Advertising - social media - google and myspace

How google screwed up the myspace deal proclaims Wired.

Lots of smart people are trying to figure out how to monetize social networks. It's no easy feat: Even if millions of people log on to Facebook twice a day, they aren't there to buy sneakers, they're there to connect with friends.

And thats exactly right.

Google has an agreement with MySpace, which has proven mostly disappointing. Under the deal, Google will serve ads on MySpace through the second quarter 2010. In return for the privilege, it will cumulatively pay the social network $900 million as part of a revenue-share agreement. Here's the problem: If Google doesn't make enough money over MySpace to meet the minimum revenue-share requirements, it has dig deep and make those payments, anyway. And thus far, the deal has shaved roughly 1.5 percent off the company's gross margins, according to estimates from Bernstein Research analyst Jeffrey Lindsay.

So if Google can't make a buck off social networks, who can?

What this highlights is a number of key and pressing questions.

Firstly - we have a media ecology partially defined by the concept of Collaborative Social Media which has nothing to do with the straight lines of an analogue world, economy, philosophy, how it is measured and how it defines value.

Jeff Jarvis makes some astute points here

Yet the traditional models of what advertising is and how it is measured remain in place for now.

Someone once said that that the challenge in this space is how to make advertising useful?

This leads to the second point that when we say advertising - people think not of commercial communication as a principle but formats, like furniture. So advertising is format defined - TV Spots, Radio Spots, Banners, Posters etc., This points to an inability to see beyond these formats.

Thirdly we need to think about what underpins the future of commercial communications - within the context of Social Media? I have described this as Social Marketing Intelligence. In We're all loved up but we're not making any cash. Who will be the first to build a portfolio of next generation marketing communications capability? I wrote

Social Marketing Intelligence is the black gold of the 21st Century - Today we leave digital footprints - and therefore we can recount the audience to a degree of accuracy never before thought possible.

Social Marketing Intelligence is the ability to take large, raw and multiple data flows - refine those data flows to enable organisations to recognise the patterns of social interactions, social network structure, and each individual’s role therein – such granularity is critical for delivering the appropriate communication to the appropriate audience at the right time.

We go from Cost per Thousands to Cost per Click to Cost Per Relevant Audience. This is defined by delivering the right message to the right audience at the right time. It is a paradigm shift

Tomi explains

This is a total shift in the advertising paradigm. No longer is the perfect ad campaign designed in New York, with the ultimate supermodel (or sports hero) selected as the spokesperson for our brand; now the users themselves select which is their favourite celebrity to be used in the ads. No longer is the brilliant ad graphic designer selecting the absolute most amazing colour shade for given product, whether lipstick or designer suit or Nike sneaker or BMW. No matter how perfect the artistic vision of that graphic designer, there are always more of an audience who have a favoured OTHER colour than the one selected. Now the colours are selected by the consumer of the ads. No longer is the dialogue in the ads produced by a master award-winning copyrighter on Madison Avenue, now it is co-created with the teenagers who are accustomed to mashing, who co-create all the time on social networking sites, and who prefer to write in their cryptic grammr & spellng of txt mssgng.

How close to "0" does one need to get to before people realise click throughs' don't work - someone said to me recently. And why is that? Because Media Can’t Deliver A Captive Audience Anymore. Jarvis writes

But the pity is that ad agencies and stock analysts, reporters, and stock buyers still pay attention to these outmoded measurements and the companies that push them.

Yet we use the same pieces of old furniture to communicate in the this new media ecology, because we can't see beyond what we see today or how we measure it. What gets measured gets made.

We have accepted social networks and communities have become part of our media landscape, we now need to accept its needs a different model to support it.

The future lies in letting loose the very thing they have spent a large part of the past 20 years trying to suppress - the individual voices of their writers - and recognising that all that the web provides is a platform upon which to compete for the key commodities: attention and trust.

Price Waterhouse Coopers believe that consumer conversations will fundamentally transform business. Change the way you count and you change the way the money flows.

But that's OK - building a whole new media eco-system is never straight forward.

A new era in marketing and advertising
One combines market segmentation and context with customer behavior and social network profiles, this recognizes consumers as individuals within their communities and networks. The process is dynamic and the system is self-learning. Transforming advertising is not based on search or words, but on customer and community profiles.

What gets served as commercial communication then has to be thought through. We can find and deliver the right audience, so, what type of communication comes next? What is the value? What is the currency of the communication as perceived by the recipient.

Comments

[Stefan Constantinescu]

catch 22, in order for ads to become more relevant the users data, the black gold as you will, should be shared across every medium that content is delivered to the consumer.

my thousands, probably millions by now, of google searches are something no one else but google sees. only amazon knows what i've been looking at. only ebay know what i've purchased.

this black gold as you call it, is something corporations don't want to give up.

little do they know that hyper relevance would equal more sales for everyone. sigh.

[Alan Moore]

Yes I agree - but though google is the 800lb gorilla.

There are a number of other ways to harness raw data and turn it into valuable intelligence. Mobile CDR's for example.

And we will see more developments over the next few years.

Companies will start to understand that harnessing data flows and refining those data flows and deploying that intelligence to commercial benefit will be part of their everyday life.

Thank for posting

Alan

[Graham Hill]

Tomi

Interesting post.

John Hagel has some similar thoughts on The Future of Advertising over at his Edge Perspectives blog and in a recent article on Learning From Facebook in Business Week.

Putting behavioural targeting to one side, it strikes me that the future of advertising depends as much on harnessing the mobile as the platform in a multi-sided market as it does on better marketing mousetraps. Take a look at what the folks from Telco2.0 have to say on multi-sided markets in telecoms.

Keep up the good work challenging us to think harder about the future.

Graham Hill
Independent CRM Consultant
Interim CRM Manager

Further reading:

Edge Perspective blog
edgeperspectives.typepad.com/edge_perspectives/2008/03/shift-happens-t.html

Business Week article
http://www.businessweek.com/innovate/content/apr2008/id2008042_809134.htm?campaign_id=rss_innovate

Telco2.0 blog
http://www.telco2.net/blog/

[Linda P. Morton]

Alan,

What an interesting post.

It provides yet another need for market segmentation. I recently read a book that basically said of all the marketing trends over the past 30 years, market segmentation has been the one that has stood the test of time. Looks like it will into the next great marketing trend - social marketing.

Linda P. Morton

[Linda P. Morton]

Alan,

What an interesting post.

It provides yet another need for market segmentation. I recently read a book that basically said of all the marketing trends over the past 30 years, market segmentation has been the one that has stood the test of time. Looks like it will into the next great marketing trend - social marketing.

Linda P. Morton

[Alan Moore]

Dear Graham,

It was Alan Moore (ME) rather than Tomi than made this post - but happy that you were interested in what we had to say anyway.

Kind regards

Alan Moore