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The Truth about Social Network Advertising -- The One VCs Don't Want to Hear

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Scott Rafer:
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Speaker(s): Scott Rafer
Date: Wednesday, October 22
Time: 16:35 - 17:25
Location: C1

Track: Strategy & Business Models
Tags Strategy & Business Models, Development
Social network advertising is easy, but it doesn’t pay very well. Social apps will make money from the online ad business, but they won’t change it. The huge majority of Facebook applications are communications tools, similar to Yahoo! Mail from the advertisers’ perspective. And like Yahoo! Mail, they aren’t worth that much. Communications tools are the wrong place to market goods and services online. They always have been, and there’s no reason to expect a radical change. There are a few ways to raise effective CPMs on social software, but all of them limit the service’s mass appeal. In these cases, advertisers pay more, as they can count on the site’s specialized audience to have focused interests and convert to sales more predictably. Targeting. In high volume, online advertising uses only three targeting methods—by URL, by demographic, and by search keyword. All three work fine for social apps if the developer’s expectations are realistic. Breadth vs. Depth. Tradeoffs work. Volume can be sacrificed for subject specialization, raising average prices but lowering traffic. Watercooler does very well on sports and TV themes, Flixster on movies, and iLike on music. These seem like big apps, but they’re much smaller than the horizontal networks—and always will be. Outside Facebook, from Imeem to Dogster, there are many examples of vertical networks that make more money per thousand pages than purely horizontal players. Privacy. Legal privacy structures vary from country to country and are changing all the time. Doing business cheaply and treating your users well means playing it safe. Scott Rafer, CEO of Lookery, delves into these topics, helps social application and software publishers set reasonable expectations for their businesses, and explains how they can use today’s advertising infrastructure to serve ad buyers well and efficiently—without compromising user privacy.

Presentation files: The Truth about Social Network Advertising -- The One VCs Don't Want to Hear Presentation.pdf

Comments

Why don't you change the titel and the content when you are going to talk about something totally different.

Sorry I wasted my time.

 

What happende? That presentation was the one promised, right? Or have I become stupid?

 

I mean it was NOT the one promised :)

 

Disappointed

 

Not worth the time... :(

 

Hm... good speaker - but what was this presentation intended to be?

 

I was very disappointed too. Although his presentation looked clean, without giving context (What's his background, what's his business, etc..) it was very hard to follow, it was a real in-crowd story. Further, the content indeed did not match the title and description, which I would have been very interested in. A real waste of my time unfortunately...

 

As I understood, the original topic turned out to be out-of-date over the past few weeks so Scott changed it the last minute - appreciate the effort. It wasn't updated in the conf. schedule (maybe a question for the program curator).

He made some good points there, regarding FB business model. I just don't get Scott - was he being sarcastic or just plain negative?

 

We all arrived expecting to hear about Social Network Advertising and received a talk on the death of Facebook? Very disappointed - if I had of known I would have attended another session.

 

Scott seemed a little bit too much irritated by how FB broke its promise to his company (so it seemed). And spoiling our time won't bring back your money...

 

What a pitty we had to hear his irritations..... Please leave presentations like this out next time....

 

Sorry it took me a while to jump on here, but I was traveling. Dejan has the issue correct from my point of view.

To be clear, I'm not irritated with Facebook. They are running their business very well, and those of us in their ecology need to respond by no longer developing for the Facebook Platform but instead developing for Facebook Comment. We are doing so, and I'm trying to encourage others to do so.

I feel bad that several of you were unhappy about the change in topic. I wish you had spoken up during the session. I would certainly have worked hard to accommodate you. The topic that I submitted in August is no longer of any practical help. I will specifically write up why and post it here or on my blog.

I had such a strong and positive reaction to my presentation at the Facebook Developers Garage on Monday that it seemed like a much more useful approach. A number of people immediately after the session and via email have expressed satisfaction with the talk. I'm not sure how to figure out what the majority opinion is.

 

Not only he changed topic, but used half the time. Considering there were other interesting sessions in the meantime, i both wasted time and missed opportunities....

 

I think the topic "social network advertising" is still of interest and that there is plenty to talk about, even when Facebook change their business model. What about the other social networks? Lesson learned: The Web 2.0 Expo clearly does not have the same audience as the Facebook Developers Garage.

 

@Tilman It's a fair criticism re: the audiences. That difference would not have been true in other places I have spoken, both in the US and Europe.

Specific to your overall point, I disagree. I don't think that there is currently anything interesting to discuss in "social network advertising." There are a couple of established businesses (both publishers and advertisers) which are doing ok but they are static. None, and I mean none, of the socially driven advertising projects have worked so far.

The only things that _might_ change that fact in the near term are Facebook Connect, or very charitably, Google Friend Connect.

 

Posted on the topic. With an offer back to you all. Hopefully, it's fair.

http://blog.lookery.com/2008/10/24/three-talks-this-week-facebook-web2-blog08/
... I did a poor job of transitioning the Berlin audience’s expectations. That lesson is learned, and it informed and improved my presentation today. However, I still feel bad about letting some people down on Wednesday. As payback, my offer is: I’m happy present on the original topic, or any other, in Berlin in December just before or after LeWeb. I just want to know that people are serious about it. If anyone is, just collect €1000 and give it to a deserving charity of your choice by 15-November. RSVP.

 

The topic sounded intriguing - and I don't think it's dead either - so shame not to hear/discuss that. However, I enjoyed the 'Thank you for killing Facebook' presentation. It would be good to learn more.

 

Thanks Frank. Learn more on what, specifically?

 

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