make it taste like something else, but at the end of the day, it’s still not the real thing.

Maybe different flavours, but still spam methinks.

The solution usually trotted out to get around all this is to have a "conversation" with the customer, build a rusted relationship etc etc. So if everybody says this, why does no one do it uch? Is it lack of training, newbies on the job etc?

Is it heck. This has happened enough times now for lessons to be learned, newbies to be rapped on knuckles, procedures to be designed etc.

No, its to do with the economics of spam. The transaction costs for a spam message are minute compared to a conversation of any stripe, making the cost of any serious conversational campaign of any volume very costly, so there is a sticker shock. Secondly, the payback of any conversational method compared to good old spam are yet to be proven conclusively. Paying a fortune for an unproven approach is not a good way to win friendly clients, who give PR agencies the money to influence people. And for these reasons the PR companies aren't going to stop anytime soon, though they will always point to their newbies and grovel when outed, and/or argue that "the client made me do it"

The obvious thing to do is to raise the transaction cost of sending spam - but that can be hard to do as it entails effort in sorting out a blacklist.

Hence Gina Trapani's cunning plan - essentially she is lowering the cost of raising barriers to spam by using social mdia herself, thus raising the transaction costs of communicating with someone by preventing the cheapest approach, ie spam, which makes the economics of spamming less attractive. And whenever the cost of preventing X approaches the cost of doing X, the "doing X" bit tends to wither away..

Needless to say, PR fanboi's are upset by Gina's elegant system, I love this line:

Well, by publishing it that way, and not providing any safeguard against people maliciously adding to the list with those that are not guilty, she’s just as guilty as those she condemns. Why? Well, she’s just created a vehicle that can harm others. In fact, it is worse. She has not just bothered people with spam, for instance, she’s created a process that may damage one’s reputation unfairly. Talk about Lifehacking. Sheesh!

Sheesh indeed, harming others no less - boot. foot. other. kick. arse.

I love technology arms races, I wonder where this one is going next..... maybe its time to ask the Vikings (see above video....)

Spam, luvverly spam (see YouTube below). Or maybe not for very much longer - it would appear users are using the same social networks PR spammers are using to spam people, but to defend themselves. Lifehacker's Gina Trapani has started a PR spammers wiki where people can register PR firms who have spammed them (link courtesy Stowe Boyd)




Stowe also points to a story by Brian Solis which caught my eye, as there is an attempt to define grades of spam:

Spam is intrusive, shotgun-style blasting that usually favors quantity versus quality – meaning, that it doesn’t take into account your interests or preferences.

Bacn (introduced to me by Chris Brogan) stems from the idea that it is better than spam, but not as good as a personal e-mail. Bacn differs from spam in that the emails are not unsolicited: the recipient has somehow signed up to receive it. Bacn is also not necessarily sent in bulk – Wikipedia.

Tofu (new category – suggested name) is email that is sent individually to people who are pre-qualified or identified as being related to, or interested in, a particular category or topic. Or, they have made their email publicly available on their site, thus intentionally or inadvertently inviting contact. I’m not sure what to call it, but the idea for tofu was inspired by the fact that we can almost make it taste like something else, but at the end of the day, it’s still not the real thing.

Maybe different flavours, but still spam methinks.

The solution usually trotted out to get around all this is to have a "conversation" with the customer, build a rusted relationship etc etc. So if everybody says this, why does no one do it uch? Is it lack of training, newbies on the job etc?

Is it heck. This has happened enough times now for lessons to be learned, newbies to be rapped on knuckles, procedures to be designed etc.

No, its to do with the economics of spam. The transaction costs for a spam message are minute compared to a conversation of any stripe, making the cost of any serious conversational campaign of any volume very costly, so there is a sticker shock. Secondly, the payback of any conversational method compared to good old spam are yet to be proven conclusively. Paying a fortune for an unproven approach is not a good way to win friendly clients, who give PR agencies the money to influence people. And for these reasons the PR companies aren't going to stop anytime soon, though they will always point to their newbies and grovel when outed, and/or argue that "the client made me do it"

The obvious thing to do is to raise the transaction cost of sending spam - but that can be hard to do as it entails effort in sorting out a blacklist.

Hence Gina Trapani's cunning plan - essentially she is lowering the cost of raising barriers to spam by using social mdia herself, thus raising the transaction costs of communicating with someone by preventing the cheapest approach, ie spam, which makes the economics of spamming less attractive. And whenever the cost of preventing X approaches the cost of doing X, the "doing X" bit tends to wither away..

Needless to say, PR fanboi's are upset by Gina's elegant system, I love this line:

Well, by publishing it that way, and not providing any safeguard against people maliciously adding to the list with those that are not guilty, she’s just as guilty as those she condemns. Why? Well, she’s just created a vehicle that can harm others. In fact, it is worse. She has not just bothered people with spam, for instance, she’s created a process that may damage one’s reputation unfairly. Talk about Lifehacking. Sheesh!

Sheesh indeed, harming others no less - boot. foot. other. kick. arse.

I love technology arms races, I wonder where this one is going next.....