In Louis Gray’s post on the Valuation of Twitter he states:
“Twitter will find a business model. It will very likely include some form of advertising, even in a tough economy for ads.”
The only reason it is a tough economy for ads is that most advertising is not targeted correctly. Many pay per click engines are intentionally selling poor quality traffic. That traffic does not generate any sales. When advertising doesn’t convert eventually advertisers WILL quit buying it!
Why Targeted Advertising
There is a simple solution that every Social Networking site – including Twitter – could implement without an enormous amount of difficulty. All that is necessary is to keep these points in mind:
- Only targeted advertising converts!
- Buying advertising that does not convert is a waste of money.
- Therefore, only offer ad placements that are very specific to what is being offered.
Am I the only one who sees the elephant in the room when it comes to monetizing any Social Networking site? StumbleUpon almost stumbled upon it but eliminated it when they got bought out.
Nine Reasons to Monetize Social Networking with Targeted Advertising
- The big money is in advertising.
- The best advertising CONVERTS.
- The REASON it converts is that it is RELEVANT to those who see it.
- SOLUTION: Use data mining to pull existing activity into pages targeted to specific niches.
- Provide an easy way for your users to get to that niche information.
- Offer advertisers ads that appear ONLY on the specific pages most related to what they want to advertise.
- WIN ONE: Users get to find out about products and services related to their favorite interests.
- WIN TWO: Advertisers get to reach those who are most likely to buy from them.
- WIN THREE: Social Networking services become as profitable as Google AdWords.
Using a combination of algorithms, tags, data mining, and allowing trusted users to edit incorrectly placed information while they’re using the site could be implemented.
Social Networking sites can start offering what all businesses want and need: a way to reach their potential buyers while STILL providing their users with a quality experience BECAUSE people do NOT mind advertising they’re interested in – only advertising they do NOT want to see!
Everyone hates to be SPAMMED. Everyone hates “junk” mail which they define as anything they’re not interested in. Products and services related to what we love doing are not considered SPAM or JUNK.
How StumbleUpon Could Have Outsold AdWords and Facebook Ads
3/22/09 UPDATE: Steven Hodson wrote a post about Having a Problem With All This Social Media Crap that generated much discussion about the value – or lack thereof – of all the time spent on Social Networking. I made several comments in that thread including this one below which is related to the topic of THIS post:
The reason it takes so long to get minimal benefit from Social Networking is that none of the popular Social Media sites are providing content in an easily usable form. StumbleUpon almost did it right before they were acquired and then got rid of the most valuable content they had!
What SU had was pages based on keyword tags. Each tag had a page that showed the most popular shared sites for that tag based on clicks, reviews, and readers voting them up. It also showed the users who shared the most valuable content on that subject.
IF you knew how to get to those pages (it wasn’t that obvious) you could quickly and easily find the most knowledgeable users on that subject. Say you had questions about Ubuntu – you could go to the Ubuntu page and find the most valuable resources about it AND connect with someone who could answer specific questions.
What Social Networking is Missing
THAT is what Social Networking is missing. Yes, there are search functions at Twitter and other social networks but that is not nearly as useful as using the power of computers to organize and present content in an easy to use way. The first Social Media site that finally gets that right will require far less time and give far more back!
When they do they will not only be an awesome resource for users – they will also provide what every small business needs and what will be their Golden Goose of monetization – a highly targeted niche audience. Ads there will convert and advertisers will line up to buy them. This is precisely how Google makes most of their money and how these sites should too!
Post originally published Jan 27, 2009. Updated Jan 14, 2017.
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