The Wall Street Journal says:
The report, set to be released Thursday, sharply reverses an earlier projection. EMarketer predicts that U.S. ad spending on social networks will drop 3% to $1.1 billion this year. In December, it projected growth of 10.2% for 2009 to $1.3 billion.
This should surprise no one (though certainly should sadden those who looked at social network advertising as a bright spot in an otherwise sagging market). The truth is social network advertising, in general, doesn’t work – that is why Facebook’s CPM is so atrociously low that the only companies taking advantage of social ads are borderline legitimate. To be certain, the economy is having a negative effect on that figure, but I believe that impact is nowhere as important as the user’s expected interactions and activities.
Search-based advertising succeeds because interactions on search are transactional and information that helps users complete their transaction, whether organic or paid-for, rates high. Social networks are about engagement, and ads do not engage.
Smart companies have put their resources behind creating engaging experiences through strong communities within Facebook’s page function and extended that engagement to applications. If they do advertise on Facebook, those ads are used to point interested parties toward their social network pages.
EMarketer’s report is a bit of depressing news for those on the transactional side of marketing, but, with companies flocking en masse to Facebook and other social networks, it only serves to reinforce the real power of engagement on these communities.
Thankfully, there are still plenty of opportunities for companies to harness the power of Facebook and other social networks. The solution is to share content honestly, openly, and constantly.
Curtis Hougland, founder Attention