Seth Goldstein on Social Advertising: It Ain't Easy

Yesterday Seth Goldstein, CEO of SocialMedia posted an interesting note on Facebook about the paradox of social advertising. As you’ll see in his note, it is summed up with “This is the paradox of social advertising: unlimited inventory of impressions that users have come to ignore, but very limited inventory of commercial experiences that users are opting in to engage with.”

Nobody will deny that the industry faces some substantial hurdles and given SocialMedia’s leadership position in social advertising, they are positioned to know about the hurdles first-hand. Here is what Seth had to say:

With a global reach of over 200 million users and growing each day, social networks have become the new mass entertainment. This scale has become increasingly attractive to brands eager to reach a critical mass of consumers. And yet managing to balance scale and engagement has proven difficult. While it is easy enough to purchase vast amounts of social display inventory at less than $.25 CPM, you tend to get what you pay for: advertising which is universally disregarded as irrelevant if its not ignored entirely.

The social media user has evolved to become immune to the very ads that are supposed to subsidize his online experience.

  • advertisers distract users ?
  • users ignore advertisers ?
  • advertisers distract better ?
  • users ignore better ?

This vicious cycle threatens the emergence of a viable business model for the social media industry. There are trillions of display ads in the form of web banners that are being delivered to and ignored by consumers around the world. Internet advertising suffers as a result of the irrelevance of these ad units. And yet IAB-standard ads are the only units that have the web-wide scale required for large consumer brand marketers. Aside from taking over the front page of Yahoo! or MySpace (the web equivalent of advertising on the super bowl), a brand such as Coca Cola can’t afford- from an opportunity cost perspective- to do a handful of one-off campaigns featuring original content in non-traditional formats. While commercial applications and some new social ad formats provide deeper engagement, they rarely offer the scale that drew advertisers to social media to begin with.

This is the paradox of social advertising: unlimited inventory of impressions that users have come to ignore, but very limited inventory of commercial experiences that users are opting in to engage with.