Is Everything You Know About Social Advertising Wrong?

By Sean Carton , August 6, 2007

Much as we like to talk about creating new models, most thinking these days about monetizing social media (on the social media site side) or tapping into the vast amounts of traffic to get messages across (on the marketing side) is pretty old-school. There are obviously lots of eyeballs and we've got messages we want those eyeballs to see, so it stands to reason that if we can get our messages in front of those eyeballs they'll see them.

Right?

Doesn't look like it, folks. Social networking CTRs (define)are abysmal, and nobody seems to be actually making any money

Perhaps we haven't found the right model yet. There's lots of homespun advice on plenty of marketing sites out there debating that issue. Perhaps there's too much clutter. Maybe we're just too far ahead of the curve, trying wacky stuff, like creating corporate islands in Second Life. Maybe new ideas like the much-vaunted widget are the answer.

I kind of doubt it. Others do, too. Just because there's a lot of traffic out there doesn't necessarily mean it can automatically be translated into revenue and it's a good place to put your ads.

Why? Because this kind of thinking isn't that far from the kind of thinking that's been driving advertising for a long time. It's intrusive, interruption-driven thinking that says, "Well, if lots of people are looking at something, then placing our ad in front of that something is going to bring us results."

Baloney.

A very fine brand of baloney, maybe, but one that's beginning to rot nonetheless. The interrupt model worked fine when we had a captive audience sitting in front of TVs with no choice but to watch what we put in front of them. DVRs changed that by putting the kind of control people have on the Internet into the hands of TV viewers. Banner ads (and I use that term loosely to describe any kind of display advertising we place on pages: rich media, video, text, static, or whatever) use the exact same model, replacing the "take over your screen" model of TV advertising with the "we're gonna put something here and make it wiggle so you notice it" model of most online advertising.

It's like TV, but worse. When you watch a TV spot, you know you'll get your show back when it's over. When you click a banner, you're off to the great unknown, especially since using a browser's back button has become so iffy.

Now, I'm not saying banners don't work (I'm not opening that can of worms). But I am saying the idea that just because there are a lot of people to potentially put an intrusive message in front of doesn't automatically translate into results. "But wait!" you may be saying, "What about contextual advertising? What about search?"

Ah! This is where things get interesting. Some models are working with consumers and their interests instead of against them. Contextual advertising works by linking the ad to the content at the "ah-ha!" moment a consumer may have when reading something related to the advertising. The ads don't work as well as search because reading and searching for a product aren't necessarily linked, but they do work better than just jamming an ad in front of someone's face.

Search advertising's success stems from the fact it inserts itself into consumers' attention stream when they're actually searching for what you sell. Sure, they may not be ready to buy and may be searching for general information, but they're still indicating an interest in the topic. The CPC (define) model makes this form of advertising even more effective because marketers only pay when someone positively indicates an interest.

You get results. It's a no-brainer.

What's this got to do with social-networking advertising? Everything. Search marketing works because it understands search's essential nature: people looking for stuff. Where social networking advertising (at least the passive model that uses banners or, in many cases, contextual advertising) falls down is it fails to recognize the essential nature of social networking. People come to hang out with other people. Anything that gets in the way ruins the experience and will be avoided.

This is why widgets have been getting so much play lately: they don't intrude on the user experience. Yeah, they're branded. Yeah, they're obviously a product of crass commercialism, but when done well they enhance rather than detract from the experience. They're something to share within a social network, not something to detract you from it. They can become part of the conversation you're having with friends and acquaintances, not an interruption of that conversation.

Are widgets the answer to how advertising can work in social networking? Not at all, but they're a beginning. The answer will become apparent when we think outside of the ol' display advertising box and start to imagine ways we can work with the essential nature of social networking, rather than against it. How can we join communities of interest in an authentically helpful way? How can we give consumers the tools to facilitate their conversations about our products or services (conversations they're going to have anyway, with our without our help)? How can we help connect them to get help, advice, or suggestions from others (Dave Evans has a few good ideas)? How can we make it easier for true believers and brand fans to do the selling for us (or help recruit new fans)? How can we work with what's going on rather than against it?

Getting there won't be easy, especially when we're all faced with clients and budgets that are mired in the old way of thinking. Where's the money come from? PR? The ad budget? The Web budget? Who's in charge? How can we "control" the brand when it's opened up to...shudder...the masses? (That's sarcasm, folks.) How do we measure this stuff? How do we define success?

There's obviously a lot to work out. But we don't have any choice. Either we face the new world with new thinking, or we don't and suffer the consequences. Time to choose.

AdMob Serves 5 Billionth Mobile Ad

ADMOB ANNOUNCED THAT IT IS now serving more than 1 billion mobile ads per month across its global network of more than 2,000 mobile Web sites--with its 5 billionth ad served one week ago.

To mark the occasion, the San Mateo-based mobile ad company released some information about the milestone--the ad was for Electronic Arts' "NCAA Football" game, the publisher was CBS SportsLine, and the consumer was an AT&T subscriber using a Motorola RAZR v3.

Such details highlight an integral part of AdMob's strategy--namely, using technology that adjusts on the fly for specific mobile carriers and handset types to serve both contextual and demographically targeted ads. The company's client roster includes brands like Starbucks, JCPenney, Atlantic Records and Coca-Cola.

The U.S., South Africa, and the U.K. are AdMob's top three markets--with some 45% of all ad impressions (520 million monthly) coming from users in the States.

"AdMob's growth is a testament to the growth of the mobile Internet and proof that advertising business models are viable in mobile," said CEO Omar Hamoui.

Online Shoppers Listen to Word-of-Mouth

AUGUST 9, 2007

Debra Aho Williamson, Senior Analyst at e-Marketer

While it is common knowledge that consumers use their ears to help make purchase decisions — by listening to the advice of others — they continue to regularly use their eyes, according to BIGresearch's "Simultaneous Media Usage Study 10" report.

More than half of consumers surveyed (51.6%) said something they saw in a magazine prompted them to conduct an online search. Nearly the same number (47.7%) said reading an article led to a search. Broadcast TV, newspapers and cable TV rounded out the top five, while face-to-face communication was sixth, at 35.3%.

The words of others ring loud when it comes to influencing electronics purchases, the survey found. Word-of-mouth was cited by 45.1% of respondents. However, the eyes still have it here as well: 37.8% said reading an article was influential and about 29% cited either magazines or newspaper inserts. About 24% said online advertising was influential.

The BIGresearch study did not separate out whether the word-of-mouth came online (in the form of reviews, blogs, etc.) or from offline means, nor did it say whether a person read an article online or in traditional media. In the consumer electronics category, the Internet is an especially strong source of information, according to a study conducted by Fabrizio, MacLaughlin & Associates for the Lumin Collaborative: 50% of people cited it, vs. 15% who said the Internet was a source of food and beverage information.

The one-two punch of word-of-mouth and the Internet in electronics purchases was also evident in a study by Ketchum and the USC Annenberg Strategic Public Relations Center. One-third of respondents said they got their advice from family and friends, and 29.9% indicated a consumer electronics company Web site provided information.

Much has been made in the past few years about the benefits of word-of-mouth and the rapid rise of online word-of-mouth, in particular. eMarketer estimates that 66 million US adults, or about 29% of the population, regularly give advice about products or services.

Of those offering advice, 26.8 million are influential online — amounting to 17.5% of US adult Internet users.

Flight Delays at Worst Level in 13 Years

WASHINGTON (AP) - U.S. flight delays are at their highest level in at least 13 years, and analysts say fliers can expect more of the same for the rest of the summer.

The Department of Transportation on Monday said the industry's on-time performance in the first six months of the year was its worst since the earliest period for which the agency has comparable data. In June, nearly a third of domestic flights on major U.S. airlines were late.

Part of the explanation for the worsening delays is that demand for air travel is rising, both on major airlines and on smaller regional carriers. In addition, the government said weather-related delays in June were up 7 percent from a year ago.

Reports of mishandled baggage and complaints filed with the government also rose.

Airline consultant Robert Mann said U.S. carriers improved their financial health in recent years by relying more on small 40-80 seat jets that are easier to fill up, and can be more profitable because there are fewer empty seats. However, this strategy also leads to more crowded skies and runways in a system "that was already saturated," Mann said.

For June, U.S. airlines' on-time arrival rate was just above 68 percent, compared with roughly 73 percent a year earlier, according to Department of Transportation data. So far in 2007, nearly 25 percent of flights on the 20 largest carriers have arrived late, the agency said.

Travelers on Skywest Inc.'s Atlantic Southeast Airlines, a regional carrier for Delta Air Lines Inc., had it worst in June, as about 56 percent of flights arrived on time. AMR Corp.'s American Airlines was barely better, with an on-time arrival rate of about 58 percent. US Airways Group Inc., had an on-time rate of about 62 percent.

The airline industry blames the increased delays on a lack of a modern satellite-based air traffic control system, combined with increasing demand.

"We're not surprised by the numbers," said David Castelveter, a spokesman for the Air Transport Association, the airlines' trade group. "We have been saying for some time: It's going to get worse before it gets better."

The industry, along with the Federal Aviation Administration, has been pushing for a sweeping upgrade to the existing radar-based system, but has been caught up in an intense political battle over who will foot the bill—big airlines or users of smaller aircraft like corporate jets. Lawmakers face a Sept. 30 deadline before the current funding system expires.

Reports of lost, damaged, delayed or stolen baggage rose to 7.9 per 1,000 passengers in June, up from 6.3 per 1,000 last year. Complaints about airline service filed with the government rose 43 percent from last June.

Top UK Sites: Google Still Leads, Mozilla Growing Fastest

The total UK online population was higher than ever in June - some 31.7 million unique visitors, or 63 percent of the total UK population age 15 and older - according to a comScore World Metrix report on the UK's top internet properties and top gaining properties for June, writes MarketingCharts.

Some highlights from the comScore data:

• The average internet user in the UK spent almost 35 hours online during the month.
• Google remained the most visited property in the UK with 27.7 million unique visitors in June, reaching 88 percent of the total UK online population, down slightly from May.

• Microsoft and eBay remained the second and third most-visited properties in the UK, with 26.8 million and 22.1 million unique visitors respectively.
• Almost all of the top 20 most-visited properties underwent only modest changes in visitation levels from the previous month, although there were significant gains for Adobe and bebo.com.
• The fastest-growing property in the top 20 was Adobe Sites; its traffic swelled 11 percent as a result of the release of an Acrobat Reader update.
• Social networking site bebo.com was the second biggest growing property in the top 20, its traffic increasing 7 percent.
• The fastest-growing property in June was The Mozilla Organization - driven by the continued uptake of and updates to the Firefox Web browser - with 41 percent more unique visitors than in May.

• Sustained interest in the television show Big Brother buoyed Channel 4's online audience; it was the second highest gainer, increasing 39 percent to 6.1 million unique visitors.
• Rounding out the top three gainers was social-networking site Facebook.com - growing a further 25 percent in June.

Facebook.com is the 28th most popular property in the UK. If its growth continues as it has over the last 6 months, it may enter the top 20 most-visited properties in July, comScore said.

Other notable gainers during June included The Weather Channel (up 12 percent) and travel sites TUI Group, First Choice Holidays PLC, British Airways and Lastminute.com (up 9 percent, 8 percent, 7 percent and 7 percent respectively), according to the data.

Customer Reviews Increase Web Sales

AUGUST 7, 2007

Giving consumers a voice can pay off.

Customer product reviews are increasing retail e-commerce conversion rates, site traffic and average order values, according to e-consultancy and Bazaarvoice's "Social Commerce Report 2007" report.

Asked about the effects of customer ratings on their Web sites, over half of online retailers in the United Kingdom, the United States and Europe said their overall conversion rates had gone up in the past year, compared with only 9% who said they fell. Over three-quarters said their site traffic had increased. Only 5% said it had fallen. Average order values rose for 42% of the responding online retailers, and only 6% said they had decreased.

E-consultancy and Bazaarvoice found that 28% of online sellers were using customer ratings and reviews. More than half said they were considering it.

More than half of all online sellers considered user-generated content either extremely important or very important to company strategy over the next year.

Nearly eight in 10 online sellers thought a major benefit of such reviews was to increase conversions, while 73% thought improved customer retention and loyalty were major benefits. Nearly six in 10 thought the fact that customer reviews improved search engine optimization was a major benefit (multiple answers were permitted).

Nearly all survey respondents thought ratings and reviews were either extremely helpful or very helpful "as consumers."

"Tapping into social commerce can be a great way of gaining a competitive advantage, for example through ratings and reviews," Linus Gregoriadis, E-consultancy's head of research, said in a statement. "But apart from the early adopters, this is something a large proportion of online retailers are only just starting to think seriously about."

Mr. Gregoriadis said one-third of online sellers were concerned about negative reviews — a major barrier to adoption of ratings and reviews — "but retailers are finding that they can improve conversion rates, drive sales and increase customer satisfaction even if customers aren't necessarily singing their praises all the time."

Online shoppers use customer reviews particularly for complicated products, according to the American Marketing Association's "Mplanet" survey. The association ranked online resources used for product information during last year's holiday season.

Online consumer reviews mattered most in complex and high-ticket categories such as automotive (19%) and consumer electronics (17%).

Consumers first turned to search engines (43%) and direct visits to company sites (29%) for product information, regardless of product category.

Games and Gadgets Driving E-Commerce

AUGUST 6, 2007

Retail e-commerce could hit $200 billion in 2007.

Retail e-commerce grew 23%, to $27.2 billion, during the second quarter of 2007 over the same period in 2006, according to a comScore Networks press release issued in July.

comScore also said that total US e-commerce spending including travel climbed 19%, to $47.5 billion, during the second quarter.

Total US online consumer spending reached $170.8 billion in 2006. comScore estimates that it will reach $200 billion in 2007.

"Retail e-commerce rebounded solidly in the second quarter after a modest start to the year," Gian Fulgoni, chairman of comScore, said in a statement. "After posting 17% growth versus year ago in Q1, retail e-commerce sales grew 23% year-over-year in Q2, matching the growth rates we've seen during the past couple of years."

Online sales of video games, consoles and accessories grew by 159% in the second quarter of 2007 over the same period in 2006. Sports and fitness and consumer electronics sales also grew by more than 50%.

"Even factoring in the moderate growth rates from Q1, we're currently on pace to break $200 billion in e-commerce spending in 2007," Mr. Fulgoni said in the statement. "However, in the past we've seen growth rates accelerate as the year progresses, culminating with the online holiday shopping season, so $200 billion may actually turn out to be a conservative estimate."

eMarketer, comScore and Cowen and Company use quarterly retail e-commerce sales estimates from the US Department of Commerce as a baseline for deriving their sales estimates and forecasts. This explains why their numbers closely converge.

Forrester Research, on the other hand, includes online categories that are not part of the Commerce Department's estimate, such as event ticket sales and perhaps even gross merchandise sales from online auctions. The latter could explain why Forrester's figures are consistently about $30 billion more than the other estimates.

JupiterResearch does not publicly disclose what categories are included in its forecast.

"comScore's data comes on the heels of Amazon's forecast that its sales will grow between 29% and 34% this year," eMarketer Senior Analyst Jeffrey Grau said. "eMarketer's 2007 sales forecast of 21% growth, which is bullish compared to other forecasts, may end up being right on target."