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awesome post
Re 3 - Don't confuse interest with intent. I guess the answer for social networks is to focus ads in the areas of their sites where users do express intent and to add more of such areas - e.g. search, classifieds, wishlists, Q&A; etc. Great post by the way.
Thanks Andrew.
This was very educational.
Your post highlights a problem in the current ad marketplace, the lack of value placed on user attention. From a user perspective the right message at the right time is extremely valuable. Intuitively, ads presenting these timely messages should also be valuable. Behavioral targeting promises to increase the number of these happy events. In order to do so, it must invert the CTR/engagement curve.
Great post Andrew. Lets discuss at lunch.
Also, isn't your CPM the eCPM (effective CPM)?
CPM = Impressions * Clickthrough Rate * Price Per Click * 1000
I have aproblem with this equation: CPM = Impressions * Clickthrough Rate * Price Per Click * 1000.
Does it mean: metric/1000? That is, metric divided by 1000.
cheers
MSW
Hi Andrew,
My team over here in Davis, CA are interested in attending. I was on a response from Noah regarding questions about the Facebook application contest. By the time he responded and I checked, the discount for buying three or more tickets. For a small team over here, any way you can cut us a break? We should be eligible for the discount since we're bringing more than three folks over...
Thanks,
Steve
Andrew,
Great post !!!
Just to support your point, an online poster company spent $60K on Facebook and did $0 in sales.
On MySpace, Google ads received 3 clicks over 180K impressions in 1 week for few set of keywords ~ 0.001%. They may do optimization that gets 80% increase in CTR, but that is still too small to make them commercially viable.
SE, comparison shopping engines, niche aggregators work much better from CPC/CPM basis where users have implicitly declared that they are interested in your offering by coming to your website.
Rajat
I've got a better idea. Let's create a social network where users can pay for a "no ad" version. This lets users compete with advertisers for their attention:
http://smoothspan.wordpress.com/2007/09/28/memo-to-doc-searles-why-not-pay-for-the-no-advertising-nirvana/
This was super insightful. I learned a lot.
Wow. Mandatory reading. This is great. Big props for the "interest vs intent" section. Can't tell you how many times I go over this one with entrepreneurs.
Great post.
I completely agree with you on points 2,3,4 and 5. I have some issues with point 1 as well as some ambiguity with regards to your CPM equation but for the most part, I agree with what you have to sayabout social network monetisation.
I do have some tiny disagreement though and they are all in this article (Yes, I am lazy)http://www.online-marketingsolutions.com/Social-Networking-pg4880.html. Anyway, good post, great ideas.
Oh, and before I forget nive graphs and statistics. Where did you get them?
Andrew, I run a social networking site targetted at Indians.
I just stumbled upon your blog by chance. I think you've got some great insight in your articles.
May I ask about the 6th thing that make your social network monetize like crap? How about the users actually buying ad space within the site? What class would you place that monetization?
Nice for Those Who Want to Monatize from their Social Networks
Great call on brand advertising. When people claim social network advertising is dead it drives me crazy that they can't see the huge potential for the brand advertising that will slowly be moving to the web.
Just found the blog through GigaOm. Great work. Check out my blog, there is definitely some overlap.
You don´t get many clicks with cpm advertising
I've just found you, and I think you're stuff is great.
A strongly logical approach which demystifies whatotherwiseappears obtuse.
Please keep it up!
I’m curious about other revenue models, especially as I am seeing lots of visitors to my blog and 1.0 sites. I’m hesitant about splashing ads all over my sites to the detriment of the content, look and feel…