Social Network Advertising

I have just read an interesting paper on social  advertising called “Do ads work on social networks” by David Strutton of the University of North Texas. I found it particularly interesting because I have always been keen to see how the likes of Facebook, with its astronomical market value, would monetize its service.

He proposed that the success of social network advertising (SNA) depended on consumers’ acceptance. This acceptance is formed on the basis of a cost/ benefit analysis in the consumers mind. If the perceived benefit of the advertising was thought to be greater than the perceived cost, well then happy days, the consumer had no problem with the ads. On the other hand if they felt that the cost was greater than the benefit well then you have a problem.

myspace have had a huge drop off in usersMySpace’s dramatic plummet from the heights of social media stardom has been put down to multiple things. A focus too firmly on entertainment. Or simply people wanting to move onto the “next big thing”. But some people state that the amount of unwanted and irrelevant  advertisements certainly contributed somewhat to its fall.

The paper suggests that previous studies have attributed the reasons people go online to include

  • Structural reasons (simply passing time)
  • Content reasons (looking for information or entertainment)
  • Social reasons (wanting to connect with others)
I think it’s reasonable to agree that social media sites fill these needs pretty accurately. We all know how quickly time can pass when your engrossed in the likes of facebook. The same applies to both informative and entertaining content. And of course interaction with others is the whole purpose of social media.
So coming back to the perceived Cost/Benefit of advertising that we mentioned already.
The benefits fit in with the reasons that people go online
  • Can they help pass the time?
  • Can they provide either relevant information or entertainment?
  • Can they help us socialise by portraying the images of ourselves that we want to be put out there?
The costs of SNA falls into two categories
  • Privacy – The apprehension people have about the loss of their privacy. Very targeted advertisements can sometimes shock social network users as they illustrate how much information that can be gathered on them
  • Invasiveness – How much an ad effects your experience by being a distraction or irritation.
The findings of the study revealed that the most influencial element on a users attitude towards SNA was entertainment. In fact it was five times more important than any other factor! It did put in a caveat though that the ads needed to be target specific. Placing the wrong type of ad on certain peoples pages could be deemed out of context or inappropriate and increase negative feelings. The same applied to the next most important factor which was information provision. However the need to have target specific ads creates somewhat of a paradox. By using information from a users profile to place suitable content on their page, you are are risking creating negative feeling towards the ad as they may feel their privacy has be intruded.
But with Social media ad revenues expected to reach $10 Billion world wide by 2013, this is something that people in the industry are going to have to try get right.