Ads
on Social Networks Don’t Attract Users
Most
social networks are able to attract web wanderers by offering free
online meeting joints. However, these networking businesses are
struggling to pull off meaningful profits mainly because users ignore
ads displayed on the sites. According to research firm IDC, ads on
social networking services have lower click-through rates than
traditional online ads and they also lead to fewer purchases.
The IDC
survey finds that social network users are less receptive to
advertising. For example, more than half of U.S. consumers with Internet
access use social networking services (SNS), such as Facebook and
MySpace, and penetration will continue to grow. Consumers are also
spending more amounts of time on SNS, a fact that has advertisers
drooling over the opportunity represented by SNS.
IDC
found that consumers who use SNS also tend to visit the services often
and spend a lot of time per visit. More than three quarters of SNS users
visit at least once a week, and no less than 57% visit at least once a
day. During each session, 61% of SNS users spend at least 30 minutes on
the respective site or stay logged in permanently, and 38% spend at
least one full hour per session (or stay logged in).
There
are four major reasons why consumers use SNS: to connect and
communicate; in response to peer-pressure; for entertainment; and for
work-related purposes.
According to IDC survey, advertising does not factor into consumer
motivations. In fact, users are less tolerant of SNS advertising than
the best tolerated forms of online advertising. Ads on SNS have lower
click-through rates than traditional online ads (on the Web at large,
79% of all users clicked on at least one ad in the past year, whereas
only 57% of SNS users did), and they also lead to fewer purchases (Web:
23%; SNS 11%).
"The
thinking has been that the popularity of SNS will attract a big audience
and generate a lot of traffic, which in turn will produce enormous
amounts of user-generated content (UGC) and therefore advertising
inventory – without any expenses for editorial staff or content
distribution deals," said Karsten Weide, program director, Digital
Marketplace: Media and Advertising. "All of the above has proven true –
except that almost invariably, SNS have had a hard time selling this
inventory."
One of
the potential benefits of SNS that the advertising industry has
discussed is whether peoples’ connections (i.e., whom a user knows or is
linked to) could be used for advertising. For instance, publishers could
show a car manufacturer's ads to a user's contacts because that user's
online behavior has indicated that they’re interested in a particular
brand of cars. Anecdotally, there has been some indication that this
"social advertising" might be more effective than behavioral targeting.
However, that idea is stillborn. Of all U.S. Internet users, only 3%
would allow publishers to use contact information for advertising, says
IDC.
IDC
expects that lower-than-average ad effectiveness on SNS will continue to
contribute to slow ad sales unless publishers get users to do something
beyond just communicating with others. If the major services succeed in
doing so, they will become more like portals, such as Yahoo! or MSN, and
they will come closer to the audience reach of the top services. If that
happened, IDC suggests, publishers would be better able to monetize
their SNS.
The
recently released IDC report, U.S. Consumer Online Attitudes Survey
Results Part III, examines SNS audience reach compared to mainstream
services, such as Google and Yahoo!, the demographics of SNS users, and
consumer tolerance for SNS advertising compared to online advertising in
general.
