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Advertising May Not Be The Saviour For Social Networking
engine

WebmasterWorld Administrator engine us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month Best Post Of The Month



 
Msg#: 3538946 posted 5:55 pm on Jan 2, 2008 (gmt 0)

A slew of Web2.0 companies will dissolve this year in the face of a "users' revolt" against online advertising, industry expert Mark Anderson has warned.
Mr Anderson, chief executive of Strategic News Service, an online newsletter that charts and predicts the fortunes of computing and communications companies, said websites that offer free products in return for targeting users with adverts, such as the social networking sites Facebook and Bebo, will fail at a rate of 9:1.

Advertising May Not Be The Saviour For Social Networking [telegraph.co.uk]

There will always be those that are happy to accept advertising in exchange for a free service. Perhaps the masses are happy with the free service. However, subscription-based models should also survive, and may, infact, become more acceptable.

 

walkman



 
Msg#: 3538946 posted 10:09 pm on Jan 2, 2008 (gmt 0)

nonsense and here's why: they might not make billions, but one can still make a lot of money and keep the service going. Too many ads, or deeply intrusive ones will of course get people upset, but the popular ones will be able to find a happy medium.
People need to understand that not every site will be google and their employees millionaires. The problem is that everyone is looking to sell within 2 years and make a fortune.

Jon_King

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3538946 posted 10:14 pm on Jan 2, 2008 (gmt 0)

>>subscription-based models should also survive, and may, infact, become more acceptable

When the crap is so deep that the general public can no longer wade through it subscriptions will boom. This happened with pop-up, antivirus and email spam software.

bwnbwn

WebmasterWorld Senior Member bwnbwn us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3538946 posted 10:37 pm on Jan 2, 2008 (gmt 0)

It doesn't take a brain surgeon to figure this one out...There are just to many of them same way it was with the search engines...Ask, Mamma, inkoma, google, yahoo, and so on

I myself don't use them as I can't put up with the slow speed taste less ads selling mostly sex and so on.

Did I mention the adware spyware garbage blinkers spammers

lorenzinho2

10+ Year Member



 
Msg#: 3538946 posted 1:01 am on Jan 3, 2008 (gmt 0)

There's so many things wrong with this analysis that I don't even know where to begin.

(and who exactly is Mark Anderson?)

A 9:1 failure rate would be a phenomenal level of success for a particular type of website.

No proof is offered by this article that Facebook has lost even one user as a result of the Beacon blunders - odd, given that the whole point seems to be that users will desert ad driven websites. My understanding is that Facebook is continuing to knock the ball out of the park in terms of user growth.

Can anyone name one successful, mainstream social network that has a subscription driven revenue model?

So when this "user revolt" happens, what exactly will the FB / MySpace / Bebo / Hi5 users do instead? Is this article really suggesting that some subscription based site is going to come along and win this space?

I do think that there is room for "freemium" business models in SNS in which additional features / access is granted to subscribers (like on Webmasterworld). But anybody who suggests that ad supported social networks are somehow in peril to subscription driven social networks just hasn't been paying attention.

vincevincevince

WebmasterWorld Senior Member vincevincevince us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3538946 posted 1:58 am on Jan 3, 2008 (gmt 0)

So when this "user revolt" happens, what exactly will the FB / MySpace / Bebo / Hi5 users do instead?

As part of the revolt myself, my option has been to send emails, use the telephone and most of all get down the pub for some real interaction with my social network. Subscription based sites were not an option at all, primarily because they would need all my social network to shell out, something which is unlikely more due to inconvenience than price.

Andy217

10+ Year Member



 
Msg#: 3538946 posted 2:47 am on Jan 3, 2008 (gmt 0)

"I do think that there is room for "freemium" business models in SNS in which additional features / access is granted to subscribers (like on Webmasterworld)."

----------

I think Lorenzinho2 is right on the money with this statement. It's a delicate balance. I've been brainstorming how to do this correctly with a targeted community site that has not been launched yet.

So here's my question: What type of additional features or access would you include in a "premium membership"?

To be successful, it needs to be a combination of "features" that the member cannot live without. They MUST have it, and the monthly, recurring price must be low enough to make it a no-brainer.

As a "free" customer, perhaps you would get access to all of the basics, such as creating your profile, posting pictures, adding friends, leaving comments, searching members, e-mail, messaging, etc.

"Premium" members (for example) would get additional space to include MORE photos, access to a "premium" classified ads section, perhaps make the ability to create, join & post in groups a "paid feature", and (of course) paid members are "free from advertising".

What else could be added to that list?

IanKelley

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3538946 posted 2:49 am on Jan 3, 2008 (gmt 0)

One question... is there anything in the referenced article that wasn't pulled directly from the author or source's arse?

Oh well, at least it draws eyeballs for the copious advertising on the page.

weeks

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3538946 posted 3:41 am on Jan 3, 2008 (gmt 0)

I think Lorenzinho2 is right on the money with this statement. It's a delicate balance. I've been brainstorming how to do this correctly with a targeted community site that has not been launched yet.

So here's my question: What type of additional features or access would you include in a "premium membership"?

To be successful, it needs to be a combination of "features" that the member cannot live without. They MUST have it, and the monthly, recurring price must be low enough to make it a no-brainer.

As a "free" customer, perhaps you would get access to all of the basics, such as creating your profile, posting pictures, adding friends, leaving comments, searching members, e-mail, messaging, etc.

"Premium" members (for example) would get additional space to include MORE photos, access to a "premium" classified ads section, perhaps make the ability to create, join & post in groups a "paid feature", and (of course) paid members are "free from advertising".

What else could be added to that list?

Don't forget status. People who pay get a some type of little star or title with their name to show they are a "real player" on the board.

You want to keep members as well as sign up new ones. The best way to get new members is to keep the old members happy--positive word of mouth is the best marketing of all.

On launching new magazines we use all kinds of tricks. A sale is a good way to get people to sign up. "Half price until Feb. 14, sweetheart!" New members only. Tote bags are cool, but do not get too fancy with the give-aways: you do not want to make it appear that the subscription has little value.

Check out the WSJ.com--they are into sampling. Try it free for three days, etc. Then they get a professional phone sale firm to do their voodoo.

Rosalind

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3538946 posted 4:32 am on Jan 3, 2008 (gmt 0)

What else could be added to that list?

Lack of noise. It's nice to discuss things in an area that isn't full of spammers and timewasters.

ferfer

10+ Year Member



 
Msg#: 3538946 posted 5:38 am on Jan 3, 2008 (gmt 0)

Fotolog is Freemium and it seems it has growing more and more, and the GOLD users are everywhere (although are the most active), at about $5 per month (depending on promo and term). I guess that GOLD users are about 1-2%, total users about 16M. alexa rank = 10-16th world top.

BUT: main target = teens from spanish speaking countries (most latin), so with almost the worse target got that.

Now, like orkut who began strong only in Brazil, it is expanding fast.

GOLD users have extra features and advantages to be more popular inside the network, so professional or business members tend to be GOLD.

it is like if a Myspace GOLD account (does not exist) would put GOLD members first in the friend lists, and allow 50 new friend request per day instead of regular 5.

wtkad

5+ Year Member



 
Msg#: 3538946 posted 2:43 pm on Jan 3, 2008 (gmt 0)

LiveJournal has three major levels:
- Basic accounts are free
- Plus accounts are free and have more features, but you also see more ads.
- Paid accounts have even more features, and you see no ads at all.

The first result from a search on percents says about 1% are Paid, and 25% choose Plus. Apparently, if you clearly define the benefits, many people are willing to not just accept ads, but volunteer for them.

Murdoch

5+ Year Member



 
Msg#: 3538946 posted 3:56 pm on Jan 3, 2008 (gmt 0)

MySpace should charge $20 in order to make a page. This would eliminate several problems such as:

Fake accounts
Kids with 10 different pages
Predators (it wouldn't stop them but you could track them more easily with credit card information)

Just think, if you had to pay $20 for a MySpace page do you think that story where the girl committed suicide because of those parents that made a fake account would have ended up differently? Maybe not, but then again maybe so.

Receptional

WebmasterWorld Administrator receptional us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3538946 posted 4:10 pm on Jan 3, 2008 (gmt 0)

Can anyone name one successful, mainstream social network that has a subscription driven revenue model?

Here's one: Webmasterworld.com
Also: LinkedIn
Also: MSN/Live premium eliminates adverts(ish)

[edited by: Receptional at 4:11 pm (utc) on Jan. 3, 2008]

Andy217

10+ Year Member



 
Msg#: 3538946 posted 5:09 pm on Jan 3, 2008 (gmt 0)

Thanks to everyone for their comments and responses!

Weeks - I think displaying a "status" is a great idea. Also, I like the idea about having different sales.

Rosalind - Lack of noise is also a huge positive. I believe it ties in nicely with Murdoch's point, and would increase the overall quality of the membership.

Ferfer - Your point about GOLD members being professional or business members. A niche site would definitely have those and that might be an additional selling point to get them to join. You could tie that back to Week's idea of having different "statuses".

Wtkad - I understand what you're getting at. Would volunteering to be exposed to more ads lead to an increase in "ad blindness"?

Murdoch - OK...you're making me think now. I'm brainstorming how successful of a sales pitch I could create that would include those points. Since my site will be targeted, would enthusiasts be willing to pay a small, monthly $$ amount to be a part of this SNS community? Perhaps I could take a small amount of each membership and use it towards providing donations to recognized charities that offer help for my niche. That's additional promotion when you think about it, right?

To tie this back to the main point of this thread - I believe a SNS could be sucessful IF a small membership price is justified with the right sales pitch and features...one of them being "ad-free".

[edited by: Andy217 at 5:32 pm (utc) on Jan. 3, 2008]

lorenzinho2

10+ Year Member



 
Msg#: 3538946 posted 6:26 pm on Jan 3, 2008 (gmt 0)

Hey Dixon, those are good examples of the Freemium model that I was talking about. The free, (usually) ad supported sections provide the majority of reach (and revenue?), and the subscription sections provide a nice, other revenue stream. In WebmasterWorld case obviously, you can sub out ad revenue for conference revenue.

If you Google Freemium, you should check out the post by Fred Wilson on it.

I don't expect LinkedIn, Webmasteworld, or MSN to do away with their free community sections any time soon, nor do I expect LinkedIn users to "revolt" against the AdSense that is all over LinkedIn.

BillyS

WebmasterWorld Senior Member billys us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3538946 posted 11:44 pm on Jan 3, 2008 (gmt 0)

Lots of meaningless traffic. Why would advertisers come? There is no target audience. And no one would pay a subscription, traffic would drop to 10% of its prior levels in less than a week.

The people evaluating the worth of these sites are clueless. You've got a lot of teenagers that are more interested in stealing music then buying it. Unfortunately, these big companies have marketing folks that are looking for their next big break.

menial

5+ Year Member



 
Msg#: 3538946 posted 12:25 am on Jan 4, 2008 (gmt 0)

If WebmasterWorld, Myspace, or other Facebooks suddenly required subscriptions for all members, even $1 a year, their membership base and popularity would drop like a stone, indeed. People are and will always consider the Internet as something "you can get for free." If you cannot find something for free it means you need to spend more time to do your research/search, but you WILL find it for free.

If not siteA, then siteB. If siteA requires payment or allows the crucial parts only for paid members, users will flock to siteB. If not siteB, there are siteC, siteD...

Andy217

10+ Year Member



 
Msg#: 3538946 posted 1:41 am on Jan 4, 2008 (gmt 0)

Following up on what Menial just said, here's a real-life example:

Classmates.com was going to launch an IPO last month, but the parent company pulled the plug. From the article I was reading:

"In addition, some analysts expressed doubts about Classmates' ability to sustain paid subscription growth, while rivals such as Facebook and News Corp.'s MySpace.com offer their services for free.

In SEC filings, Classmates also disclosed that its automatic subscription renewal policy is under a Federal Trade Commission probe."

So if paid subscriptions aren't the answer, then SNS really don't have a choice and must continue to rely upon advertising?

rushglen

5+ Year Member



 
Msg#: 3538946 posted 2:39 am on Jan 4, 2008 (gmt 0)

I'm not sure if this thread (below) is "social networking" as its about a dateing site but it surely illustrates you can make money purely from advertising...I notice the site in the thread now has more than double the number of online users so it certainly is working. One of the best threads ever on WebmasterWorld (in my opinion).

[webmasterworld.com...]

JS_Harris

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3538946 posted 3:08 am on Jan 4, 2008 (gmt 0)

I think that the report gives only an extremely narrow view overall and may apply only to a small number of sites in general. I know for a fact that on some sites the advertisers are itching to grab some of the very limited placements available.

What that means is that if a site fails because of visitor revolt (an extremely rare occurence) the advertising dollars end up on other sites... which creates more opportunities to fill the void.

As long as there are advertising dollars to spend, I don't see this as being a real issue.

JS_Harris

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3538946 posted 3:11 am on Jan 4, 2008 (gmt 0)

The report also doesn't take into consideration the fact that young webmasters can create extremely high quality sites and applications for nearly no cost and there is a ready pipeline of channels to promote it with. I'd suspect that for every site folding, several will be created. We're in a boom period for new sites and new applications, aka.. dare I say it... widgets.

abacuss

5+ Year Member



 
Msg#: 3538946 posted 11:21 am on Jan 4, 2008 (gmt 0)

Many designers are now studying human interpretations and designing to attract and retain quality traffic. With these social networking sites I think 9:1 is a bit rude.

timchuma

10+ Year Member



 
Msg#: 3538946 posted 5:13 am on Jan 7, 2008 (gmt 0)

I still maintain an email list for my communuication, as a text file also as I still remember what happened with the Love Bug virus.

Facebook never really appealed to me for some reason and for all it's faults, Myspace is actually useful for the area I am involved in.

I do get requests to join other networking sites, but it is just not worth the time unless most of your friends are already on them.

dataguy

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3538946 posted 3:25 am on Jan 8, 2008 (gmt 0)

Classmates.com was going to launch an IPO last month, but the parent company pulled the plug.

I was going to cite Classmates.com as a good example of how to implement a free/paid system of membership. They do everything they can to squeeze a paid membership out of you. Personally I don't like the hard-sell they do, but I'm sure they make a lot of $$$.

physics

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3538946 posted 5:02 am on Jan 22, 2008 (gmt 0)

That was a horrible article which was not supported by any facts, simply assertions.

physics

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3538946 posted 5:03 am on Jan 22, 2008 (gmt 0)

Classmates.com is the failed version Facebook. They could have had it all but instead had to nickel and dime you. People would rather see a few ads then have to pay $X/month to see their own friends' email address.

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