Friday, January 30, 2009

Monetizing Social Media

I recently came across 11 Business Plans for Twitter, a collection of business plans submitted by people on how to monetize Twitter.

It's pretty tough to monetize social media. People on Social Media generally don't like ads. You might object and say that there are ads on Google. Well, Google ain't Social Media. And people searching on Google are often given added value by the Pay Per Click (PPC) ads that appear. That's why Google is so successful. If I'm searching for "furnaces" and a PPC advertisement shows up that offers to sell me furnaces, I really don't mind. There's a full list of non-PPC search results right there anyway.

Now, if I get an advertisement on Facebook, we're not in the same situation. I wasn't searching for anything. It's just an ad in a place where I'm really not looking for ads. Facebook even lures advertisers with the line, "Reach your customers before they start searching. Pay per click." See, that's not a benefit. I want a customer who IS searching for my product.

Now, occasionally, I get a see a few ads on facebook that are useful. When I went to Queen's I constantly saw ads for Queen's Student Housing. I never clicked on them, but still, they were more useful than most ads. However, now most ads seem to be internet marketing offers to MAKE $5,000 WITH GOOGLE NOW or HOW I MADE $100,000 POSTING LINKS ON GOOGLE. I don't even know what possible business model there is that can be described as "posting links on Google."

Some businesses have made good use of this. See Burger King's great viral marketing campaign. Oh, wait. Facebook didn't like that idea.

I'm not saying Facebook has no business offering advertising. That's silly. Facebook advertising has worked for people. But I don't think it's very optimized right now, and the ads don't add value the way Google does.

Let's move on to Twitter advertising.

Twitter has over a million registered users, but it isn't yet really monetized. That's where the business plans linked at the top of this post come in. They are attempts to turn Twitter into a valid business model.

"Targeted ads" isn't really a very innovative business model, but there are a few in there. I like the one about contextual Tweet response advertising. For example, someone posts, "Going out tonight. What restaurant should I go to?" and the response comes, "@example user Bob's Restaurant is located on Madison Ave. Check it out at: www.exampleURL.com!"

The problem with this is that you'll probably get a lot of crud. And if it becomes popular, it'll just plain pollute your Twitter feed.

However, if they were VERY targeted, it would be useful. What if the example I outlined above was more, "I'm looking for a good pizza place to go to tonight? Recommendations?" and the answer/advertisement came, "@example user Bob's Pizza Restaurant is located on Madison Ave. Check it out at: www.exampleURL.com!"

That's a lot better. But there's only so much a search spider can do. But the more users start using Twitter, and the more advertisers there are, the more specific the ads can be. In short, they can take advantage of the Long Tail.

But before Twitter can do this, it needs even more users. In short, it needs to harness the market for microblogging, and the market for microblogging has to expand dramatically.

But it's possible. Who knows. Smarter people than me will be looking at ideas like these for a long time to come.