The ad dollars are not coming into social networking sites as planned. “MySpace Might Have Friends, but It Wants Ad Money” says Brian Stelter in the New York Times of June 16th.
Here is what my yellow marker highlighted from his article, to caution those thinking about depending on the advertising model to support their niche social networking websites:
“…the cash is not coming in as quickly as the company [MySpace] had hoped.”
“…there are still many questions left about the advertising value of social networks.”
“…all [Myspace, Facebook and Bebo] have ambitious plans for making money, but not enough proof that the plans are working.”
“…Google said that social networking inventory was not earning money as well as expected.” (Quote is from January. Google says things have improved.)
Sites are trying to “solve the social networking riddle,” to hold advertisers, by hyper-targeting. “Buckets” (interest groups) are the solution on MySpace and “social ads” related to a friend’s product preferences are the fix in Facebook. We’ll see.
Stelter says Facebook, MySpace and Bebo execs are counting on success and revenues in the long-term. Care to comment on whether you can wait that long? Are niche sites the exception? The answer?
{ 5 comments… read them below or add one }
I think that ads can make a site profitable provided the startup costs are minimal and upkeep,staff, etc. are not prohibitively expensive. That being said, the ad model is crowded and uncertain, and the niche site might think of branching out into branded merchandise.
Thanks, Richard. I agree branded merchandise is a good additional revenue stream.
I think the problem for niche social networks is getting enough exposure and regular users to make monetization easier. I have adsense and affiliate links that bring in revenue. My site doesn’t rank high on Google and PPC becomes expensive. So far my best sources of traffic have been Stumbleupon and Findasocialnetwork.com
Interesting information. Great post!
I hope “long-term” is not too long-term, but I do think that niche sites are better positioned than broad social networks because they offer more targeted demographics. And the content is typically more appealing to advertisers than the unpredictable and often inappropriate material on sites like MySpace.