DISQUS

davemc500hats · 1 year ago

agreed it's difficult, although if the off-network referral mechanism is powered by friend list & relevant targeting provided by Facebook (or LinkedIn, or MySpace, or Google / Microsoft / Yahoo / AOL using email lists), then it's possible that an affiliate or other txn-related fee might be possible.

that said, i agree it's challenging... made even moreso by the fact that multiple parties will be gunning for those revenues, and the friend lists info & targeting assets aren't necessarily proprietary.

thus even if they *can* figure out a way to charge for them, there will be competitive pressure to give it away for free in order to gain traction / volume.

i wrote a little bit about business models for social networks a few weeks back here:
http://500hats.typepad.com/500blogs/2008/03/bus...

also more specifically about how user logins & messaging data stores from Yahoo/MSFT/AOL/Google could also be used in this way:
http://500hats.typepad.com/500blogs/2008/03/web...

on the other hand, there's significant optimism for an increase in resultant txn activity due to social networking behavior (as you note from your examples), and the likely big winner there is probably the small- & medium-size merchants who can't easily implement their own social networks, but could borrow/utilize acct infrastructure from Google, MSFT, Yahoo, Facebook, MySpace, or others.

mberkley · 1 year ago

Completely agree, Charles. Facebook tried to take a bold step with Beacon in this area, and the rest was history. Of course the Beacon flop wasn't because of the issues you highlight, it was because of misguided execution.

Regarding being an intermediary: Facebook and MySpace have created application platforms that allow brands to be "invited in" to the social graph. But it's social application providers like Zazzle (http://zazzle.com) and SplashCast (http://splashcastmedia.com) that are the intermediaries for these transactions, not Facebook and MySpace.

Jesse Farmer · 1 year ago

Bingo. Facebook and other social networking platforms are the new email, IM, SMS, etc.

It's about messaging. Assume email was locked up behind a proprietary vendor for historical reasons. Why would advertisers pay when one of my friends sends me an email recommending me a product?

The only difference between Facebook and email, IM, and SMS is that it delivers messages passively while the other require active participation on at least one end.

winson · 1 year ago

I get what you mean after I read twice.

What if advertiser is one of a hidden twitterer and push their ad in our tweet list? I mean ad is one form, social recommendation is another.

PhilG · 1 year ago

Wilson : that would be spam no ?

winson · 1 year ago

Kind of, but people welcome ad inside episodes. Even not welcome from deep heart, it's free.

Peter · 1 year ago

One obvious answer is 'brand advertising'. When Ford shows you their latest travesty in a commercial, they're not expecting you to click through and purchase it online - they're branding. Google's been working on building their branding advertising initiatives for years, now.

Another answer is that all reviews started out as being unwelcome on the net. Companies like http://www.bazaarvoice/ seem to be having a go a recommendations and reviews, and they're someone convincing folks that this is a good thing. I think there's every reason to believe that Facebook could take over the role of a Bazaarvoice in the 'social graph'.

I think the technical details are not so difficult. What could be difficult is more advertiser-related talk than I know about - things like crappy CPMs at sites like YouTube, etc. There are probably some good reasons for those low rates, but I haven't seen any convincing explanations in the tech blogosphere that I inhabit.

trent · 1 year ago

I understand your point, but I think the problem you're suggesting
is not different from google not being able to charge advertising fee to
samsung just because a guy searched for the term "samsung" on
google and got tons of results. In this case, "samsung" doesn't have
to pay google for the referrals they're getting (through search results).
Then why would they do so?

Ken Taylor · 1 year ago

Personal recommendtion is not new, we just have new ways to communicate it. The reason it works is that the knowledge you required existed in your network. Advertising will still have its prime use of trying to inform your choices - the real problem is the lack of granularity in the placement of advertising.

Nathan D · 1 year ago

+1 on brand advertising, though Facebook and other social networks have a problem with being really good for brand promotion because so many models would be seen as intrusive or interruptions. So far the "Pages" experiment on Facebook has done a little bit of good on the brand front, but the results to date have been underwhelming. May be Facebook will need to take advantage of its reach and breadth of data to monetize across the Net by selling selective access to said information (and/or being its own ad network powered by its data).

David - Traackr · 1 year ago

Very interesting article Charles. It raises a very good question: what is the value of your contributions to these social network? What is your influence on your friends or people who follow you on these site?
And of course this influence extends beyond just social networks to the entire web like this blog for example. This blog is another vehicle for your influence on the web.

So back to the original question, how do you measure your contributions or your influence on the web? Well, that's what we try to help you do at http://www.traackr.com. You tell us where you publish content (videos, photos, blogs ...) or in what social network you participate and we calculate your Traackr score (popularity and buzz for now) that you can compare with other people.
Come give it a try and see how popular you are!

drewdeal · 1 year ago

Here are a few ideas/observances:
1) Apart from personal recommendation, these sites already have a targeting advantage for sidebar and newsfeed ads. Facebook should start getting better at making this work over the next few months.
2) What if these sites polled their audiences about products and services and sent this info to advertisers with the promise of attaching ads to the enthusiasts of their brands? There is a lot of nuance regarding how this would work, but it would boost the brands as well as the ease of associating what each user likes with what they are recommending to their friends.
3) There is a bit of a false dilemma posited in this post. Just because the recommendation track is hard to monetize, social networks themselves are not left out in the cold, based on all their other advantages.

kegill · 1 year ago

If you are arguing that these two sites need to be able to monetize this exchange of social capital, you are correct that it could be difficult. But is this really what they are trying to do?

Facebook is currently monetizing with ads on the website and should, hopefully, get better over time.

Not sure what Twitter's founders want to do - maybe sell the technology? Be like Slashdot (part of a larger consulting type enterprise)?

Everything we do does not need to be monetized!

LukeG · 1 year ago

I don't think that implementing a cost per acquisition(CPA)/affiliate model to monetize these transactions will actually be thaat difficult. Sure, there will be business and technological challenges to getting it built, rolled out and actually adopted, but getting advertisers (major concert venues or promoters, for example) to pay a small commission for ticket sales that originate on facebook is a relatively easy sell.

Advertisers love CPA models because they are (generally) low cost, trackable, direct response marketing channels. And, in pretty stark contrast to CPM advertising models, CPA deals put the risk on the publisher rather than the advertiser. Cost-per-acquisition is the "truest" advertising model, so to speak - it's just the most accurate way to price something.

A good CPA solution for facebook will make it very, very easy for consumers to participate in the transaction: the process should be a frictionless as possible, and there are most likely some ways to design it so that it actually increases the conversion rate (so that maybe 3 or 4 of your friends would have joined you at the show, for example).

There are many dollars and massive scale behind this - enough that it will happen. Maybe it really just should, too.

IdeaTagging · 1 year ago

This post seems to use recommendations/referrals and advertising interchangeably. They are different in my opinion. When you posted your Q&As on Facebook and Twitter as in your examples, those apps had no business trying to get a cut from the resulting transaction. What they should have done though is recognise your intention to purchase something and display relevant ads to you. That's all that Google does.

I think monetising social networking sites should be easy. Leverage social connections to make it easier for users to demonstrate their purchase intentions, e.g. Q&A linked with search and then serve ads (search for Facebook on my blog for more).

tspeirs · 1 year ago

Great post, Charles!
I think you are bang on with your assessment that it will be near impossible for SN to track most transactions that will originate on the network.
Likely they will need to focus on opt-in beacon-like ads (maybe offer brands subscriptions to access tools to contact/engage profile users) or focus on similar metrics used for TV advertisements (price by impression to target demo and verify results using brand recall and intent surveys before and after campaigns,
How is Gaia approaching the sensitive issue around advertising to young people?

hussein_fazal · 1 year ago

Interesting article - There are actually three different types of social network advertising IMO. I actually wrote a blog post about it at http://socialnetworkadvertising.blogspot.com/

In fact, I have just begun this blog specifically because I believe social network advertising is a great opportunity but not well understood. Charles, I would like to invite you personally to comment on, or submit an article, as you are one of the few who seem to really understand the business.

Thanks!

Mark · 11 months ago

plus one
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stevenmartinez · 11 months ago

This article is truly a good read for me! Informative and very interesting!

jamesthompson · 8 months ago

Why the internet will become the only hub of information full stop.

It doesn’t take Einstein to work out the problem with modern society, be it a problem or probably more so a situation, either way, it’s happened and is always happening. Its compression, and population figures are constantly adding salt to the wound, yet we are humans, this is what we do, it’s our instinct to do so.

I believe that we can evolve around this, I’m not preaching the word of a reclusive, but this is my method, on avoiding the misery of an external world, I can no longer tolerate. It had taken many situations for me to realise what it was, I no longer missed. Grid locked traffic, argumentative people, queue jumpers, lack of manners, crowds, cost, danger and stress.

I began to use modern technology to my advantage, the internet and the power of its purpose is absolute, its source infinite, and its rhythm constant. I pledged to myself that I would no longer waste precious time in stressful situations I could avoid and by doing so, would create more moments of happiness within my life.

I Joined free community websites and forums, and began meeting people through them. I joined hobby groups and began writing a column for single fathers in the area. I was in no way shutting myself away from the world; I was more involved than ever before. I’ve tapped a great well of information and I believe we can all use this to some gain.

I no longer take car journeys I need not make, I avoid crowded places and the lack of manners that pollute commercial institutions, are a thing of the past. I spend more time with my family, we enjoy free and fresh moments together now, through the aid of modern means, internet pass times. You’ll be surprised to know of many hobbies that exist in this world, which can be sourced through the web and experienced in your own home, in safety and in comfort.

By utilising the internet for shopping, information, hobbies and pass times, you can scrape back hours of once wasted time, time travel is not possible but time saving is.

Welcome to the internet.

I think Marketing has nothing to fear, my seldom thought guys

Gadget_Blog · 4 months ago

Great post, really help me alot. Thanks.

Cheers,
gadgettechblog.com

staffing1 · 2 weeks ago

I think monetising social networking sites should be easy. Leverage social connections to make it easier for users to demonstrate their purchase intentions, e.g. Q&A linked with search and then serve ads
www.staffingpower.com