MediaWeek reports that advertising on social networks, blogs and other venues where consumers produce content is about to become a much bigger business than it is now. It's on pace to be a billion-dollar business this year. However, by 2011 it will grow to a whopping $4.3B, eMarketer says.
Unfortunately, it's not all candy canes and lollipops. The picture is not so rosy when you think about it.
For starters, the people who create all this content that's getting monetized - you, me, your Aunt Tilly - are not going to continue doing so for free. If the platforms are getting all of the financial gain, then the community should stand to get a significant share of that money. Sites should start to implement these systems now in a fair and ethical way.
Second, people are getting a lot more sophisticated when it comes to ad blocking technology. Younger, more technically adept users have extensions installed. Take a look at digg, for example. However, it's going more mainstream. For example, the new version of Camino on the Mac has ad blocking built right into the browser. There will be an arms race between those who serve banner ads and the ad blockers that's similar to the spam wars of today.
Finally, above all, advertising ROI on community sites won't work so well in a vacuum. They will need to be buttressed by other initiatives that engage the audience around a shared desired outcome. These are more risky than banner ads but have a higher payoff when executed in a meaningful way.
