Convince and Convert Blog: Where Social Media and Email Collide

From Dot Bomb to Dot Boom

Let’s face it. The economy is taking on the distinctive, sickly pallor of a post Mardi Gras Keith Richards.

Generally, recessions hit the advertising business with the ferocity of a rabid wolverine, and the last one trimmed overall ad spending by 9% according to market researchers Veronis Suhler Stevenson. The wolverine in question mauled and devoured online advertising, which plummeted 27% over two years during the last recession.

This time it will be different. Not only will online marketing survive, it may actually thrive during the lean times, continuing its inexorable theft of ad spend from traditional media tactics. Online is far more mature and proven now, and there are five specific reasons why it will be the go-to tactic among increasingly budget-conscious marketers.

Money Talks

First, online is typically less expensive than many other marketing tactics, and a sizable and impactful online effort can be undertaken more quickly and cost-effectively than can an offline campaign.

Wiggle Room

Like an Elizabeth Taylor marriage, online doesn’t require much long-term commitment. PPC ads can go up and down on a day-to-day basis. Email can be sent (or not sent) based on financial considerations. Even banner ads can usually be negotiated with an advantageous cancellation clause of 72 hours or so. Try that with your local TV station or newspaper. Other than keeping your Web site up to date, the only core online tactics that require substantial ongoing effort are organic search optimization, and Web site analytics and testing.

More Juice for the Squeeze

With diminished outbound marketing budgets, companies will shift focus toward increasing revenue from current customers, either through more frequent purchases, or larger ones. Email marketing is the perfect vehicle for communicating with customers and incentivizing additional purchases. Customer lifecycle marketing (persuasively combining email with direct mail, voice mail and text messaging) will gain favor as companies strive to close a higher percentage of a reduced flow of leads.

Waste Not

There is meaningful financial waste associated with advertising to people who have no interest in your product or service. The superior targeting ability of online marketing will enable companies to focus their reduced marketing dollars solely on likely prospects. This will accelerate the trend toward use of behavioral targeting and retargeting in online ad placement.

Behavioral targeting mines a person’s Web page visits and search terms to serve relevant ads. If a prospect reads several pages on Yahoo! about Nissan Altimas and does a search on Yahoo! using a related term, an ad for Valley Nissan dealers can be served up just in time.

Retargeting (a nascent industry led by local company Fetchback) takes the concept one step further, enabling companies to advertise only to people who have visited their Web site previously without making a purchase. With average conversion rates hovering around 2%, this is an ideal way to reach the other 98% that have taken the time to visit your site but haven’t yet converted.

Additionally, search marketing will continue to expand since it is the only tactic (other than Yellow Pages) that puts the marketer in the middle of the consumer’s purchase psychology funnel. I expect heavier bidding on specific, “long tail” search terms that often correlate with greater intent to purchase.

Numbers Don’t Lie

Online marketing of all types offers superior measurability and trackability in comparison to traditional tactics. This is of course due to the Orwellian nature of the Web, where every mouse click is tracked, usually anonymously. While the availability of this data may give you the same creepy feeling you get when gazing upon Joan Rivers, it makes for effective marketing.

When implemented correctly, banner ads, organic search, paid search, blogs and social media, email, lifecycle marketing and all other online marketing tactics provide a user by user scoreboard that can be utilized to ascertain precise return on investment metrics for each campaign.

In this way, online marketing provides companies the ability to test a wide array of tactics, evaluate which generates the best response, and then adjust the marketing program accordingly.

The old saying is “I know half my marketing dollars are wasted. I just don’t know which half.” This problem is even more acute and painful in a down economy when advertising dollars are curtailed. The inherent cost, targeting, and tracking advantages of online marketing make it more likely to succeed (or at least able to minimize losses from a failed campaign). And when a wolverine is at your door, that’s the type of assurance you want from your marketing strategy.

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Web services giant Sapient recently fielded a national online digital marketing survey of more than 200 chief marketing officers (CMOs) and senior marketers responsible for managing digital budgets (among other things).

Survey respondents were asked about the top qualities they sought in their advertising and marketing agencies in the coming year.

Sapient’s Top 10 Wish List for Agencies of the Future…and My Comments

1. Greater knowledge of the digital space. With more than a third of marketers surveyed revealing that they are not confident that their current agency is well-positioned to take their brand through the unchartered waters of online digital marketing and interactive advertising, it’s clear that agencies need to have a greater knowledge of the digital space in order to thrive. In fact, nearly half (45 percent) of the respondents have switched agencies (or plan to switch in the next 12 months) for one with greater digital knowledge or have hired an additional digital specialist to handle their interactive campaigns.

This is another in a series of warnings from me that traditional agencies NEED to get uber-competent at digital marketing now. Clients are switching agencies based on digital marketing knowledge. See my post “Wake Up Agencies - Digital Shops = Trojan Horse” for more.

2. More use of “pull interactions.” When trying to engage consumers with their brand, 90 percent of respondents agree that it is becoming increasingly important that their agency uses ‘pull interactions’ such as social media and online communities rather than traditional ‘push’ campaigns.

No question this is true, and it will be even more acute in 2010 when Millennials (who prefer organic sources of information and recommendations) become a larger demographic cohort than Boomers or Gen X. 

3. Leverage virtual communities. An overwhelming 94 percent of respondents expressed interest in leveraging virtual communities (public and private) to understand more about their target audience.

This one is a little fuzzy for me. It sounds like market research using social networks. That can work, but if this list is in order, no way is this #3 for the future of agencies. On a related note, check out Rapleaf. They take a database (your client’s email list, for example) and cross-reference it against all the social networks so you can figure out if you should emphasize MySpace, Facebook, LinkedIn, or something else. Cool, and potentially massively useful. 

4. Agency executives using the technology they are recommending. Ninety-two percent of respondents said it was ‘somewhat’ or ‘very’ important that agency employees use the technologies that they are recommending. For example, it is important that agency executives regularly use Facebook, Flickr, wikis, blogs, etc. in their personal social media mix.

The fact that this even made the list is an indictment of the advertising profession. If you’re going to pitch a social media campaign to a major client, you might want to have a Twitter account (among other things). It’s like SEO firms that aren’t ranked anywhere on Google for their own services. The Emperor has no clothes.

5. Chief Digital Officers make agencies more appealing. Forty-three percent of marketers surveyed said that agencies with chief digital officers are more appealing than those without.

I agree that having somebody in charge of digital strategy in an agency can be beneficial (disclosure: I had this role at Off Madison Ave for nearly 3 years). However, that approach only works if the agency has many digital experts, and just needs someone to steer the ship. Too many small and mid-sized agencies far prey to the “guru syndrom” and hire one Internet guy to handle all digital marketing for their agency. Big mistake. If that guy leaves (and he will), you’re screwed. And, centralizing digital expertise gives the rest of your staff an excuse to not get better at digital marketing. Don’t do this. See my series of training workshops for agencies on how to not get your whole agency competent at digital marketing. 

6. Web 2.0 and social media savvy. Sixty three percent of marketers surveyed said that an agency’s Web 2.0 and social media capabilities are ‘important/very important’ when it comes to agency selection.

Yes. Related to a couple of the points above. However, it’s critical for agencies to have a social media strategy for their clients, not just a random collection of social media tactics. Building a wikipedia page is not a strategy.

7. Agencies that understand consumer behavior. Seventy-six percent of respondents deemed this as an ‘important/very important’ aspect of their agency’s online digital marketing and interactive advertising area of expertise.

Isn’t this what agencies are supposed to be doing now (never mind the future)? This will be a huge determinant on agency winners and losers in the future, because Google and others will take away agencies’ revenue streams that are procedural rather than strategy and creative-driven. See my post about Google looking to crush agencies for scary details. 

8. Demonstrate strategic thinking. Seventy-seven percent of marketers surveyed ranked strategy/brain trust capabilities at the top of their agency wish list.

Yes. See #7. Same thing in my book. 

9. Branding and creative capabilities. Sixty-seven percent of respondents ranked branding at the top of their agency wish list while seventy-six percent ranked creative capabilities as ‘important/very important.’

This one is definitely more future looking than some of the others. At present, especially for the mid market, digital marketing can sometimes be very successful without great branding. But that will change, and agencies MUST get their creative teams comfortable with digital. How do creative directors get away with “I don’t really understand online, so I have our junior art director do that stuff”? Would that work for radio? For outdoor? For magazine? Well guess what, Internet advertising is larger than all three of these media types (U.S. annual spend).

10. Ability to measure success. It’s no surprise that marketers want an agency that can report on where campaigns succeeded, fell short and where they should be fine-tuned. Sixty-five percent ranked analytics at the top of their agency wish list.

This is the secret weapon of digital marketing and what makes it superior to traditional in some ways. Agencies that aren’t using the inherent measurability of interactive marketing to their advantage are missing the boat. The reason digital marketing will thrive in the recession is its targeting and tracking components. 

What do you think? Are there other attributes the agency of the future must have? Jetsons-style flying car? Extreme Wii proficiency? Please leave a comment with your ideas.

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A One Legged Stool

There’s no question the Internet has been good to me. The last two jobs I had before getting involved in Internet marketing in 1994 were spokesman for the Arizona Department of Juvenile Corrections (prison tours), and marketing director for Waste Management (landfill tours). I prefer this gig as it is smell and horror-free.

I’ve been doing the Internet thing long enough, however, that my hype detector is finely honed (when I hear the words “designer dog” my nose runs). And lately, the more I read about this new online boom, the more Kleenex I grab.

No question, online marketing has many enticing characteristics like trackability, ease of implementation, and targeting (all of which I’ve chronicled in these pages). But I’ve witnessed more than a handful of conversations recently where clients and even agencies have pondered “maybe we should only do online?”

The Internet Isn’t Magic

That chalk mark on the ground? That’s the line between enthusiasm and crazy, and you just crossed it. People are being lured into an illusory sense that just because it’s digital, it defies the laws of marketing. That just because a trial campaign was boffo, a 400% increase in budget should yield a commensurate increase in results.

There are a few, highly targeted businesses – especially those that operate only online – that can succeed with a purely digital marketing approach. But for most real world companies, online-only (or even online dominant) marketing will not succeed.

The Difference Between Demand Creation, and Demand Fulfillment

Why? Because at its very core, digital marketing fulfills demand much better than it creates it. The digital tactics that work best (email to current customers, search marketing, highly targeted banners, social media) work because they reach an audience that is either already aware of your company, or susceptible to your charms based on their needs and lifestyle.

At any moment in time, there are a finite number of prospective customers that are aware of your service, interested in your service, and online. Thus, there is a ceiling on the effectiveness and size of any winning digital campaign. Approximately 100 people will search today for “RV rentals.” And not much can be done online to increase that number. You can do everything possible to maximize your exposure to those 100 searchers, but that’s the size of the potential customer pool via search at present.

To grow the pool of people who are clearly interested in RV rentals (as evidenced by their search query), you have to use the much maligned and uncool world of traditional marketing. By using print, broadcast, direct mail, event sponsorship, and public relations you can grow the awareness and demand for your product or service, and PRESTO that demand will show up online.

Learn From Cupcakes

For example, an examination of historical search volume for “cupcakes” shows a consistent, slightly increasing number of daily searches from 2004 through 2006. Beginning in 2007, when the media began running frequent stories about the new gourmet cupcake trend (no doubt prodded by professional PR practitioners), search volume for “cupcakes” spiked, with a 300% increase.

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1+1=3

At Off Madison Ave, (where I handle strategic planning) we often engage in a tactic called “Media Isolation” to measure this effect and produce efficient media plans. Try it for yourself.

Take a two to four week period and run only PPC and SEO. No other outbound efforts. Then, keep the search campaign up, and add offline tactics. Reexamine results of the search program. Then, take down the traditional campaign, and continue running the search campaign.

What you’ll find in essentially every case is that the initial online campaign produces results that increase by 50-100% when traditional media is added. But most interestingly, the search campaign continues to perform better than it did initially, even when traditional media ceases. Why? Because the traditional program increased demand, and then the online tactics fulfill that demand.

This concept that offline marketing improves online marketing is powerful, but it can sometimes take a while to prove, when you consider that search latency (the time lag between when a consumer first searches for you and when they buy) can be as long as 90 days. Look at your reports in three and six month increments, not just monthly intervals, to help identify these relationships and trends.

From a marketing strategy standpoint, maximizing the effectiveness of your online efforts is a great first step, as the available data and feedback immediacy produce ROI faster than other tactics. But if you want to seriously grow your customer base, you have to put down the black turtleneck and Red Bull and employ a true mix of marketing approaches that work together to increase the number of people that care enough about your product to bother looking for it.

What do you think? Am I being too hard on Internet marketing? Leave a comment

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It was bound to happen, and now it has. A big-time digital agency (R/GA) has opened up a full-fledged brand development arm.

And whom do you think they will be competing against with this new branding department? Other digital agencies? Nope. They are aiming for traditional agencies and the branding, media placement, and creative budgets they enjoy. The division is headed up by an ex Wieden & Kennedy executive.

To quote from AdAge:

Branding is a logical progression for R/GA, an agency that focuses on digital design for clients — for example, its Nike Plus work. It’s also another example of R/GA’s aggressive expansion into other marketing disciplines; the shop was originally known for its web work but has added TV production and media planning in the past few years. 

Digital marketing is going to grow. That’s unquestioned (see blog post about growth rate). But the smart digital agencies aren’t satisfied with consuming that piece of the marketing pie. They figure that if they can master the digital component - widely recognized as the most complicated aspect of marketing - surely they can handle traditional branding and advertising. I see a horse. His name is Trojan.

As social media (see blog post on social media’s role) becomes a more important part of public relations, this argument becomes more valid. It’s further supported by the increasing ties between online and offline media, with traditional media tactics driving traffic to landing pages (see blog post about landing page testing) and campaign microsites.

This is not just a national, big agency trend. In every market in the country, digital agencies are adding PR 2.0 divisions to specialize in social media, and are trying to deliver traditional services. With the digital marketing DNA being firmly rooted in measurement and analytics, digital shops are using tracking reports and low cost new media tactics to convince advertisers that they know a better way.

Forty Agency in Chandler, Arizona is a good example. Formerly a Web design and application development firm, they have branched out into branding and social media PR. They’re not doing broadcast production or traditional media buying, but that’s a logical next step. 
 

Agencies, the time is now

This is the official call to arms. Traditional agencies have to get serious about digital marketing now (see blog post about how to embrace digital). Not only are you not tapping into your clients’ digital budget, but you run the risk of those clients beginning to think that their beloved advertising and PR agencies just haven’t kept up with the times.

Agencies that want to do the “easy” digital stuff like building Web sites, but don’t want to get their hands dirty with SEO, analytics, or other numbers and process intensive services just perpetuate clients’ thinking that digital shops understand the future better than traditional firms.

It’s not too late. Is digital marketing complicated? Absolutely. Is it out of reach for advertising and PR firms that want to commit to it? Absolutely not. But you have to take the plunge pretty soon, or the curve to catch up will be exceedingly steep.

Comments? Any digital agencies want to admit to their master plan? Any traditional shops feeling threatened and ready to do something about it?

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A new report from Bernstein Research says online advertising in the U.S. will grow by 20% in 2008, despite weakness in travel, auto, and financials.

Top categories for online advertising spend include:

• Finance, insurance, real estate - 29.6% of overall spend
• Media and entertainment - 25.2%
• Retail - 13.8%
• Other - 12.9%
• Auto - 8.6%

The Question for Agencies…

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A groundbreaking study by the Interactive Advertising Bureau (IAB) and Bain & Company shows that ad networks’ share of display ad sales soared from 5% to 30% from 2006-2007. (Read the excellent full report here)

It seems the rise in Internet advertising (~20% per year, according to eMarketer) is creating a flurry of new sites, and a scenario where established sites keep adding more content, and thus more ad inventory.

For agencies, the opportunity is tremendous because ad networks charge $2-$3 per one thousand ad impressions, while buying ads direct from a site can run $20 or more. Certainly, sites often hold back premier ad placements for direct sales, giving ad networks less attractive, run of site inventory. However, if one ad buy is at a $2 CPM, and the other ad buy is at a $20 CPM, it is extremely unlikely that the premium inventory will perform 10 TIMES better than the non-premium placements.

There are literally dozens of ad networks now, each willing to place ads for your clients on Web sites, including highly targeted behavioral and retargeting opportunities. (Decent list of reputable ad networks here) Given that you can buy solid inventory at a fraction of the cost, why wouldn’t you use ad networks almost exclusively, especially for test campaigns when you’re trying to optimize creative and call to action? (my blog post on how to optimize online ads)

From 2006 to 2007, sell out rate (the percentage of overall ad inventory sold) by premium publishers covered in the IAB study actually went UP from 55% to 72%, but that was due almost entirely to the huge increase in ad network placements. Thus, sites are turning more and more of their ad inventory over to networks that are paying them a pittance for it, figuring “some dollars are better than no dollars.” This of course is true in the short-term, but eventually this house of cards will fall.

Sites cannot continue to sell an increasing share of their ads at a couple bucks per thousand, unless their content creation overhead is extremely low. And even ad networks that are booming at present with a 600% annual growth rate, cannot sustain it. As more ad networks come online, downward price pressure will only increase, making it difficult for ad networks to make much margin on their arbitrage. Failures and consolidation will occur quickly.

Advice for Agencies

Consequently, my advice for agencies is to use ad networks as much as possible for your online media purchases, especially in the testing phase. However, use first-tier networks at all times, and use multiple networks.

Realize that your preferred network may not be around very long, and when the consolidation begins, it will happen FAST, so make sure your in-house team (either media or account executives) legitimately know enough to be dangerous about Internet advertising placement to keep you in the game if the precarious ad network situation blows up in your face.

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Google announced on Friday via one of their blogs that they have added 3 new features to Ad Planner. 

(note: for more about Ad Planner, and Google’s long-term plan to totally change the ad agency business, read this post from Convince & Convert’s greatest hits)

Impressive that Google has made pretty significant upgrades to Ad Planner only a month after launch, and the new features make it an even more useful tool for ad agency Internet advertising buyers.

• They’ve added more detail on sites, including a lot of stickiness metrics like time spent, total views, and average visits per visitor. This really helps understanding the potential engagement level of sie visitors.
• If you already have sites that you know you need to include in your plan (either they’re must buys, or you’re already running them, etc.) you can just type them in, rather than having to search for them in the Ad Planner interface. 
• Visual indicator that the site is in the plan. This is a helpful step, as it displays an icon next to sites you’ve already included so that you don’t add the same site multiple times. Nice usability touch.

The variety and quality of banner ads online is truly staggering. From the infamous X10 Camera pop-up, to Punch the Monkey, to today’s highly engaging rich media video ads, turning out great banner creative is a universal challenge.

For nearly every facet of the creative process, there are libraries that can be used for inspiration. Font collection. Stock photography. Creative annuals. But until now, thinking through a banner ad design consisted of going to a few Web sites you like and hoping to find an ad that actually looked decent.

Not anymore.

Finally, a Banner Ad Search Engine

Yureekah is a free Web site that enables you to search banners ads by country (currently, U.S. U.K., India, and somewhat unexpectedly the United Arab Emirates), brand, or keyword. The site then returns a collection of banner ads matching your query, including where those ads are running.

For example, a global brand search for “Ford” returns 31 results, including banners for at least 20 different campaigns.

You can click a check box next to banners you particularly like and save them for future inspiration.

3 Ways To Use Yureekah

Yureekah is theoretically highly useful to ad agencies, interactive shops, and client-side marketers. Three primary uses for Yureekah include:

- Creative inspiration. If you’re challenged with making a great banner for a new sweater, type “apparel” or “sweater” into Yureekah and get some instant ideas

- Competitor campaign monitoring. If you’re JCrew (if so, please send discount code) and you want to know what Eddie Bauer is doing with their online creative, type “eddie bauer” into Yureekah to find out.

- Competitor media monitoring. Find our where Eddie Bauer is placing their online media.

The Reality

In fairness to Yureekah, the system is still in alpha (in fact you’ll need to request a log-in to get to the site). Consequently, we shouldn’t expect it to be perfect. However, there are definitely some gaps in the system.

- The overall amount of ads in the search engine is pretty paltry.

- The brand search is nearly useless. Except for Top 50 or so brands, don’t bother. Even my nifty Eddie Bauer example above came up with zero results.

- Inability to search for ads by format. If I need to create a Leaderboard ad, it would be nice to only see Leaderboard-sized search results.

- The email someone an ad system is very sketchy. It comes through as junk mail, and has no formatting or context at all.

If it continues to evolve and expand, Yureekah could be a useful site for many in the agency community. However, their original alpha launch was in late April and no changes appear to have been made since then.

Let’s hope it comes out of experimental phase and becomes the robust research tool it could be.

AdAge reports that GM has moved approximately 25% of its total media budget online over the past three years. That’s 25% of a $2 billion+ annual media spend.

A current focus for GM’s online initiatives is the new Used Car Ambush program, a microsite and online campaign intended to convince used car shoppers to purchase certified GM used vehicles, rather than those sold by private parties.

The site is perhaps a bit too polished to pull off its desired “organic” vibe, and it requires a serious download commitment from the user. But, this type of online-only content and accompanying campaign demonstrates that car makers are trying to use the Web to make their overall media spend more efficient in these tough economic times.

Targeted Ads Are More Efficient

From an online advertising standpoint, moving dollars online (at the expense of TV) is a no-brainer for automotive and other highly considered purchases. Here are just a few of the way you could target your advertising online to reach only consumers with a demonstrated interest in making a vehicle purchase in the near future:

- Manufacturer Web site
- Dealer Web sites
- Paid search
- Organic search
- Behaviorally targeted banner ads
- Ads on auto aggregator sites like cars.com
- Ads on blogs and social networking sites devoted to vehicle research and reviews (However, we do not recommend ads on social networks. Here’s 3 reasons why:)

Conversely, here are the ways to isolate TV viewers so that you are only reaching folks that are currently in the market for a vehicle:

- Using demographics and psychographics and hoping for the best

Furthermore, reaching out to prospective buyers online enables automakers to presumably collect data from Web site visitors, allowing for ongoing, targeted follow up via email, postal mail, etc.

Broadcast Is Not a Research Medium

Of course it’s true that the Web doesn’t reach everybody. As Dan Gorrell from Autostrategem mentioned in the AdAge account of GM’s spend, 34% of U.S. new vehicle buyers do not use the Internet to shop for an auto. He states that this makes GM’s online strategy a “double-edged sword.”

This makes zero sense to me. First, if 66% of the country IS using the Web to research new vehicle purchases, that’s a colossal market segment. Second, I very much doubt that the other 34% are instead using television to research vehicles. How would that work exactly? You watch “24″ hoping commercials for cars you like appear at the breaks?

Comparing Internet and TV as opportunities for consumer pre-purchase research is like comparing apples and chihuahuas.

Broadcast Creates Demand. Online Fulfills It

Let’s don’t go crazy, however. There’s no question whatsoever that online advertising doesn’t have the reach or power to go it alone for a broad category like automotive. You need TV to generate initial interest and awareness (unless it’s just an under the radar program like Used Car Ambush). Once that awareness takes root via broadcast, the online components of the campaign pick up steam in a hurry.

I’ve seen this happen many times, and it’s an easy phenomenon to measure (and agencies should try it). Measure search volume for your key terms. Then run a broadcast campaign (alone) for a couple of weeks. Then remeasure your search volume. You’ll find it goes up considerably. The same thing happens with banner ad campaigns. Click through rate always goes up after the market has been “softened” by broadcast.

Automakers looking to market more efficiently should reduce their TV spend and use it in short bursts at the beginning of campaigns to introduce new models and programs, and then follow up with aggressive Internet advertising programs that are much more targeted and cost effective.

Do you agree? Leave a comment.

A recent article by Michael Estrin in iMediaConnection asks whether social media has lost its luster from an advertising standpoint.

Traffic and usage of the major social networks continues to soar, with traffic to Facebook and Linked In up considerably in the past 30 days. In fact, LinkedIn which is considered to be the least social of the social networks but the most popular among more seasoned business users, is up 187% year-over-year.

However, based on Estrin’s article, online media buyers are increasingly shunning social networks even though their audiences are huge and impressions are plentiful.

Pack Mentality, or Performance Issue?

For some media buyers, this poo-pooing of social media ad buys could be a herd effect. “people are saying social media isn’t a good buy, so I’m not buying it.” For other online media types - including yours truly - there’s another fact at work….

Historically, Ads on Social Networking Portals Don’t Work

I have personally supervised the purchase of many ads on MySpace and Facebook, and the performance of those ads has been consistently terrible when compared to the same ads targeting the same people running on different sites. I believe there are 3 reasons why this is true.

#1 - Proprietary Formats

Have you really looked at a social network page lately from an advertiser standpoint? It’s just an absolute mess. Facebook encourages users to cram as many applications and widgets as possible onto their profile pages, making for significant tunnel vision. Who can even notice the banner, when you’re being invited to play “Can you Name This Candy Bar” by a long-lost high school flame?

Not to mention the fact that the Facebook “banner” format is not really a banner at all, but a text-heavy, seemingly contextual ad that purports to serve up relevant offers based on your profile data. However, I seem to get an ad for liposuction every third visit, which while debatably necessary, doesn’t endure me to Facebook (nor to my Wii Fit which give me the “you’re obese” message when I log on - I love being ridiculed by my gaming system).

So, considering you can’t do anything remotely creative within the Facebook ad area, is it any wonder that the ads don’t pull? Why can’t Facebook use IAB standard ad formats like everyone else?

#2 Too Much Clutter

The second issue is the inability to determine if an ad is actually an ad. This is the biggest problem with MySpace, which has page layout regulations approximately equal to Chinese air quality standards. Lax, at best.

As the screen shot below for Paris Hilton Zombie demonstrates, the folks at University of Phoenix are not likely to be getting a lot of solid eyeballs on their banner, which even if it sprayed acid out of the computer monitor would be less arresting than the rest of the page.

#3 Lack of Relevancy

The success of the social networks in attracting huge audiences that pile up the page views actually hurts the sites from an advertising perspective. To even remotely fill their massive inventory, these sites are accepting run-of-site, low CPM deals as long as the advertiser meets a minimum overall spend ($10k+ in most instances).

As a result, the ads you see on these sites (especially MySpace) are frequently mismatched with their viewers. Considering heavy social network users view 30+ pages per visit, it takes about 2 visits to realize that most of the ads on the site are not targeted, nor relevant, therefore why bother paying them any attention? Imagine if every Super Bowl commercial was for discount embalming services. By halftime, you’d be ready to tune out.

While this trend is perhaps most egregious on these sites due to their millions of page views per hour, the explosion of ad inventory online is an industry-wide problem. I don’t blame sites for trying to monetize their content, even if it’s at $1 per thousand impressions, but the subsequent lack of ad relevancy trains users that banner ads usually don’t have anything interesting to say, and that hurts all advertisers.

The media buyers that are still buying social network ads are contributing to the problem by not implementing impression or frequency caps. I saw the same University of Phoenix ad about 9 times in a row on MySpace. That’s not an efficient or smart media purchase.

If you’ve got examples of good (or bad) social network advertising, leave a comment.