Marketing Week have an interesting article “Social networking sites search for right revenue model” regarding the internet’s largest social networking website struggling to monetise their popularity.
Web 2.0 sites such as Facebook, YouTube and Bebo are growing in popularity a recent study by Hitwise highlighted the fact that more people are now searching for social networking sites online than ecommerce sites.
The problem seems to be generating money from the sites, Google adopted a cost per click model for search marketing around six years ago and has created a market worth over £10bn and the official line from Google is that it is still early days for social networking and they are not worried.
There are a number of problems the social networking owners need to overcome:
Copyright – Viacom are currently pursuing a £500million case against Google for infringement of copyright laws, this has meant only 4% of YouTube can be monetised in fear of the Viacom litigation.
Content Quality – Most of social media content by definition is poor quality and uncontrollable which larger organisations may find does not fit with their brand proposition.
Pricing Model – Cost per click works very well in search marketing however, perhaps an alternative is required for social networking.
Advert Placement – Look at more effective positioning of adverts and increase the targeting capabilities. YouTube are already looking at pre and post video advertising.
Social networking is a new form of media which continues to grow at a fantastic pace however, it is unlike most other forms of new and traditional media. The content is owned by the websites community and careful consideration should be taken when advertising models are placed within the community. The key to successfully monetising social networking sites will be adding value for each group focused on targeting and delivery of useful information.