Social media websites are finding it increasingly tough to be profitable. Most users are used to getting things for free so charging a membership to join a social site is nearly impossible. Ad revenue opens up the door to monetization, but it can only be so effective.
With so many Internet users growing banner blindness it’s becoming harder for advertisers to justify media placement. Social media sites are having to get more and more creative in how they integrate ads. They must make sure they are capturing the attention of their user base as well as get them to engage with the ad.
Various social media sites are discretely tying in paid placement iato their regular content streams. This seems to be working pretty well if the audit compels the user enough. The issue with social media users is that they hate advertising and commercialism. The key to ensuring a successful ad is actually not trying to sell a direct sale.
This is a tough sell for traditional marketers. Paying for ad placement without pushing direct sales is a hard pill to swallow for most. The important thing to do is to educate the social media users through information about the benefits of your product, service, or something relevant. Let the brand awareness, traffic, mindshare, and curiosity do the rest. If the social community has a passion for your product or service though, like Internet meme t-shirts., then direct sales can easily fit into the equation.
The Social Content Aggregation Sites
Digg.com integrated its traditional voting model into its sponsored ads by allowing the social community to vote on the ad. Digg will reward ads that gain more votes by charging them less for the ad. This method motivates advertisers to create ads and content that the community will actually enjoy. If the community doesn’t enjoy them then they can bury the ad to oblivion.
The ads are averaging about a 2 to 3% click through rate (CTR) which is a large jump from the .08% average CTR from the display ad banner rotation.
Digg is planning to syndicate the Digg Ads system to several publisher partners. Phase one of its ad network ambitions will be to represent standard ad inventory on partner sites. Phase two will be to become a more integrated ad platform for those sites.
One downfall is that only approved companies can advertise right now and it seems to be fairly hard to be approved at early stages of this advertising model.
Alternatively, Digg has “Digg Content Ads” (screenshot on the left) which “build relevance into your ads by leveraging popular, topical content that the community has already expressed interest in.” This allows brands to sponsor relevant content that’s already been promoted by the community.
Companies like GE have gone as far as sponsoring any content in the “Health” sub-category. (see screenshot below)
Digg has revolutionized social news advertising by making ads a part of the community. While their user-base has typically revolted over changes they dislike they have been surprisingly receptive of this model.
Reddit.com advertising is pretty simple and allows almost anyone to advertise a sponsored link on its front page. They have a self-serve tool that allows you to set up your ad and they boast 2%-10% CTR on most ads.
The trick here is to create an ad title that the community will appreciate. I highly recommend studying some of the front page content before crafting the title.
Reddit’s ads are fairly cheap too and are based off the current pool of advertisers on any particular day. They state:
Even if your budget is only $20 a day, you can get in on the action. Here’s how: we’ll allow you to submit a sponsored link (set the title, upload an image), and set the start date and duration. Then, you can bid on how much you want to spend on that link (we’ve set a minimum of $20 per link per day, and $30/day for targeted ads). This bid is exactly how much you’ll pay for the link once it starts running.
On each day, we tally up the total number of bids, and use the total to figure out how large a piece of the pie each sponsored link gets. For example, if you were to bid $20, and the total for the day is $200, you’ll get 10% of sponsored link impressions for the day.
Fark.com is an interesting ad platform where they allow ALMOST any type of ad to get through. The cost for a seven day rotation is $40 for a fun message, a single eBay auction, or a link to your own content-driven website.
According to their testimonials:
“The traffic on my website doubled and even tripled at times after I got a Fark classified ad. I pulled the best numbers I’ve had since the page reopened 5 weeks ago. This is the deal of the century if you ask me.” – John Hawkins, Right Wing News
“The Fark Classifieds are by the far the most cost-effective way I’ve been able to reach tens of thousands of people. You’d be insane not to take advantage of it. The numbers speak for themselves.” -Brooks, SportsByBrooks.com
I tend to disagree with these testimonials though. I haven’t seen enough return to really recommend this but $40 isn’t a bad risk.
Another downside of Fark ads is that there are no reports whatsoever, no user-based feedback, and a fairly odd submission process. They claim that you can “See how many clicks your ad has gotten in its comments forum. Use the comments forum to add further description, receive honest feedback, and answer any questions people may have.” But doing so is highly dysfunctional and not very user-friendly.
TweetMeme.com, like Retweet.com and TwittURLy, aggregates links that are popular on Twitter. The difference between TweetMeme is that instead of voting on content, you retweet it to give it your vote.
Sponsored ads, or Featured Tweets, can be featured on here much like they are on Digg.com. The nice thing about these ads is you can specifically target certain categories with your content so that you can ensure that the right audience is seeing your sponsored ad. This prevents wasted CTR and saves you some cash too.
The downside is this can be fairly costly and the wait time to get your ad to run is fairly long so plan ahead.
This overview is to help you leverage social media news sites by paying to play if you don’t have the budget for organic viral marketing and linkbait promotion. It’s important to know that sponsored ads never replace, or even come close, to the real organic thing. Just like in paid search, organic will always get the highest CTR and be more trusted than the paid placement. In social media, with trust comes links and virality. You can never obtain that from paid placement.
In my follow-up post I’ll be discussing paid advertising in social networking sites like Facebook, LinkedIn, MySpace, Twitter, YouTube, and even touch on mobile advertising so subscribe to our RSS feed to catch that next post.