Mele’s Musings

MySpace Might Have Friends, but It Wants Ad Money

Why are the social networks, with their huge audiences, having trouble monetizing?

i.ehow.com

Article excerpt:  When the News Corporation added MySpace to its portfolio nearly three years ago, it expected that if its base of 16 million users kept growing — and each user kept adding friends, sharing photos and swapping flirty messages — the advertising dollars would roll in.  In the fiscal year that ends in two weeks, the News Corporation unit that encompasses MySpace will miss its $1 billion revenue target. When the News Corporation announced the projected shortfall in April, several analysts downgraded the company, sending shares down 5 percent. With an eye toward monetization, MySpace is being redesigned beginning Wednesday with a new home page, which will be less cluttered and more hospitable to advertising. (The home page will also feature a “splash page” for an ad about the new Batman movie, “The Dark Knight.”) The redesign, to be done by early fall, will include a new navigation bar, search tool and video player.  The rest: nytimes.com

Musing:  What a conundrum – huge audiences, major stickiness, but little luck in garnering the streams of ad money that were supposed to come their way.  Why?  Because advertising in this space is not like advertising in a magazine or on a TV show.  It’s the same problem that mobile is having.  Just because you have an audience, even one that is targetable, doesn’t mean that running a bunch of ads is the right thing to do.  We are still figuring out the best ways to advertise on these sites, but it is clear that the model that is currently being applied en masse is not the right one.  It’s about invitation, it’s about value.  Not about just being there.