Saturday, December 13, 2008

Major brands find it hard to attract social network site users; not like the TV world

Brand advertising on social networking sites is not necessarily working out naturally or easily the way it did for broadcast television in previous generations. At least that’s what a story by Randall Stross in the New York Times Business Section, Dec. 14, “Digital Domain,” “Advertisers face hurdles on social networking sites” says (link here). The print version (on p 4 of "Sunday Business") of the article has the title "Do You Want to 'Friend' a Detergent?" with a picture of label from a Tide box (from Procter & Gamble, of Cincinnati).

People go to social networking sites to socialize or promote themselves, not to shop (or to be reminded of their laundry machines). On the other hand, when people search for items with engines, they are more likely to be in a “buying mood” and respond to ads, whether branded or not. With social networking sites, companies (especially major brands) often have to engineer promotion campaigns to attract enough attention. So the investment in promotional campaigns that used to be common business practice is hard to justify in the social networking world. And some major companies don’t like to place their ad space on “amateur” pages or on pages whose content may be controversial in unpredictable ways, very different from the world of television and printed newspapers. In view of these observations, it may be surprising that social networking sites have made their owners so much money, although Facebook’s revenues and profits are not readily available since Facebook is a privately held company.

Companies have tried placing ads on “friends’” pages (a practice called “social advertising”) and not gotten a particularly favorable response.

Companies are also going the companies like Nielsen to research Internet surfing behavior, in a manner to the way they monitor television viewing (I actually had some contact with that system in the 1970s when I worked for NBC), but it is probably much harder to build meaningful databases indicating what visitors really want.

Advertising, and an expectation that some consumers will buy things, is an important cornerstone to the whole idea of “free” content on the Internet and the opportunity for “free entry” for new publishers. This may go against the temperament of many Internet users who want the entertainment and informational value of the web “for free”, and within the penumbra of some privacy expectations. So, strategically, an interest from consumers in “buying more” (to mention the electronics store in “Chuck”) is also important to the “democratiziation” of political argument and to grass roots journalism, the spontaneous reporting that competes with major media and forces them to do a better job. None of this is easy as the economy gets more difficult. Will the “free content” model on the Internet work indefinitely? Nobody imagined this when the public Internet and World Wide Web were first launched.

Along these lines, Andy Warhol made artworks of commonly branded products, such as Brillo soap pads. Some examples of his work based on brands are at this link, and some can be seen at his museum in downtown Pittsburgh.

A related story by Duncan Riley on how this business really works behind the secnes can be found here.

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