Advertising on sites like Facebook and Myspace are not a surefire moneymaker says an Epsilon survey. 55% of marketing officers surveyed had little to no inerest in the social networking ad game. Wired has the full story and wrote:
Another study, this one by the research firm IDC, suggested their lack of enthusiasm might be well-placed. More and more users are spending more and more time on social networking sites, but the study found they aren’t very responsive to ads there: Clickthrough rates were reported to be far lower than at other sites. On the web in general, nearly 80 percent of users clicked on at least one ad in the past year; on social networking sites, fewer than 60 percent did so.
It is no secret that one of the biggest draws sites like Facebook have is that their features are all provided free of charge. This is great for users, but the people behind the site are left with trying to find a way to monetize their service. Charge users a fee and risk losing countless members. Settling on advertising, Facebook still isn’t winning, with users up in arms about privacy invasion and now advertisers upset that their investments are not panning out.
What does this mean for the online video market? Well, free sites like YouTube are not immune:
Meanwhile, the folks at Google are still scratching their heads over YouTube, for which they paid $1.65 billion in 2006. The web video supersite serves 5 billion videos a month in the United States and nearly 4 billion in France, Germany and Great Britain, comScore reports. Yet its revenues are negligible—about $200 million this year, according to analysts’ estimates. That’s barely 1 percent of Google’s total income.
The volume is there, but the translation from visitors to income is missing. Companies, however, would be mistaken in thinking that online video iteself is not viable. The key of course is how video is being used. Streaming video sites that allow unrestricted uploading serve a very specific purpose, creating a community. Companies should adapt the community building aspects of social sites, but give it a business edge.
