Why Social Ads Don’t Work

There’s been lots of talk recently about the ineffectiveness of advertisements in social media properties like MySpace and Facebook. During their recent quarterly earnings results, Google explained that they are not making as much money from ads on social network sites as they had predicted. Even though this was a blip on an otherwise stellar quarter, Google’s stock took a serious beating.

Why is this so? Why is it that Google monetizes so well on Search while having a hard time on social properties? Given an equal amount of views on Google vs. MySpace, shouldn’t they be able to get about the same number of click-throughs and thus ad revenue?

The difference, of course, is that when people go to Google, they’re actively looking for something. That something isn’t on Google. They are performing a search activity. Thus their task will be to click on a link that seems to promise what it is they’re looking for. It may be the organic results, or it may be an ad that seems close to what they want.

When people are on MySpace, the activity they’re doing isn’t search. It’s something akin to “hanging out” or “networking”. Their task is almost the opposite of search. They are already on the site they want to be on. They don’t need to click on links to take them where they want to go.

In other words, the context is entirely different. When you’re in search mode, you are playing by different rules.

Social ads don’t work as well because people are being social, not searching for something.

Advertisements live along a spectrum that goes from “irrelevant and distracting” to “relevant and interesting”. When ads are well-placed, they actually serve to help the user find what they’re looking for, or they’re interesting enough to grab the person’s attention away from whatever else they were doing. It would seem that this is what social ads have to do…they have to be interesting enough to get you away from socializing. Or, perhaps they are simply for brand-building purposes…you see the brand and it has a subconscious effect…you don’t change what you were doing but the brand is somehow strengthened in your mind from the ad impression.

Here’s a question: What if the activity you’re doing actually does determine your willingness to click on ads? This is what is being suggested by the early returns on ads in social networks. If this is so, then we can start by making a list of activities in which it would make sense that people are most accepting of ads.

• Searching
• Shopping
• Traveling

These activities all share something in common. People are on the move, and are actively looking for products and services to help them along their way.

There is a reason why Google wants super short time-per-visit and Facebook wants super long time-per-visit. It’s because the services support two completely different activities. Google wants a tremendous number of incredibly short visits. They want you to find good results immediately and leave the site. Facebook wants you to stay forever.

A fundamental problem with monetizing social sites is that the very reason why they have long time-on-site that makes them less effective places for advertising. They have provided a comfortable third place…people are already where they want to be!

Social network audiences are less like searchers and more like homebodies. The ads that will work best aren’t those where people have to leave the site, but those which allow you to stay and keep hanging out. But trivial things like games and contests can only be novel for so long…

In addition, since we are dealing with social capital as much as economic capital, the advertisements don’t make as much sense. Imagine if every time you talked with your friends they were trying to sell you something. They wouldn’t last long as your friend.

Facebook, in particular, is pushing the envelope here, as well they should, and hopefully learning a lot along the way. I hope, also, that we can learn from what they’re doing. My big takeaway so far is a renewed focus on the activity at hand. What activities people are engaging in says as much about their behavior as their innate constitution.

This might also suggest why Yahoo and Microsoft have a harder time monetizing their ads on their various properties. They’re trying to monetize ads on Mail, Groups, and other places where people are doing non-search activities. That’s why Google continues to rule the roost, because they have the most searchers. People, when they want to search for something, go to Google. Google = Search.

No matter how well Microsoft thinks it can monetize Yahoo’s non-search properties, it won’t be able to do as well as if it had more searchers coming to its site. However, Yahoo does have some interesting travel properties, so those should provide better results. I’m sure that these companies know down to the nano-percentages which types of properties work and which don’t. I would bet that it all depends on the context of use within those properties.

In terms of design, which is our focus, what does this mean? Well, it means that we need to investigate what contexts people are in as they use our web applications. Are they looking for something, or would they use our service as part of the activity of looking for something? Are they primed for ads? If not, then we’re better off providing value in some other way, like increasing productivity, etc.

This simple list also suggests why Google is investing a ton of energy into mobile, because when people are mobile we’re in unfamiliar places with the same old needs. We’re searching not only for our destination, but services that will help us along the way. So that’s why every time you turn around there’s some new quiet feature in Google Maps, because maps and mobile are the future of advertising.