Forum Moderators: martinibuster
...social networking inventory is not monetizing as well as we would like,” said George Reyes, Google’s chief financial officer... In 2006, Google agreed to a three-year deal to sell ads on MySpace, committing to pay a minimum of $900 million.People involved in that deal said that Google never assumed that it would earn its $900 million back from that deal, but it appears to be losing even more than it had expected.
Three things come to mind:
1. Social networks like MySpace are among the most visited sites on the Internet. That's a lot of page views.
2. Ad inventory at MySpace isn't working out. That's a fact according to a quote of Sergey Brin within the article where he acknowledges a failure to monetize.
3. Has the flood of inventory at MySpace and other social networks negatively affected the supply and demand ratio of average-joe publishers, resulting in lower earnings?
Those sites and deals should not affect narrow vertical niche publishers with ample advertisers supply.
In my limited experience with AdWords, MySpace was delivering a firehose of impressions (if not necessarily clicks) on every subject, until I simply blocked it altogether.
I'm not sure if that was due simply to vast traffic levels, or because I'm bidding fairly low amounts on the content network, or maybe Google is preferentially funneling impressions to MySpace in order to pay for that $900M deal. Not trying to start a rumor with that last conjecture, just saying it occurred to me.
Google's advertising ambitions go far beyond AdSense direct-response ads. That's a matter of public record.
Definitely. That's my point. Even if image-based ads... (which do offer advertisers a piece of hardcore branding) ...become commonplace, I still don't believe monetization will increase exponentially. I guess I should specify "image ads for branding purposes" and not say PPA (since PPA can be both text-based or image-based).
The problem with trying to monetize Myspace traffic is, there is no defined niche, topic, or subject. Ads can range from Alaskan cruises and soy milk products - to OneRepublic ringtones and Liberty nickel collections.
Sure - a 10-year old can lie and post a profile as a 35-year old. Just as a 25-year old can lie and post pics depicting himself as Matthew McConaughey. That still doesn't create the best ROI opportunities for advertisers since most folks are there for gawking and socialization purposes. This is why I say age groups and the ads themselves don't really matter.
maybe Google is preferentially funneling impressions to MySpace in order to pay for that $900M deal.
I wonder if MySpace is being smart priced...
For an example of how this can work, see Topix.net (which is received heavy investments from several newspaper chains), which--with Google's blessing--has developed a method of displaying AdSense ads based, at least in part, on what the reader has clicked on previously.
Let's say that Google knows that a PC in the Doe family's household has clicked on a dozen ads for Caribbean cruises. Armed with that data, Google could serve ads for Caribbean cruises to that PC even on pages that have nothing to do with the Caribbean or cruises, because there's a good chance that someone in the Doe household has an interest in (and may be a prospect for) a Caribbean cruise.
When you think of MySpace, think of Google delivering "branding" ads (both conventional display ads and rich-media ads) for beverages, cars, consumer electronics, and other mass-market products or services.
You know its funny because even though I am quite aware of the connection between MySpace and Google, when I think of MySpace, I never think of Google. There's that much of a disconnect.
Maybe they should start throwing up ads that say:
KIDS! Are your parents asleep? In the shower maybe?
NOW IS THE TIME TO STEAL THEIR CREDIT CARD!
I'm waiting for the day when kids have their own debit cards and their allowances are automatically "direct deposited" from their parent's bank accounts. That'll be the day the economy starts getting better :)
And as far as all this marketing accuracy in MySpace goes, I'll repeat (for the Nth time) that MySpace should require a $1 fee via credit card for page creation. Then verification would be MUCH easier.
I think it has to do with "why" people are using myspace. It is to edit their profile page, connect with friends, send messages.
This reminds me when google first announced adsense. At that time, GoogleGuy stated here that their testing showed that content ads performed as well as search. We know that is not true, and the reason does not have to do with the user demographics or ad targeting - but instead what the 'actions' of the normal audience members within that market area. Consider what the user is interested in 'doing' and this is not that mysterious imo.
At that time, GoogleGuy stated here that their testing showed that content ads performed as well as search. We know that is not true
Actually, we don't. Sometimes it's true and sometimes it isn't, depending on the audience and how well the ads are targeted. (Any niche editorial publisher who earns significant revenue from affiliate links can tell you that "content ads" convert quite well.)
Consider what the user is interested in 'doing' and this is not that mysterious imo.
Exactly. However, that doesn't mean social-networking sites are worthless as ad venues. It just means they aren't the best venues for direct-response ads.
I was surprised that the ROI was on par too
I think my point is clear. Google is aware of this AND I believe Google has an obligation to communicate they do understand the differences between these audiences. They don't. Search is different than content which is different that social networks. That means search advertising does not equal social netwoking advertising. news?
I feel they roll forward giving the perception to advertisers and stock owners that their advertising is equal across different mediums.
An example of this is the default setting in adwords accounts - they know the difference. Their actions do not coincide with the differences. Look at this scenario, as if google is just learning this and it is some new frontier. No. Google has been aware of this difference for a long time. I just think they should talk and act as though they are aware of this difference. Will they be changing adwords setting so advertisers money isn't 'wasted' on default contextual advertising setting ... often unknown to them. I think not.
How shocking! Ads that sit inside trash don't do very well!
Why? Because an advertiser can exclude a high-profile domain from the content network in one fell swoop. It's obviously a lot harder to play whack-a-mole with a nearly infinite number of low-traffic, here-today/gone-tomorrow sites owned by so-called publishers who want to know the highest-paying keywords and whether they'll be banned if they do X, Y, or Z.
Also, not all social-networking ads are on the content network; some are on the search network, and AdWords advertisers can decide for themselves whether the search network has an adequate ROI.
My concern is not for one or the other but as a whole, regardless of the forum category. What is not good for advertisers is not good for publishers. I am considering the system as a whole, as google does.
You can exclude all you want, but google is well aware how few are comfortable using those options or are even aware of them. Google's actions are clear of what they are aware of versus the default settings for advertisers. Advertisers I share as an adsense publisher. This is not good for publishers either.
Let's remember google pitches advertising as easy. Does anyone here consider EFV solution of monitoring and excluding easy? I don't and if google was serious they would make all advertising except google search as opt in vs opt out.
MySpace is a mess! It's the ugliest site on the internet. Sure, it doesn't stop people from returning, but the awful pages certainly don't help with ad placement.
It's a junk yard. It probably kills your AdWords Quality Score with so many impressions and so few clicks.
This MySpace deal was one of those huge gambles that resulted from having so much money they didn't have to take a close hard look at it. Just like those crazy pre-dotcom bubble burst days of the 90s.
I don't see much potential with YouTube, either, unfortunately.
These two duds are part of the internet learning curve. Google thinks anything can be monetized.
Live and learn.
p/g
The answer to me seems obvious:
- If you own a social-networking site, it's bad news.
- If you have a site that reaches people who are researching ways to spend their money, it's good news.
- For publishers in general, it sends a message that should have been obvious all along: Audiences (and audience motivation) matter.
If you have a site that reaches people who are researching ways to spend their money
That kind of site has always been easy to monetize. Adsense probably wasn't a breakthrough for those sites. It was, however, for content sites.
But forums, social and bookmarking sites, video & games sites, etc are really at the bottom of the barrel in terms of quality of traffic for advertisers, I'm sure, as people aren't actively looking for something, just spending time chatting or being entertained.
These sites should go more the mainstream media route, like television, for their type of advertising (general purpose brand awareness type of campaign), not waste cost per click ads on adsense that smart price the whole content network.
Regarding the junk can aspect of myspace, I agree but I do not think that is the issue. Other social networking sites, well designed, are not raving about the truck loads of money backing up to their drives. MySpace may have additional challenges because of the junk, but social networking sites in general don't fair any better. Shiny designs and all.
If you own a social-networking site, it's bad news.
Would you be willing to extend that to those users as well? The reality is that there are many (second tier) social networking sites with large user bases. If they do not solve this equation, quickly as userbases are growing and becoming more expensive to support, the end result will be the sites will shut down. I believe some won't make it, and the market will figure out something for the others. But in the end monetize or shut down will be the results.
I believe it maybe a extraordinary opportunity if you can find a way to monetize this 'type' of traffic. For users, advertisers and publishers. Is it possible? The alternative is they will not continue to exist, imo.
I believe it maybe a extraordinary opportunity if you can find a way to monetize this 'type' of traffic.
This is why I have hope for my social network related sites. At the end of the day, as bad as that traffic is, the social networking market still accounts for 100s of millions of page views a day. If someone can figure out a way to successfully monetize that traffic, they could make a small fortune given the volume and low cost of that market. I have to believe that it's only a matter of time.
[edited by: WebPixie at 8:50 pm (utc) on Feb. 1, 2008]
That kind of site has always been easy to monetize. Adsense probably wasn't a breakthrough for those sites. It was, however, for content sites.
Actually, I was talking about content sites. Remember the conversion examples that Google gave back in 2004 when smart pricing was introduced? "A camera review page" = high conversion. "A page of photo tips" = low conversion.
Another example would be a travel-planning site (people researching ways to spend their money on travel) as opposed to a travel-narrative site (armchair travelers reading about other people's adventures).
This is why I have hope for my social network related sites. At the end of the day, as bad as that traffic is, it still accounts for 100s of millions of page views a day. If someone can figure out a way to successfully monetize that traffic, they could make a small fortune given the volume and low cost of that market. I have to believe that it's only a matter of time.
Sure, but it's probably better monetized with "awareness-building" or "branding" ads for mass-market advertisers than with direct-response contextual advertising. There's nothing inherently wrong with "low-quality" audiences, if they're big enough and you can obtain the right kinds of advertisers. (Bud Lite drinkers may not be as rich as Glenlivet drinkers are, but a lot of money is spent on reaching them through mass-market TV commercials.)
From a publisher side, attaining these type of advertising accounts is a much different story than traditional online sites. Good luck making that sale, and keeping it. I believe another answer is needed besides advertising for "brand awareness". Unless the brands get on board on their own all of a sudden.
I'm trying to think of other advertising that is distributed to people who are focussed on something else at the time. People see billboards when driving. Is geo/location the important factor there. People see ads while at a sporting event. Branding primarily there.
What advertising works in a social environment without the person'a only focus being the ad?
What advertising works in a social environment without the person'a only focus being the ad?
It will take some creative thinking. As an example, there's a company that offers music/video widgets for placement on social networking profile pages. This company began promoting bands through their exposure on social networking resource sites. One of the bands they hyped ended up having their video being one of the top 5 most requested videos on MTV in spite of MTV never having shown their video. By taking the product directly to the people they were able to bypass the radio and MTV. Obviously I have no idea if this method was cost effective as I don't know how much was spent or earned. But it's an example of how powerful targeting this market can be when done properly.
too many techies, too few marketing folks at the googleplex?
the big question: will advertisers be willing to spend serious amounts of money on such branding efforts? in the end, when a social network provider really is under pressure to become profitable, it will either come down to subscription fees for the users - however, you will need a strong network to push that through. or you vigorously cut down the operating costs. low expenses along with low earnings. really not in the $900m range..
I think this has to be, among other things, with the fact that Google goes more after larger networks, which don't monetize, and kind of (it seems to me) ignores smaller publishers, who publish sites dedicated to targeted products or industries, and who's sites are more likely to monetize.
Yes, I may be a midsize or smaller publisher, but all of us together should be more valuable to Google than Myspace. Becuase our sites dedicated solely to different things may monetize better.
I think my site dedicated to digital camera reviews may monetize much better than a digital camera page in Myspace?
Do you agree with this assessment?
My bottom line is that Google needs to turn to small to midsize publishers and help us to get better inventory of ads, not diverte ads from us.
Reading this forum we can conclude that an average publisher (or average joe publisher) reports earnings progressively decreasing over time.
That's like concluding that [name any product] is a lemon because members of [product name] support forums are usually asking for help.
Fact is, nobody except Google knows what the "average joe publisher" earning trend might be.
I think this has to be, among other things, with the fact that Google goes more after larger networks, which don't monetize, and kind of (it seems to me) ignores smaller publishers, who publish sites dedicated to targeted products or industries, and who's sites are more likely to monetize.
Do you know what the average MySpace EPC and eCPM are? I sure don't. I can say, with a great deal of confidence, that MySpace isn't likely to get many AdSense impressions (let alone clicks) for many of the topics that I cover. Your mileage may vary, depending on your topic and audience.
I think my site dedicated to digital camera reviews may monetize much better than a digital camera page in Myspace?
Quite possibly, if your audience consists of people who are interested in buying cameras. You may also be earning more than MySpace does on digital-camera pages. Maybe it's the fault of people like you and me that MySpace isn't monetizing well for Google--our sites may be performing better and sucking up the good ads. :-)
I think that like Java, Web 2.0 will prove to be a passing fad over time, except for those sites that manage to organize their content. I don't want to wade through people's yammering to get real and useful info.
People still want information, pure and simple. Research is and has always been the forte of the Internet and social networks are just a lot of noise signifying very little, even if the occasional UTUBE video might be entertaining.
My site does very, very well providing info pure and simple. Social networking may well add minimal useful traffic (though I will give it a try), but the cost of "stickiness" has not proven itself on sites not on the par of Yahoo (who Microsoft is gobbling up and likely to destroy with its smarter-than-thou tendencies which have made its search engine almost useless, in any case).
The whole social networking phenomenon is largely hype costing those who have really important and organized content money, as it is a form of dilution. Lounge music/Muzak/Social Networking/Spam/Advertorials/Infomercials/Commercial News/Clearchannel, etc... Same empty stuff, different form which offer absolutely nothing for those who want real information... And I hope that honest people would care about those who are seeking real information.
The statistics all reflect this.
[edited by: honestman at 12:11 am (utc) on Feb. 2, 2008]
I know it is hard to conceive that this is the same thing but it feels the same, push out the little get get the big score (ie myspace or equiv) and life will be grand.
Today in the computer distribution biz, guess what they are back to courting the little guy.
Seems history repeats itself.
* Google is stuck paying too much money to MySpace.
* They are desperately trying to hide a disastrous deal on their books so that the Wall St doesn't eat them alive (they will anyway).
* Anticipating the embarrassment, they start "fiddling" with the proverbial "revenue split" dial trying as hard as they can to conceal the manipulations. The goal - make the cost of traffic acquisition (revenue paid to partners) seem lower, at least in aggregate. In the process, some people say they're not affected and others scream bloody murder.
Then the quarterly report comes out and of course the Street doesn't like it. It seems that they got hammered after the quarterly report (the stock lost over 8% in the last 24 hours).
May be that's why we have threads like these
[webmasterworld.com...]
[webmasterworld.com...]
P.S. Disclaimer: not only do I not own any Google stock, I didn't even bother reading their quarterly report. This is based on what I culled from the press today. Sorry if it's a naive interpretation, I am not in the financial industry.
[edited by: loudspeaker at 1:43 am (utc) on Feb. 2, 2008]
I know it is hard to conceive that this is the same thing but it feels the same, push out the little get get the big score (ie myspace or equiv) and life will be grand.
It isn't the same thing at all. Google, like Amazon, has pursued--and is still pursuing--a dominant market share across the publisher spectrum. AdSense has publishers who range from people like my son (who's happy to earn hosting fees and pocket money) to giant media corporations. If Google wanted to "push the little guy out," it could easily do that, but it doesn't and it isn't. Such a strategy would be foolish, because (a) it would result in lost revenues, (b) it would shift power from Google to its major media partners, and (c) it would let competitors get their feet in the door.
(Mind you, Google may be perfectly happy to push some publishers out, meaning publishers who are more trouble than they're worth because of TOS violations or who deliver only junk traffic to advertisers.)
Never underestimate the importance of demographics.
