IDC: Social Networking Traffic Up as Ads Fall Flat

More than half the country actively uses social networking sites, but so far advertising on these properties is nothing short of anemic, says a new report issued by market research firm IDC. In fact, IDC calls advertisers’ attempts to tap into these sites’ unique social nature as “stillborn.”

According to IDC’s report “U.S. Consumer Online Attitudes Survey Results Part III,” more than three-quarters of social networking site users log on at least once a week, and 57 percent do so daily. And these folks are logging an increasingly large amount of time on these properties, as more than 61 percent of users spend more than a half-hour on these sites per session, with 38 percent staying at least an hour.

Yet despite those huge usage numbers, social networking sites like MySpace and Facebook significantly underperform when compared to overall online advertising, per IDC. Just 57 percent of social net users report clicking on an ad over the past year versus 79 percent of all users, according to the study. A similar disparity is evident when it comes to online shopping.

“The thinking has been that the popularity of will attract a big audience and generate a lot of traffic, which in turn will produce enormous amounts of user-generated content and therefore advertising inventory, without any expenses for editorial staff or content distribution deals,” said Karsten Weide, program director, digital marketplace: media and advertising at IDC. That’s all proven true, said Weide, except the advertising part. “[These sites] have had a hard time selling this inventory.”

Until recently, MySpace and Facebook have promised that as long as users provide information on their age, location, personal interests and the like, advertisers will be able to offer highly targeted ads. But IDG’s study found that only 3 percent of users surveyed are OK with publishers using their contact information for advertising. “That idea is stillborn,” says the report.

So what can social nets do to improve ad effectiveness? Become more like portals, says IDC, and give users something to do other on these sites other than communicate. That’s something MySpace has gradually done over the past few years as it’s added more professionally produced content and video.