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Monday, September 17, 2007

Analysis: Why Some Web 2.0 Sites Will Never Attract Big Ad Dollars

Accountability - e.g. a company's return on investment in advertising - is an evergreen topic in the marketing community. Naturally, when it comes to the emerging sphere of Web 2.0 sites, advertisers want to sleep easy knowing that their money is generating a return. So with US ad spending on social networks expected to reach $2.5 billion by 2011, this is a good time to poke at conventional wisdom with hard data. It's not pretty.

Based on a informal analysis, my belief is that many online communities, bloggers, social networks will never attract a critical mass of advertisers because they are not set up properly to attract visitors who have a commercial intent to buy products and services. Online media is not sold this way now, but I bet it will be in the very near future.

Today, most advertisers size up community sites, blogs and social networks using traditional media buying models - namely, reach and frequency. Unfortunately, the reality is that many Web 2.0 sites, can't deliver marketers the numbers they want because of the effect of Long Tail. It's simple supply and demand economics at work. This is why efforts like the one announced by comScore and Federated Media are fundamentally flawed.

This week in New York I am participating in an all-day roundtable discussion about how to measure the impact of online influence. Edelman, my employer, is convening some of the industry's leading thinkers on this subject. It is my hope - and our challenge - to come up with new ways to measure the potential the web has on influencing purchases. Quantifying eyeballs is not the answer. We need new thinking.

My personal conviction - one that I plan to table - is that search should be the most important driver for how advertisers size up the influence of different community sites and the individuals who make them up. The problem is no one is thinking this way. Everyone is overlooking the organic impact of Web 2.0 on product-related searches in favor of quick and dirty old school metrics.

Microsoft AdCenter Labs has some demonstration technology that illustrates this vividly. (Microsoft is an Edelman client.) Their Online Commercial Intent tool uses terabytes of search data to calculate the likelihood of a web site to attract buyers.

I took a handful of different URLs and ran them through the Microsoft tool. To give you a sense of a benchmark, Amazon.com has 52% purchase intent. Here are my results (numbers are rounded) ....

Consumerist - 49% of visitors have a commercial intent
Gizmodo - 47%
Autoblog.com - 45%
Treehugger - 41%
Techmeme - 41%
Engadget - 40%
Gridskipper - 38%
YouTube - 38%
TechCrunch.com - 37%
digg.com - 34%
del.icio.us - 29%
PerezHilton.com - 27%
Wikipedia - 14%
Flickr - 14%
Facebook - 10%
Twitter - 5%

While a lot more analysis is needed, as you can see a lot of sites don't fare particularly well. They're set up to attract eyeballs, but perhaps - purely from an economic sense - not necessarily the right ones. Eventually ad spending will recede and marketers will place a greater focus on ROI. Purchase intent and search will play a key role. If you want to attract advertisers, start conveying that you attract buyers and make sure you are delivering on that promise.

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Listed below are links to weblogs that reference Analysis: Why Some Web 2.0 Sites Will Never Attract Big Ad Dollars:

» Search and Web 2.0 - Steve Rubel has it wrong from WebMetricsGuru
Search and Web 2.0 and an Analysis: Why Some Web 2.0 Sites Will Never Attract Big Ad Dollarsby Steve Rubel overlooks a fundamental point. Websites that are too commercial dont do well in Search Engines, particularly Google,... [Read More]

» Analyzing purchase intent on Web 2.0 and lying with data from thinks
Last week, I noted Seth Godins post about fudging the numbers. Now Steve Rubel gives a textbook example of how this works in the real world. While I understand Steves point - that Web 2.0 sites arent designed to drive ad revenues -... [Read More]

» Microsoft Tries to Measure Online Commercial Intent from Future Now's GrokDotCom Marketing Optimization Blog
Recently, comScore and Federated Media announced they would measure blog readership and social networking features. The hope is to validate blogs in terms of influence, and to give advertisers a way to quantitatively and qualitatively compare these ni... [Read More]

» Calculating a BlogsSuccess from New Comm Biz
Marketers are under ever increasing demands to justify the large amounts of money we spend each quarter. Even for those of us pushing new media initiatives we struggle with ways to measure success. Thats the great thing about the web, there̵... [Read More]

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