I agree with Jitendra that the CPM model is falling apart. However, I question whether the consumer will buy into the idea of a universal profile. There's been problems with universal reputation management for a long time. People don't want to expose too much about themselves online across multiple sites. They won't want to expose their viewing habits or interests to a wider group. On sites like Facebook or Twitter, people expose specific types of information about themselves to specific groups of people. I think that the main advertising model in the future will be search-based. People will basically create a custom publication with custom advertisements with every search. Google is off to a grand start. Their current universal search results page is just the beginning.
Jitendra
· 1 year ago
Craig,
Thanks for you comment.
Search based advertising is great because it combines motivation and context in a sweet opportunity. But saying that Search would be the predominant model is like saying that 411 or yellow page listings were the only way to discover people/businesses in pre-internet days. Its misses the value of the social networks and mis-characterizes the way we really discover content.
In terms of the value of universal profiles, I tend to believe that users (especially the newer generation) are not only willing but also want to take credit for their participation across different mediums. If there is a good subject bases segmentation of conversations and users have the control over their profiles, universal profiles can be a very important component of the solution.
thanks, Jitendra
Marc Vermut
· 1 year ago
While I certainly agree that better targetted/behavioral advertising relationships with users is valuable, this article doesn't actually address the "monetization" aspect of the conversation.
Given that CPM on a clickthrough and impression basis has been falling off a cliff in terms of rates and effectiveness, how exactly will advertising look? What sort of packages and pricing will be offered to advertisers? How will the effectiveness of this contextual advertising be measured and benchmarked?
The underlying problem is that the inherent measurability of action and activity on the internet has led to undervaluing the advertising that runs across it because value created but not acted upon (brand exposure, etc) is not really measurable.
And, ultimately, it's going to be the supply-demand curve that determines pricing. There's an awful lot of supply out there, and it will only grow in this social activity world.
gareth
· 1 year ago
What you are describing is essentially advertising on the TV and print as it is now as has been since the beginning of time i.e. 'value created but not acted upon'. Not sure I buy into the idea thats its broken just because we 'should' have some way of encouraging responses but cant.
Dave Peck
· 1 year ago
I agree the cpm has problems. There is no doubt about that. Its just hard to measure what is happening on the internet. Something will need to change in the near future. I do not think people will by into the universal profile aspect of things to Big Brother.
pedagangIT
· 1 year ago
that great bro... by social network , now i get more then 500 view per day...
Annie Wong
· 1 year ago
Great info! As I'm working in the online advertising industry I do see that the CPMs are ever-changing by the introduction of new types social media everyday. I think nowadays it's hard to tell what works and what not and people in general are just experimenting with a whole bunch of stuff, not putting all their eggs in one basket. In addition with the bad times in the economy, everyone is holding back which is making the whole situation a lot harder to evaluate and bring on a clear view to the whole situation at this point in time. But I do see that the universal profiles are something that will be successful if the community or site owners use the user’s information properly, as many networks nowadays are trying to do something similar.
Danny Brown
· 1 year ago
I've always found Stumbleupon Ad campaigns much more profitable and rewarding as far as ROI goes than any Yahoo, Google or similar version. Social media (when used and understood properly) is most definitely the way forward.
Marta Strickland
· 1 year ago
I think that there are a few things wrong with this look at the advertising + social media. First, recent studies are showing that widgets are a whole are down. The Facebook platform is not the great innovation that social media has brought to the table... the innovation they have brought to the table is the conversation.
Another point was that I feel that "New models will emerge where social algorithms and keywords trigger contextual ads" is a bit limiting. I think instead it will be both a combination of social relationship analysis and semantic technology analyzing not just the "keywords" on the page, but the sentiment and meaning.
But other than that, I think you have hit the nail on the head as far as the value of the social graph in ad relevance. We need to start pulling together not only data from the ONE person across all their social profiles though. It's also about gathering information about HOW they socialize.
If we think about Mark Earls' HERD behavior book and the recent statistics on social media influencing shopping behavior, it is no longer about connecting a message to a single person in the hopes to influence them on the aspect of individuality. You need to make the brand a social object, a conversation. This ad needs to represent a brand that many people "just like you" have been buying, why shouldn't you join the tribe?
I've been exploring this conversation recently on the ThreeMinds blog. How will semantic technology change the future of marketing?
It will change both ad relevancy and social media measurement.
Marta Strickland Editor, ThreeMinds Organic Inc
Ian Bell
· 1 year ago
Good read. As you pointed out, Social Media a new platform that old media is going to have to adapt to. Regular display ads simply do not work here.
A social networking/media site should not be confused for a traditional print-converted-to-web style site. The content is different, and people interact with the two sites differently.
The CPM model might not work for a couple reasons on social media sites. One could be because users are jumping around so much (as you pointed out), but another reason could be for the simple reason that there are literally 6-20 advertisements per page (mashables is a good example). Once you dilute the page so much, the ads all start to blend in, no one clicks on them and the CTR goes down.
Digitaltrends.com for example runs 2-3 banners ads per page (typically two) above the fold, and our CTR is constantly above .35, and quite often above .50. This allows us to charge anywhere from $16-22+ CPM rates. Advertisers will pay more for exclusivity and for realestate that is considered undiluted and a premium.
Craig Oda
· 1 year ago
Jitendra, taking credit for content across a number of disparate sites might valuable to some people engaged in the online community. I think that there would have to be some additional value then just showing the same name across multiple sites. People can do this right now. I can be Craig Oda on Mashable and Craig Oda on Slashdot.
The real value of a universal profile is in reputation management. If identify were both verified and managed, then there is some additional value for the individual. I have long hoped for a universal reputation management system, not for advertising reasons, but in order to establish online business and social relationships with people. Right now, it is too easy to create fake personas and astroturf a conversation.
I've long been a believer in people using real names for online discussions. You just have to make sure that the person you're talking to online is also using their real name.
Jitendra
· 1 year ago
Yeah Chris...Reputation is another huge piece of the puzzle here and a food reputation management system can and does (as is the case with SezWho) facilitate conversations by setting up the right incentives for readers, writes and site owners.
thanks, Jitendra
Vatroslav Mihalj
· 1 year ago
This is emphasizing the problems masable has written few years ago: people do not come to social networks (or flickr or you nam eit) to click on ads. An ad is a natural companion to (Google) search, because you are looking for something, and this ad is helping. Judging from the data displayed, I'd say that "ads" will work only in a particular context within the SN: a game, a quiz or someting like that, promoting some product (like Coca-Cola did for their "Burn" dreing). Forget making money on ads. Real monetization for SN might come from micropayment (up to $1) for certain services and features. We have created a micropayment solution for the Croatian market, "Sitnoplat", based n premium telephone numbers - teenagers and students usually do not have credit cards, transaction costs are pretty high, and PayPal does not allow money to be received here. Setup costs as well as montly fee are $0, so it doest make sense to small sites. Another lesson I've learnt is that in order to make money, the social network has to do it "in the line of business", in a way users find natural and non-irritating. Ads on SN are irritating, people do not want to click on them. So, we realized that creating a service that provides users with an additional channel of communication will allow SN to earn money. Since SN connect people (via profiles, blogs, IM and forum), we have created a service that bridges web and voice communication - Hoholu.com. SN visitors can dial each other via anonymous short codes, talk, and decide if they will actually meet or exchange real phone numbers (to avoid stalkers or weirdos). If they do not want to, the other side can't dial them 20 times a day or find theri home address via phone number. Since it is a premium number, SN gets a commision for providing users.
Silv
· 1 year ago
Nice article but in some areas - very mis-informed.
CPM advertising does still work and does drive DR results.
Yes, CTRs are declining but so is the cost of media. Social networks can drive alot of volume when the inventory is pooled into a CPA buy on a network.
The ad network is buying on a CPM (albeit cheaply), they are using the inventory to drive conversions for the advertiser. This is working for two parties here - ad network and advertiser.
Alot of inventory from Social networks feeds alot of the CPA campaigns in the market - everyone knows this.
So although there is more to social media in today's landscape - the CPM model can still work.
All Comments
Thanks for you comment.
Search based advertising is great because it combines motivation and context in a sweet opportunity. But saying that Search would be the predominant model is like saying that 411 or yellow page listings were the only way to discover people/businesses in pre-internet days. Its misses the value of the social networks and mis-characterizes the way we really discover content.
In terms of the value of universal profiles, I tend to believe that users (especially the newer generation) are not only willing but also want to take credit for their participation across different mediums. If there is a good subject bases segmentation of conversations and users have the control over their profiles, universal profiles can be a very important component of the solution.
thanks, Jitendra
Given that CPM on a clickthrough and impression basis has been falling off a cliff in terms of rates and effectiveness, how exactly will advertising look? What sort of packages and pricing will be offered to advertisers? How will the effectiveness of this contextual advertising be measured and benchmarked?
The underlying problem is that the inherent measurability of action and activity on the internet has led to undervaluing the advertising that runs across it because value created but not acted upon (brand exposure, etc) is not really measurable.
And, ultimately, it's going to be the supply-demand curve that determines pricing. There's an awful lot of supply out there, and it will only grow in this social activity world.
by social network , now i get more then 500 view per day...
Another point was that I feel that "New models will emerge where social algorithms and keywords trigger contextual ads" is a bit limiting. I think instead it will be both a combination of social relationship analysis and semantic technology analyzing not just the "keywords" on the page, but the sentiment and meaning.
But other than that, I think you have hit the nail on the head as far as the value of the social graph in ad relevance. We need to start pulling together not only data from the ONE person across all their social profiles though. It's also about gathering information about HOW they socialize.
If we think about Mark Earls' HERD behavior book and the recent statistics on social media influencing shopping behavior, it is no longer about connecting a message to a single person in the hopes to influence them on the aspect of individuality. You need to make the brand a social object, a conversation. This ad needs to represent a brand that many people "just like you" have been buying, why shouldn't you join the tribe?
I've been exploring this conversation recently on the ThreeMinds blog. How will semantic technology change the future of marketing?
It will change both ad relevancy and social media measurement.
Marta Strickland
Editor, ThreeMinds
Organic Inc
A social networking/media site should not be confused for a traditional print-converted-to-web style site. The content is different, and people interact with the two sites differently.
The CPM model might not work for a couple reasons on social media sites. One could be because users are jumping around so much (as you pointed out), but another reason could be for the simple reason that there are literally 6-20 advertisements per page (mashables is a good example). Once you dilute the page so much, the ads all start to blend in, no one clicks on them and the CTR goes down.
Digitaltrends.com for example runs 2-3 banners ads per page (typically two) above the fold, and our CTR is constantly above .35, and quite often above .50. This allows us to charge anywhere from $16-22+ CPM rates. Advertisers will pay more for exclusivity and for realestate that is considered undiluted and a premium.
The real value of a universal profile is in reputation management. If identify were both verified and managed, then there is some additional value for the individual. I have long hoped for a universal reputation management system, not for advertising reasons, but in order to establish online business and social relationships with people. Right now, it is too easy to create fake personas and astroturf a conversation.
I've long been a believer in people using real names for online discussions. You just have to make sure that the person you're talking to online is also using their real name.
thanks, Jitendra
Judging from the data displayed, I'd say that "ads" will work only in a particular context within the SN: a game, a quiz or someting like that, promoting some product (like Coca-Cola did for their "Burn" dreing). Forget making money on ads.
Real monetization for SN might come from micropayment (up to $1) for certain services and features. We have created a micropayment solution for the Croatian market, "Sitnoplat", based n premium telephone numbers - teenagers and students usually do not have credit cards, transaction costs are pretty high, and PayPal does not allow money to be received here. Setup costs as well as montly fee are $0, so it doest make sense to small sites.
Another lesson I've learnt is that in order to make money, the social network has to do it "in the line of business", in a way users find natural and non-irritating. Ads on SN are irritating, people do not want to click on them.
So, we realized that creating a service that provides users with an additional channel of communication will allow SN to earn money. Since SN connect people (via profiles, blogs, IM and forum), we have created a service that bridges web and voice communication - Hoholu.com. SN visitors can dial each other via anonymous short codes, talk, and decide if they will actually meet or exchange real phone numbers (to avoid stalkers or weirdos). If they do not want to, the other side can't dial them 20 times a day or find theri home address via phone number. Since it is a premium number, SN gets a commision for providing users.
CPM advertising does still work and does drive DR results.
Yes, CTRs are declining but so is the cost of media. Social networks can drive alot of volume when the inventory is pooled into a CPA buy on a network.
The ad network is buying on a CPM (albeit cheaply), they are using the inventory to drive conversions for the advertiser. This is working for two parties here - ad network and advertiser.
Alot of inventory from Social networks feeds alot of the CPA campaigns in the market - everyone knows this.
So although there is more to social media in today's landscape - the CPM model can still work.