Social Media Snake Oil or Value Add – Social Media Spending Being Cut

I loved this post not only for the title but the blogger Jennifer Leggio goes into what is the core issue. To many people bullshitting their way around social media. I agree and have been banging on this drum for months now about social media here and here (corporate blogging is failing)

Here is my view – I guess that I’m anti PR on how social media will roll out.

Anyway she nails it on the market. As we slide deeper and deeper into the recession social media is being cut left and right. Social media until it scales will continue to be cut.

What’s the future for all social media strategists and practitioners – apply social media to the business processes on how to improve business results. The business process improvement aspect of social media – the impact to organizations in how they organize, talk to prospects, and customers. More importantly how companies compete.. words like ROI, finacial impact, leverage, revenue per employee, benchmarking, customer service, and business intelligence will trump words like engagement, conversations, storytelling, blogs, podcasting, viral branding.

My favorite line from Jennifer’s post – “A business strategy should not be altered to fit social media; the social media approach needs to be altered to fit the business strategy.”

Future Ad Model Reveals Itself – Self Service Display – In the darkest hour the future online advertising business model has shown itself

Self service advertising is the killer app. Brian Morrissey at Adweek just penned the future of online advertising. I’ll say it here and years I predict I will be referencing this blog post.

I’m calling it – Self Service Display Advertising is the new scalable model for online advertising – the heir apparent to search and keyword marketing. It will range from Podcasting insertions to social networks.

I’ve been researching this notion of a vertical engine for matching affinity data to user context for two years. The results: everything points to self service display. Content is the ad and the complexity that Brian refers to will be handled by the advertisers – sort of vertical engine of advertising – best of contextual and behaviorial targetting rolled into one model.

This is the future model that Facebook will adopt for monetization – everything else that they (Facebook) says is a smoke screen. Even worse if this isn’t on Facebook’s roadmap then they better move fast.

In the darkest hour the future online advertising business model has shown itself (again just like in 2000) . It will be a race to see who can build it first at scale.

Facebook COO Sherly Sandberg Desperately Looking For An Ad Model

Here is an AdAge story about Facebook and their need to find the revenue model.

UPDATE:
Rob Hof Editor-in-Chief at Businessweek comments and links to his view (he was there) below that Sheryl Sandberg main point yesterday is not what AdAge was reporting. It seems that Sheryl was saying that the only thing around today is demand gen. Thanks Rob. Rob also points to Mediapost which has a followup. Apparently the real twist in this is that the Advertisers want a solution. This sounds familiar – I feel like I’m in early 2000 again. Search went through this growing pain. Whoever delivers the solution will ‘mop’ up the revenues. THANKS ROB

UPDATE 2:
Over on the metarand blog there is a good post on this by Randal. I like his analysis but would disagree with Randal on the monetization focus and his reference in Jeremy Liew regarding to online advertising growth. Online advertising is a growth sector and will NOT slow down in the medium to long term. Maybe short term yes but long term massive dollars are going that way. If you look at the IAB stats from 1999-2001 there was gloom and doom. Then look at 2002-today. Massive growth. As Diller says no one has the answer yet.

Facebook’s latest attempt to finally get some real ad revenue has shown early signs of promise, Chief Operating Officer Sheryl Sandberg told an audience at the American Magazine Conference in San Francisco yesterday.

“The results were really positive,” Ms. Sandberg said. MTV not only got some attention for its awards show, it learned a little about what viewers wanted to see. It and other networks have subsequently said they want to try using the product earlier, to make the most of that feedback, she said.
“The monetization question on the web is a very big and open one,” she said. …Ms. Sandberg a former Google executive, noted. “What no one’s figured out how to do is demand generation,” she said.
“We need to find a new model and new metrics,” she added.
“Walled gardens don’t work,” she explained.
“People are using our product to protest our product,” she said, noting that a protest group is now the fifth largest on Facebook.

These quotes speak volumes about Facebook’s lack of awareness to how online advertising works. Pesonally I don’t think that they have to produce the monetization answer right now but instead just focus on the product leadership and key business development deals. I have no idea why Sandberg even entertains the monetization question at all.

Here is my favorite line from the Barry Diller interview on online advertising..
On Internet advertising: “You really want to get a headache? Try to understand Internet advertising. Social-networking advertising is being discounted because there is so much inventory [of available ad spots], and because methods have not yet been found to make it very effective. Will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.”

Sheryl you have nothing on the ad side yet just admit it and work with advertisers to get the right solution in place.

Hey Online Video is Growing Big – Not a Surprise Online Advertising Video is a Real Market

Having founded and ran a media platform (video) startup since 2005 I’m not surprised by the recent reports that online video advertising is growing big time. This shows to some VCs who have been not so bullish on video and advertising that the online video platform business is real and relevant (note my VCs wanted to turn my vision of building a media advertising platform into a production company and PR agency).

The problem is that most VCs and new players to the online video market are having a hard time figuring out the business model. Not sure why – it’s pretty obvious it’s advertising. The problem or better yet said “opportunity” is that the ad unit needed to leverage these new networks, new content types, and syndication/aggregation technology just isn’t here yet. It will be soon. I know a few great companies working on that vision. As soon as the ad unit and enabling infrastructure supports performanced based contextual videos the money will flow.

Liz Gannes over at NewTeeVee has a good post on the recent Lehman numbers that online video is growing (she has other numbers as well from other sources).

Here is the text from Liz’s post:

The investment bank Lehman Brothers, which basically discounted the potential of online video advertising in a recent report on digital entertainment, now puts a number on that market: $1.1 billion in U.S. video ads this year, rising to $2.4 billion by 2010.

Lehman had previously forecast that video-on-demand and iTunes revenues for studios would climb to $2.5 billion in 2015 from $319 million in 2007, so paid content and ad revenues are at least in the same ballpark. Of course, they’re nothing like traditional television numbers.

The report isn’t available online.

The Lehman forecast for online video is pretty middle of the road, even a bit pessimistic compared to those of other firms (though most predictions tend to extend a couple years further out). Parks Associates sees $6.6 billion in 2012 in U.S. online video ads by 2012; Forrester is looking for $7.1 billion by 2012; and eMarketer says $4.3 billion by 2011. And In-Stat said today that it expects $4.5 billion in worldwide revenue from all online video business models by 2012.

In other revenue projection news (which there seems to be a ton of today; see Chris’ report on premium video revenue), eMarketer points to an iSuppli report that projects $3.8 billion in worldwide mobile advertising revenue by 2011, up from $427 million in 2008.

All of these discussions remind me of the early days of the web when then online advertising spend was always compared with traditional advertising spend. I think that it’s safe to say that the ad dollars are shifting online fast. At what pace will determine the magnitude of change of these forecasted numbers.

I’ve been recently bullish on live video as well as downloadable media. The combination of Live and Downloadable is very compelling.

Social Advertising About to Boom – In Growth Not Bubble Pop.

While I talked about Social Media being misunderstood, the real dollars will be in online web video advertising.  Seems pretty straight forward – the web delivers and is measurable.  Connecting the dots you can see that advertising is changing which basically means the users are changing.  User behavior is alway leading advertiser behavior change.  Except video advertising will be done in a new way.

Report out today shows that Professionally-produced Web programming yields high CPMs, according to a new report from the Diffusion Group. The CPMs for long-form online content are $40 today and will reach nearly $46 in 2013. Meanwhile, CPMs for short clips are clocking in at about $30 and will increase to about $34 in five years.

User-generated videos generate CPMs of about $15 today and will reach $17 in 2013. The report also found that user-generated videos account for about half of the online videos consumers watch but only 4% of online video ad revenue. Meanwhile, professionally-produced videos command the other 96% of Web video dollars. Advertising in Web video should reach $590 million this year and hit $10 billion in 2013.

YouTube is slowing figuring this out.   The key to success is to evove with the market not force it.  I’m long on YouTube.  They are the ‘next new network’.

Video works on the web and soon advertisers will figure out how to do it.  Right now they are failing.  Prerolls are the only game in town so we’re stuck with it for now.

Why Current Social Media is Crashing – Traditional Advertising Doesn’t Listen – Doesn’t Work For Social Media

In a post by Paul Daigle called the Net Effect. He talks about how advertising doesn’t work in social media because traditional advertising doesn’t listen it only talks.

I think that this is a wake up call for all the Social Media executive out there and C-level executives trying to understand social media. Social media a half ‘Groundswell” (book written by Charlene Li and Josh Bernoff) and half “Book to be announced” (not yet published – Peter Drucker like book). The business process improvement aspect of social media – the impact to organizations in how they organize, talk to prospects, and customers. More importantly how companies compete.. words like ROI, finacial impact, leverage, revenue per employee, benchmarking, customer service, and business intelligence will trump words like engagement, conversations, storytelling, blogs, podcasting, viral branding.

Rather than me going on again and banging the drum about my view I’ll let Paul say it and he puts it in a business light.

Paul writes..

“Every week a new article seems to redefine what social media means for brand advertisers. This communicates, accurately I think, that the advertising and media industries are still working to understand how they can best help their clients capitalize on the new social media opportunity.” …

“Advertising doesn’t know how to listen. It only knows how to talk. So talking with advertising people about social communities is like telling an accounting department how you can increase sales. Sure, you can run traditional ad campaigns within social settings, but the real opportunities being advanced are not advertising… but communication opportunities. This misalignment between the goals of marketing decision makers and opportunities being offered is why many companies are moving so slowing, and acting so suspiciously of social media.”….

“Advertising isn’t going to go away, and it isn’t going to change. Nor should it. Advertising, as we know it, will remain an important way to build brand and drive sales. But developing social strategies and advertising strategies are completely different vocations. I don’t believe marketing or advertising departments are where tomorrow’s corporate social initiative will reside.”

“In order for companies to succeed socially, they will have to restructure to become social entities. It will happen, but it will take time. Helping companies understand where their social assets lie and how to synthesize these assets to create modern CRM departments maybe the answer. These new departments would strive to manage the ear, face and personality of the business, and help the company engage socially to win. In the real world, when we represent our companies at social events we do so knowing who we are, why we are there, who we are speaking with, and what we’d like to accomplish. We know that our success requires that we engage the room in conversation and that we listen.”

Brand Advertising Social Media Trend: YouTube Needs the Advertisers to Catchup – Don’t Do PreRolls

What’s an example of Social Media? Make something social and sharable. Gatorade has a success on their hands. It’s not to the level of Coke Mentos but it’s close.

There has been talk about the opportunity for brand marketers to connect with users of a new generation. Also, YouTube got slammed by a Wall Street Journal article on their lack of monetization. The problem is that brand marketing will be done differently. Here is the Gatorade commercial on YouTube. It’s not a commercial but a piece of content created for the community. As I have been saying on this blog for a year “Content is the Ad”. Wall Street Journal is missing the point and if YouTube does pre-roll then they will lose users fast.

YouTube should continue to serve users by providing a great user experience and let the advertisers innovate – not the other way around. Hey Chad Hurley: Don’t do prerolls! Let the advertisers innovate on the copy strategies that work for YouTube and don’t change YouTube for what is a behind the times advertising market. This Gatorade ad is a great example. Companies like Intel should do this rather than doing those boring NPR sounding videos. Brand marketing is about respecting the audience and delivering content that they will enjoy and find valuable – not a marketing piece.

What’s interesting is that this Gatorade video has millions of impressions over multiple users reposting it. The penetration is amazing.

The big deal is that this isn’t some boring product specific video talking about Gatorade. It’s a product placement ad that speaks directly to the Gatorade demographic. Was it successful – sure thing. It connected with their audience in a mode that they enjoy. It’s respectful and not a overproduced in your face Gatorade ad – like on ESPN.

Here’s the ad look for the product placement. Gatorade gets the benefit by not mentioning Gatorade. This trend will continue.