Microsoft’s push for online advertising
moneyrelations :: Feb.15.2008
Microsoft sure is getting a lot of mention these days with its fingers in multiple pies: cellphones, social networking, search engines – all in an attempt to compete with Google.
With the attempted Yahoo takeover, this just underscores Microsoft’s desire to get a foothold in online advertising. In October, it had purchased a 1.6% stake in social networking company, Facebook. This deal amounted to $240 million and put a value on Facebook at $15 billion.
While acquiring Yahoo would help Microsoft shore up its search engine advertising, advertising in social networks is still an inexact science as explained by this BusinessWeek article: Generation MySpace Is Getting Fed Up.
Signs indicate that user growth is slowing and the time spent on sites such as Facebook and MySpace is in decline. Can it be that users are getting tired of the “in your face” monetization of these sites? Tell that to the advertising money that’s flowing in:
Last year global ad spending on these sites shot up 155%, to $1.2 billion, says researcher eMarketer. This year, eMarketer expects it to jump 75%, to $2.1 billion.
But what’s interesting is the click through rates of these sites:
Marketers say as few as 4 in 10,000 people who see their ads on social networking sites click on them, compared with 20 in 10,000 across the Web.
And let’s not forget the furor which accompanied Facebook’s Beacon feature which alerted friends of your buying habits. The backlash of the Facebook community was so strong that it lead to Facebook CEO, Mark Zuckerberg, into issuing an apology of violating users’ privacy.
But while traditional forms of advertising in social networking sites has been disappointing thus far, let’s never count out the ingenuity of some programmers.
Watch the videos below to see how money is made on Facebook applications – by engaging users through an experience.
There is money to be made in Facebook. So while Yahoo is spinning its wheels trying to escape the clutches of Microsoft, another option would be for Microsoft to revisit the untapped potential of social networking. You know someone, somewhere will get the formula right eventually. Will it be Microsoft?
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what an interesting post. I rent office space from “workspace” and most of the others working there are geeks, several of whom have made Facebook app’s. Every couple months they host a ‘democamp’ where they show off their apps and discuss monetization. It’s really fun, and very interesting.
Personally speaking, I basically never read the paper anymore or watch TV — it’s all online for me. I don’t click on the traditional ads, but as you put it, ‘engage me’ and you have a customer. It doesn’t always have to be hard, either. Just give me an opportunity to convince myself that the product is something of benefit to me (no room for bullshit) and I’ll fork over the cash.
I can’t wait to see what unfolds in the next couple years.
Nancy, isn’t it the brave new frontier!? Like I mentioned on my other post about the writer’s guild, it’s going to be exciting what they come up with online.
I’d be interested to know how those geeks monetize and if they are raking in the big bucks… it amazes me with the ingenuity (tricks?) of some people – did you watch the first Youtube video with the bit about the pink ribbon breast cancer campaign (2 min. mark)? I wouldn’t necessarily download a toolbar, but I have been known to click on ads for non profit blogs…