Research by eMarketer has forecasted that social media ad spend for 2009 will drop by 3%.
Interestingly this drop is mainly attributed to MySpace, as the company in turmoil is failing to keep the interest of advertisers. The social network is expected to earn $495m, a fall of 15%.
Meanwhile, Facebook – MySpace’s main rival, has continued to attract larger parts of advertising budgets and is expected to overtake MySpace in 2011. Total ad spend on social networks for 2009 is expected to be $1.14b, growing to almost $1.4b in 2011.
Whilst on the surface it seems logical that Facebook is continuing to outperform MySpace with advertisers, as they now outperform MySpace in daily reach, pageviews, average time on site and most importantly the number of registered users. But that only tells one half of the story.
Up until now Facebook has faced the same challenge as that other uber popular, but yet to make money website: Youtube.
Google have proven themselves to be the kings of monetizing the web, but have so far struggled to find a business model that enables them to turn the millions and millions of videos on Youtube into a profitable endavour.
So how come two of the most successful websites on the internet – they boast a combined number of monthly pageviews of nearly 100 billion! – fail to turn all that attention into a source of revenue? It’s the fact that brand managers are hesitant to promote their brand next to user generated content.
Lehoullier, former new media director of G2 states that “in this kind of environment, advertisers fear the possibility of negative discussions of their brands”. Similarly, eMarketer indicates that “this frenzy of content generation is not likely to produce commensurate rewards for marketers or site publishers, since advertisers continue to shy away from attaching their brands to unpredictable content.”
Television and advertising up until now has proven to be a marriage made in heaven. The television networks produced top quality content to attract an audience and companies subsidised this content by advertising their products and services. Advertising knew who were watching and, more importantly, what they were watching. It added a sense of predictability to their job. But online most content is user generated, creating uncertainty for advertisers. You’re just as likely to be shown alongside a drunk cat on a tread mill as the latest music clip by Snow Patrol. This is the very reason why Youtube has succumbed to pressures from the recording and production studios and pay for professionaly produced content – it’s their way of winning the trust of brands and advertisers.
That is why, to me at least, it is interesting to see that Facebook is predicted to overtake MySpace for their intake of ad dollars. Facebook, like Youtube, is almost fully user generated, whilst MySpace is far more content driven. MySpace focusses on music and video and through their takeover by Rupert Murdoch’s News Corp became more of a media company with social features, rather than a full on social network. As such they would seem a far more interesting prospect to brand advertisers.
But alas, it seems advertisers are flocking to Facebook. It may be too early to say that advertisers are shrugging of their doubts about user generated content as an advertising platform, it may simply be due to the enormous growth of Facebook – making this a straightforward numbers game. But either way, it is an interesting development nonetheless and it’s great to see social networks taking a more prominent place in advertisers minds.
“Regardless of which site is in the lead, 2009 is the year of building social marketing strategy,” says Ms. Williamson – senior analyst at eMarketer. “2010 and beyond will see increased activity and deployments.”
Hallelujah!
Sources: Paid Content & ReadWriteWeb
