BusinessWeek has an interesting article on the problems Google and advertisers are having with click-thru rates on MySpace. The number of visitors is dropping, time spent is dropping, and click-thrus are dropping. Therefore Google isn't making the money on ads and advertisers aren't getting the eyeballs and purchases.
As I discussed in an earlier post, this is not surprising as this advertising is interruption-based and therefore not as relevant to users as, for example, keyword search. While the article quotes various people promising that social networks are in their infancy and ad revenues will grow, I really believe ad revenue growth is not sustainable and, long-term, the prospects are dim. Not just for social networks but any interruption-based advertising, be they online display ads or AdSense text ads.
The best bet for companies on social networks or online in general is to create authentic, meaningful, relevant experiences that offer an opportunity to engage in two-way dialogue. I’d rather put my budget toward content on my site, a Facebook page or Adwords than run skyscrapers on a site. I believe the success of social networking sites will continue to be based on collecting, organizing and providing access to highly-targeted audiences. Marketers need to find how to interact with these valuable audiences beyond the lowest common denominator, ads.
Yelling at people is over.