Advertising on social networks

Here's an interesting article that I came across today that has some important implications for advertising on social networking sites. The article reports on a conference for the Direct Marketing Association in the US this week.

Although there is a lot of interest in online advertising and social networking sites, in particular, it states that advertisers are still struggling to impact the bottom line. This was captured well earlier this year, when Google reported disappointing earnings and Chief Financial Officer, George Reyes, said "Social networking inventory is not monetizing as well as we had expected". Interestingly, in the same announcement, Google expressed excitement about the potential of advertising on the new generation of mobile devices.

It seems that people are more interested in interacting with each than they are in reading adverts. But the article goes onto provide more of a clue to the way forward - applications. I mean software that allows people ot interact in new ways - there are a number of examples around (anyone remember "fish slapping" on Instant Messenger).

Furthermore, FedEX's "Launch a Package" application became the number 1 visited page on Facebook last month - the first time this has ever happened for an application. The advertising agency commented that this was much more successful as a Facebook app than it ever would have been as a standalone application.

This reinforces something that I have believed for a long time - the enduring value in much of this new technology is in the interaction with other users. Anyone remember playing multi-user Duke Nukem in the 90's. The value in the games wasn't the fancy graphics or gameplay, but was the social interaction between the players as they worked together to capture the other team's flag.

Trivial, childish non-sense? Maybe, but in here somewhere is a clue to the future.