Social Networks vs. TV Networks vs. Digital Out-of-Home Networks

May 12th, 2008 Brian Dusho

Social networking sites are getting a lot of attention nowadays, due to their explosive growth. I agree, it’s a huge phenomenon; all of a sudden - everyone is on either Facebook or MySpace, or both, my family included. USA Today published an article today, saying that social networks will assume the role of TV networks, and marketers will benefit from placing ads on these sites.

Sounds fantastic, but I think something important is missing here. Let’s see. Have social networking web sites accumulated massive numbers of users? - Yes, they did. Do those users constitute the demographics most desired by advertisers: young, affluent, educated people? - No doubt about it. Now, will the social networking sites become an effective advertising vehicle? - This is where I am not so sure.

Online advertising has absorbed the largest part of ad dollars shifted from traditional media. However, the lion’s share of that money goes into Search Marketing - the most proven model for online so far (and the lion’s share of Search Marketing budgets go to Google AdWords):

Where do Facebook, MySpace and the like fit in here? They will probably compete with many others in the display ads category.

The problem I see with social networking audience is essentially the same as with TV viewers: they come to those web sites to socialize, whereas viewing or clicking on ads, no matter how relevant the messages are, is the last thing on their minds. Much like viewers turn TVs on to watch programs, not ads. So you are still stuck with the same predicament: no one really wants your ads, except for the media owners - the social network sites themselves.

By contrast, people who see sponsored links in their Google search results, view them as relevant timely information to help them find what they are looking for… Searchers actually appreciate those ads, and often click through them. This explains the high effectiveness of Search Marketing and its unstoppable boom.

As a TechCrunch blogpost put it, commenting on the above table: “The numbers look great for Google, with paid search advertising expected to hover at around 40% of the total online ad spend through to 2012, increasing as a whole from $8.6 billion in 2007 to $16.59 billion in 2012, a 92.9% increase over 5 years.”

Online advertising was propelled to its current height and market share after Google finally figured out a business model that harmonized the interests of users and advertisers. It worked like magic. Social networks, however, are yet to figure such a model out. Similar problems hamper the growth of online display ads. In many cases display advertising is bought just because it falls under a section in the media plan with a trendy title ‘digital’, which in the advertising lingo is synonymous with ‘internet’, while the metrics are still quite vague.

As we know, the only other advertising medium, apart from Paid Search, that has been defying recession is Digital Out-of-Home. Unlike the case of TV or social networking web sites, the business model here is pretty straightforward and fits the interests of both consumers and marketers:

- modern consumers are pressed for time and are receptive to brief info that may help them make a purchase decision, while on-the-go. They are NOT annoyed, because they are not interrupted. Therefore, the acceptance of DOOH advertising is much higher.

- operators can make sure that the screens are on and show the right content, therefore - the proof-of-play is predictable and measurable.

- the audience is more easily measurable. New technologies will soon allow high-precision, passive (automated) digital audience measurements.

- the ROI is more direct: one can trace an ad from proof-of-display to proof-of-audience - to sales increase, as the advertised products are usually not far from the screens.

My point is, I love the phenomena of Facebook and MySpace and they probably have a great future, but at this moment I wouldn’t give them a penny from my ad budget. There are much more viable advertising alternatives to TV networks than social networks as they are today.

Entry Filed under: The Big Picture, Digital Signage Evolution, Uncategorized