There are Only Two Kinds of Online Advertising: Relevant Advertising and Spam
Posted on 05. Dec, 2007 by Chi-chi Ekweozor in Audience Analytics
Alex Iskold over on popular technology blog, Read/WriteWeb has just published a thought-provoking piece on the myth of contextual advertising on social networks like Facebook.
By ‘contextual’ advertising, he is referring to advertising that is served to the user based on information the advertiser has about him or her.
He does not think the contextual ‘Social Ads’ on Facebook work very well because of “[Facebook’s] lack of understanding of its users.”
His argument is that Facebook does not know enough about him to serve relevant ads (or does not appear to use the information it knows about him effectively enough to serve relevant ads) because much of its information is unstructured.
Now, I’m no computer scientist but I beg to differ.
The information he has willingly entered on his Facebook profile is stored against variables that are associated with each relevant interest (pardon the pun) .
Should he change his ‘Hometown’, for example, he would simply be updating the information stored in a ‘structured’ database on a Facebook server somewhere. That information can, and will be used by advertisers who want to advertise to Facebook users from his Hometown, for example.
The point he is overlooking is context. And here’s where the title of this post becomes relevant.
All forms of mass media work well in the medium they are deployed in because advertisers learn to use the medium in the context they are most effective in.
So, one is accustomed to seeing glossy perfume ads in glossy magazines and hearing overly chirpy voiceovers on the radio during rush hour.
The problem with contextual advertising based on friend-to-friend referrals on an online social network is that the context is all wrong.
This is something that Alex points out himself:
In addition to the ads in the sidebar, Facebook is now showing advertising in the newsfeed. I understand that they want to monetize the site, but this is just really confusing. We have been trained that the news feed shows updates from our friends. This is the place that we are directed to first each time we log in to the site, and having ads there simply creates a bad user experience.
This is the real issue.
If I was going to monetize a fast growing social network on which users willing proffer huge amounts of information about their day-to-day lives using advertising, I would focus on making the ads relevant to the user first.
I wouldn’t add information about their friend’s purchases and other Social Ads in the news (or activity) feed unless this information was relevant to the user’s interests because this just increases the likelihood of introducing non-user friendly spam.
If it is not relevant, it is no longer advertising, no matter how much it might look like it.
Contextual advertising is still largely untried and untested online because it is difficult to manage the information required to do it effectively.
Now I am no social networking expert but I have a theory that may be worth exploring. Let me explain.
On a really popular social network, the problem of delivering relevant ads to users based on their interest becomes increasingly more difficult the more information you have.
It is not as easy as simply delivering targeted ads to users who express a preference for a particular interest, say, ‘Sci-fi movies’, for example.
The advertiser you are selling that (user) information to will want formidable proof that delivering ads to just to those users on the social network will be worth their investment.
To do so, the social network will need to have systems in place that actively interact with (or monitor) the information those users provide about ‘Sci-fi movies’, for example, to ensure that it can to run suitable ads against it.
When you think about all the different interests listed on user profiles on the major social networks, from sports and music to fashion and film, it becomes apparent that monetizing user data can become a real pain in the whatsit….
There is simply no way the controlling social network can effectively manage all that data on its own.
The most sensible way to manage this inherent complexity is to invite external application developers to create interesting applications that provide ‘user interest interaction and monitoring engines’ for the various types of users of the network.
This is why May’s announcement of the F8 platform was such a smart move by Facebook.
On its own it was a first step in the direction of providing useful apps for Facebook users to interact with.
Taken together with the move towards monetizing the site using advertising, it provided a way to harness all that user information and control some of that complexity.
Unfortunately, not much focus seems to be going into ensuring that the F8 platform is used to deliver ads that are relevant to the user on Facebook and I can understand why.
Offering all 50 million plus users of the network as potentially limitless advertising inventory to marketers is much easier.
Tracking their activities on partner sites and feeding that information back into Facebook to form the basis of ‘social ads’ that can be monetized through clicks by trusted friends is a much simpler proposition, on face value.
However, this has the potential to do the following:
- Disrupt the user experience on the site
- Reduce the ROI of the social ads themselves.
The latter point is critical. The real test of social ads and social advertising systems built on referrals through friends on social networks is whether they actually work. This is what the advertisers have signed up for, at the end of the day.
I’m not sure they do.
I will explain why:
A ‘referral’, trusted or otherwise, is quite different from a ‘recommendation’.
Here are the two words defined by dictionary.reference.com:
Referral
tr.
1. To direct to a source for help or information:
2. To direct the attention of
Recommendation
tr.
1. To praise or commend (one) to another as being worthy or desirable; endorse: recommended him for the job; recommended a car instead of an SUV.
2. To make (the possessor, as of an attribute) attractive or acceptable: Honesty recommends any person.
Most referrals work on the basis that there is something to be gained from the referring action.
Recommendations are different, however. They are often made based on prior knowledge of what a user has done or his or her ‘interests’.
Recommendation systems, like the one perfected by Amazon, are often more credible because they combine prior knowledge about the user with relevant information for the user.
‘Trusted referral’ advertising on Facebook on the other hand, seems to offer no incentive to the user other than the opportunity to ‘share’ information.
As the title says, there are only two forms of advertising on the web: relevant advertising and spam.
Are you starting to see why some of this blind ‘sharing’ of information might not be such good idea?
If I were monetizing a fast growing social network, I would actively scan the horizon of popular applications on the network and find ways of partnering with the application developers to sell advertising within their apps.
After all, that way I would be learning more about my users and delivering advertising that is relevant to most of them at the same time.
This decision would take a fair bit of thought to hammer out a working business model but it would ultimately be the best option for the users in the long run because they would not feel like they were being manipulated in any way.
And they would receive a lot less spam.
You can argue that to make social ads work, advertisers should provide users with an incentive to take part in recommendations but that’s the topic of another blog post.
What do you think?
Would you like more spam with your advertising if it came from trusted friends, or less?
Or is it all information that you’d rather have blocked using some sort of social spam filter?
Your thoughts in the comments….
Related posts:
- Future of Social Advertising: Branded Content and Branded Social Media
- Future of Social Advertising: Potential Pitfalls of Using Social Media
- The Future of Social Advertising: Social Media and Social Experiences
- Social Media Giants YouTube and Wikipedia crack list of Top 10 UK Online Brands
- Future of Social Advertising: Determining the Value Exchange
