Friday, December 19, 2008

This Just In From Captain Obvious

There's an article this week in the NY Times treading some well-worn ground, namely that advertising on social networks isn't going so well:
Advertisers Face Hurdles on Social Networking Sites
There's not much new in the piece, so if you've already been reading on the topic you can probably skip this one; highly-placed in the piece, for instance, is this earth-shattering insight: "Members of social networks want to spend time with friends, not brands."

Still, maybe there's value in belaboring the point (or, at least, in documenting it in a publication as respected as the NYT). There is this one takeaway, though:
"Brand advertisers on Facebook can try one of two new approaches. They can be more intrusive, but the outcome will not be positive. Or they can create genuinely entertaining commercials, but spend ungodly sums to do so."
I can think of a third approach: don't advertise on social networks. And even a fourth: advertise, but do so knowing that you're advertising for the purpose of brand awareness rather than sales.

Actually, that last point is maybe a little interesting. Facebook and other social networks might be where ads go to die, but there's got to be an oppportunity cost if you don't advertise on those platforms. That is to say, there's a risk in choosing not to advertise on hot Internet media properties -- namely, your brand might come to be associated with old media, your parents' generation, etc. It's probably hard to quantify, but I'd love to see an analysis on an actual cost-benefit ratio of social network advertising, where the cost is obvious (the cost of producing the ad, placing the ad, maintaining the promotion plus any prizes you give out) but the benefit is maybe a little obscure (not just sales but also brand recognition and positive brand associations).

Wednesday, December 17, 2008

Ads and Social Networking Sites Go Together Like Orange Juice and Toothpaste

Which is to say, people hate that combo. I came across a useful summary to that effect this morning:
Social Networking Sites and Advertising
Here's a summary for those of you who are too busy to, you know, read:
  • Consumers have a very low tolerance for online ads
  • 29.9% of visitors surveyed will immediately leave a site they see as cluttered with ads
  • Ads on social networking sites result in substantially fewer click-throughs, and even those who do click are less likely to make a purchase
  • Don't even think about charging customers for an ad-free site; they like that idea even less.
So what's to be done if you're running a social networking site? Frankly, there only appear to be three options (only one of which is good):
  1. Hope that your cash in the bank is enough to tide you over until advertisers are willing to pay a lot more for click-throughs (or until some marketing genius develops a much more clickable banner ad)
  2. Get really smart, really quickly, about contextually targeting your ad inventory to your visitors
  3. Forget about the idea of monetizing social networking, and figure out how to make that a side-project to your core business of selling something else
Overall, #3 has the best chance of success. At the very least, it's less dependent on brilliant flashes of insight; those things are great when you have them, but "we'll figure it out later" is a poor excuse for a business model (are you listening, Twitter?).

The bottom line in this scenario is not everything can be monetized. There are times in every person's life when you have your wallet out, and other times when you're simply not interested in spending money. Successful online businesses are likely to be the ones whose services most closely align with those "wallet-out" moments. Social networking sites are trying to swim against that tide, and will continue to do so as long as they're exclusively focused on social networking.

Looking into my crystal ball, here's what I forecast for Web 3.0: Facebook, MySpace, Twitter, Friendfeed, etc.: they will all go away (at least in their current forms). In their place will be a bunch of online businesses that incorporate social networking elements by default. Web 2.0 taught us how powerful the Web could be as a social mechanism, but it was a stop along the way, not a destination.

Friday, December 12, 2008

Marketing Lessons from Google, a blog on search engine optimization, recently put out an article on "Marketing Lessons from Google." The full article is here:
A number of the "lessons," though, are applicable only to leaders of heartless multinationals -- few of whom, I imagine, are reading this blog. (Except for Steve Ballmer, of course. That guy will not leave me alone.*) There are also a fair number of "lessons" intended to prove how evil Google is (apparently the big G isn't too popular in the SEO world). For the rest of us, I've extracted three points that apply to smaller operations, interspersed with my own scintillating commentary. Shall we begin?
  • Offer a free version to make sure everyone who may want to has a chance to experience your product and/or service.
This is at the heart of a several-year argument I've had with a friend who founded a subscription-based content business. He has insistently argued that the lesson we all learned from the Web 1.0 bubble is that content isn't free, and only fools give it away for nothing. My response has always been two-fold: if you don't build an audience, a fair price will drive you out of business just as quickly as no price at all; and "the first taste is free" has been an excellent business model in the drug trade for decades now. Certainly it's true: if you never find a way to offset your operational costs, your business is doomed. But people today are accustomed to finding stuff for free online, and if the first thing they see when they come to your site is a hand out, asking for money, they'll leave. Give it to them for free long enough that they start to value what you offer, and then you have the chance to convert that value into coin.
  • Offer something that forces people to keep coming back to your website.
In Google's case, that's the search box enabled by default in Firefox (and now Chrome as well). The rest of us have to come up with other ways to spur repeat usage. One good idea is link journalism: leverage your expert status within the area of your site to provide visitors with a regularly-updated set of links to content on other sites. In short, you browse so that your vistors don't have to. Solve a problem for them, big or small, and they'll keep coming back as long as that problem persists.
  • Keep making small changes and talking about how important they are so you stay in the media.
I've noticed something about TechCrunch lately: many businesses covet that first post -- virtually a coming-out party for startups these days -- and the great bounce in traffic that comes with it. But TechCrunch also likes to report on significant updates to sites and services that they've already reported on. I could see where a smart business might think of those updates as part of a marketing plan (not just on Techcrunch, but also Webware and other like-minded blogs) that will keep the buzz flowing.

Does buzz flow?

* This is a joke. To my knowledge, I am not being stalked by Steve Ballmer. And Microsoft is in no ways a heartless multinational; bloodsucking vampires must have hearts, otherwise where would we hammer the wooden stakes?**

** Also a joke. Microsoft is not staffed with bloodsucking vampires. At least, I've never personally witnessed any bloodsucking, though I wouldn't put it past some of those marketing guys.

Wednesday, December 10, 2008

Take the Bird in the Hand

Useful insight from Seth Godin on the dreaded bounce rate:
Silly Traffic
If you do anything related to website analytics or traffic reports, you know about the bounce rate: that's the percentage of visitors who take one look at your website, stick out their tongues, and leave (perhaps never to come back). Industry standard bounce rate is somewhere around 70%-75%, so even if you're doing your job quite well, better than two-thirds of your visitors are leaving your site immediately. To some people, that looks like a challenge: how can we redesign our home page (they say) to capture more of those visitors and turn their disinterest into engagement?

Seth Godin suggests that maybe you shouldn't bother, since most of that traffic is random noise:

"'I'm just looking,' is no fun for most retailers. Yet they continue to pay high rent for high-traffic locations, and invest time and money in window displays. Very few retailers lament all the traffic that walks by the front door without ever walking in. A long time ago, they realized that the shoppers with focused intent are far more valuable. Smart retailers work hard to get focused people to walk in the door and to keep the riff raff walking on down the sidewalk.

Your website can do the same thing. In fact, you might want to make it more likely that bouncers bounce, not less, but only if those changes increase the results you get from the visitors you truly care about."

It's a good point. Website traffic figures conceal far more than they reveal; you know that X number of visitors came by and stayed for Y amount of time, but you don't know (much) about why they came and you know next to nothing about why they left (assuming you're not running an exit survey, which almost no one is). When you know next to nothing about your visitors, it's tempting to think of them all as potential customers who were turned off because of something you did or didn't do. In this light, your bounce rate is a big, ugly missed opportunity.

But when you think about it, Godin is exactly right: you're always going to get some visitors who came to your site by accident, and they left because you're not offering what they are looking for. Those people will never be customers. They'll never become members of your community. Nothing you do will ever change that. Far better, then, to spend your limited time finding ways to satisfy the people who do want to come to your site, and signal that desire by coming, staying for a while, and then coming back a second time.

A bird in the hand is worth two in the bush, and your bounce rate? That's the bush.