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The Bursting Social Media Advertising Bubble
schwit1 writes One of the great "paradigms" of the New Normal tech bubble that supposedly differentiated it from dot com bubble 1.0 was that this time it was different, at least when it came to advertising revenues. The mantra went that unlike traditional web-based banner advertising which has been in secular decline over the past decade, social media ad spending — which the bulk of new tech company stalwarts swear is the source of virtually unlimited upside growth — was far more engaging, and generated far greater returns and better results for those spending billions in ad bucks on the new "social-networked" generation. Sadly, this time was not different after all, and this "paradigm" has also turned out to be one big pipe dream. According to the WSJ, citing Gallup, "62% of the more than 18,000 U.S. consumers it polled said social media had no influence on their buying decisions. Another 30% said it had some influence. U.S. companies spent $5.1 billion on social-media advertising in 2013, but Gallup says "consumers are highly adept at tuning out brand-related Facebook and Twitter content."
I'll say we're tuning it out. With AdBlock we don't even receive it.
Are the customers able to recognize whether they got influenced? I thought that current advertising methods are predominantly trying to influence subconsciousness rather then consciousness decisions.
No one is ever influenced by advertising, ask around. People say "no, I'd never buy something because it's on TV" but those infomercials stay in business for a reason.
So polling people and asking them if advertising is effective on them is a bit of a red herring. Like IQ tests - logically half the world has IQs less then 100. Oddly, I've never met any of them.
Now the question 'is social advertising effective' is certainly open for debate, but not because some survey says people believe it's not effective on themselves.
Min
On the whole, I find that I prefer Slashdot posts to twitter ones because I don't get limited to 140 chars before
1. It's always different this time.
2. It's not different this time.
Why can't we celebrate how the Internet continues to resist freighting information with advertising? That's one of its best attributes.
I'm genuinely curious, because that word does not fit in that sentence.
i know single people who are always going out to bars
single people hacking away on tech
married no kids who are always chilling out somewhere
and lots of other kinds of people
why would i want to buy everything they buy? even then you can have a group of a dozen girls and some will have expensive and snobby crap, others wal mart crap, others the hipster overpriced crap, etc
Heck I tend to hold a grudge against companies that stick themselves in the middle of family pictures, or who are clearly trying to hide their ads as content.
I think in general there is much more ad revenue being spent than the results can justify, but perhaps the rest of society is far more gullible than I give them credit for?
1.) Social media advertising isn't as effective as advertisers hoped.
2.) Social media can be mined for data about your products, what people think of them, and overall opinions about your company. It is also a tool for engaging with customers.
Point 2 is much more useful to companies that 1; which means the real money in Twitter et. al. is data mining, not advertising.
I'm a consultant - I convert gibberish into cash-flow.
"Why" "is" "Paradigm" "in" "quotes"? Secular? WTF is secular decline? Is that as opposed to ecclesiastical decline?
None of them can see the clouds; The polished wings don't care.
but Gallup says "consumers are highly adept at tuning out brand-related Facebook and Twitter content."
I go one step further. I tune out Facebook and Twitter entirely, not just brand-related content.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Lots of sites have ads that go to other sites which are ad supported. Many of these sites have ads for each other. It's like a big pyramid scheme.
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Not in decline and certainly not for over a decade. They have been going up in both volume and price. Look at google's revenue numbers, of which a big portion is banner ads. Sure, they might not be the buzz word of the day, but banner ads still rule.
-- these are only opinions and they might not be mine.
>> which the bulk of new tech company stalwarts swear is the source of virtually unlimited upside growth
schwit1, are you one of POTUS's speechwriters in your day job?
As opposed to a holy increase as in "Holy shit, we're actually making money with these ads?"
Spectacular, perhaps?
Otherwise you can't get anything done online.
"Unlimited upward potential", right... There's only so much advertising budget to go around; companies will shift some of it from traditional media to social / online ads. The actual upward potential comes from serving the long tail: small firms that cannot afford to pay traditional media ads, or larger firms that are willing to spend more on advertising if it turns out to be more effective. Or an advertisment arms race. But even that only goes so far.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Survey Methods These results are based on a Gallup Panel Web and mail study of 18,525 U.S. adults, aged 18 and older, conducted Dec. 12, 2012, to Jan. 22, 2013. All surveys were completed in English. The Gallup Panel is a probability-based longitudinal panel of U.S. adults who are selected using random-digit-dial (RDD) telephone interviews that cover landline and cellphone telephone numbers. Address-based sampling methods are also used to recruit panel members. The Gallup Panel is not an opt-in panel, and members are not given incentives for participating. The sample for this study was weighted to be demographically representative of the U.S. adult population, using 2012 Current Population Survey figures. For results based on this sample, the margin of sampling error is ±1 percentage point at the 95% confidence level. Margins of error are higher for subsamples. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error and bias into the findings of public opinion polls.
18000 is a very high number for phone interviews. I think most were internet polls. So 18000 people who clicked on and took a survey while casually surfing said they are not influenced by social media? If such click-any-dialog-that-pops-up-randomly people are not influenced by social media, what about the people who are actually skeptical of the "series of tubes"?
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
"According to the WSJ, citing Gallup, "62% of the more than 18,000 U.S. consumers it polled said social media had no influence on their buying decisions."
I suspect most people would answer a poll saying advertising NEVER influences their buying decisions. Independent analysis may prove otherwise. Coke, GM, or whoever don't spend billions on advertising because they think it helps. They have done lots of tests and analysis, and they know it helps. Sure, lots of advertising is a waste. But targetted advertising at the right time and place can have a ROI.
Ninjas don't carry tic tacs
Informational: This is what most people think advertising is all about. It provides you with information about a product. It might be telling you a new product exists, or just a new flavor/kind of an existing product. It might tell you about what it does, or the price, at heart it is simple and easy to understand - people can't buy it if they don't know about it.
Branding: This type of advertisement is not about information, it is about a feeling. It's what most of those 'cool' superbowl ads are trying to do. It's why Coca-cola and Apple keeps advertising (everybody already knows about Coca-Cola and they rarely talk about price/new products). This is about creating the feeling that this product is the kind of product that people like you buy. It also makes people believe the product is higher quality, because look, they can afford to advertise. (which also implies they have insurance to pay out if they accidentally put lead pain in your toothpaste, as opposed to that store brand you never see on TV).
Because lay people don't understand branding, they routinely underestimate the value of advertising.
excitingthingstodo.blogspot.com
The reason the bubble is bursting is no doubt another case of ad overload. It's a cat-and-mouse game that's been going on forever - advertisers flood a given communication medium with advertisements and people find a way around it. TVs have things like the DVR (and earlier the VCR), one of the key selling points of which is being able to record a show and fast-forward through the commercials. There's also the TV culture of using commercials as a time to get a snack, go to the bathroom, or do something else and then come back afterward.
The internet is becoming the same way. First it was pop-up and pop-under ads, which caused all of the mainstream browser developers to implement pop-up blockers as an integrated component of the browser. Sure, they're not 100% effective and many advertisers have tried to find workarounds for it (such as ads embedded into the website layout that cover content unless clicked away) but for the most part, the pop-up is nowhere near as effective as it used to be.
The same thing is happening for banner and flash ads. In the days when Internet Explorer had near-100% market share, it was comparatively difficult to install an ad blocker, as most of them came as third-party programs that had to be installed separately. Now, most of the major browsers (IE still doesn't to the best of my knowledge) have a modding interface that allows for easy installation of things like Adblock.
Advertisers have to learn how to advertise smart, rather than try to be as intrusive as possible.
Yes indeed. People will SAY that advertising doesn't affect them. Then they immediately put on their Nike shoes to head to McDonald's for a Coke.
Coke isn't a billion times tastier than Joe's cola. It sells a billion times as much because it's been advertised a billion times as much.
First off, I just instinctively turn off ads that I see in a browser. They are nothing more than an annoyance to me. Secondly, FB and Twitter are full of fake profiles.
"Every time you're exposed to advertising in America, you're reminded that this country's most profitable business is still the manufacture, packaging, distribution and marketing of bullshit. High quality, grade-A, prime-cut pure American bullshit."
"consumers are highly adept at tuning out brand-related Facebook and Twitter content."
Or better yet, just not going to those sites at all.
Whenever a player quits EVE to go play WoW, the Average IQ of both games increase.
Coke isn't a billion times tastier than Joe's cola. It sells a billion times as much because it's been advertised a billion times as much.
It sells a billion times better because it's available just about everywhere and people know that it tastes like crap, but they don't know whether Joe-Bob's Home Cola tastes better or is recycled pig slurry. Joe-Bob could spend billions advertising Joe-Bob's Recycled Pig-Slurry Cola, and it still wouldn't sell as well as Coke does.
I hate polls that take some factual statement that is either objectively true or isn't, and then ask people whether they think it's true, as if that tells us anything about the factual matter rather than just the biases of the poll sample.
Social media advertising either influences or it doesn't. And it will influence or it won't regardless of whether zero, half, or all of the country thinks it does.
....since I suspect it's based more on consensual delusions & back-scratching within the industry than actual data.
Does Nike *actually* get $3 million more profit if they have a superbowl ad, than if they didn't? If they don't, then do they really need to pay that cutie-pie that is the assistant to the assistant director $85k/year to fetch donuts and sort the mail? Or the still photographer an annualized contract rate of $160k/year to shoot the 'making of the commercial' art book pictures? Aside from the shlubs who sling lights and mikes and do the tech work, the media industry is generally staggeringly overcompensated. I wonder when someone will notice?
-Styopa
Most advertising doesn't really affect buying decisions. Sometimes you might see something new, but mostly it's Coke, Budwiser, etc., things that everyone has known about for decades.
The funniest online ads I see are when I search for or buy something... and then see an ad for that exact thing a few minutes later on some sidebar ad. Hey, dipshits, I already know about that thing you just advertised BECAUSE I JUST WENT ONLINE TO LOOK FOR IT AND BUY IT!
This is a little bit like paying someone to hold up a sign for Ford cars to show to people that have just left a Ford car lot.
I honestly don't understand the effectiveness of advertising, but that's just because I ignore most of it, and of the stuff that gets put in front of me, none of it influences a single purchase decision I make. I would much rather see a product for myself or rely on a non-sponsored recommendation from an acquaintance.
It boggles my mind that there are humans that are controllable enough to fall for the "Oooo, here's an ad!" --> "Let's click on it!" --> "Psychologically engaging content designed to sell me something" --> "Let's buy that!" chain of events. It must work, otherwise there wouldn't be a whole science behind advertising / consumer psychology, but I don't get it.
It seems to me that if you have a good product, it will sell itself and all you need to do is get a few people to try and recommend it to their friends. If you can do that, then you're just wasting money on traditional ads. Everybody knows Rice Krispies exist, and some people find them tasty. Why does Kellogg's have to tell the world over and over again that they exist?
Oh well, I'm not looking forward to the 40+% drop in stock market values that's coming with the next bubble pop, but I guess that's the way the new new economy goes.
Coke isn't a billion times tastier than Joe's cola. It sells a billion times as much because it's been advertised a billion times as much.
I prefer [Mexican, sugar-based] Coca-Cola to pretty much every other cola out there on the basis of flavor, no matter how much advertising I consume. Which for me, is very little. I probably hear more commercials while shopping than in the rest of my life combined because I consume streaming and not broadcast media, and I use ad blockers.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
With Adguard, and Adblock Plus, I can't remember the last time I saw an ad. And, the ones that do, just right click, BOOM! Gone!
I have clients who have basically thrown their money into a facebook toilet; and I also have clients who have reaped huge benefits. The key for the ones where it worked was that they knew exactly who their customers were and very carefully measured the results and could then compare the value they got from facebook as compared to all other media including billboards. Facebook was the hands down winner and was more than 100x cheaper than things like radio on a per customer generated basis. On a side note billboards were far less effective but the best of the traditional media.
But that only applied for a few narrow products. I don't think it would work very well for a high commitment product such as a car. I would not be surprised if the car companies have tried facebook and spent more in advertising per customer generated than they got back in profit per car. For instance I would recommend facebook for a TV show on tonight, and as a reminder to listen to some radio show. But it would require highly targeted advertising. So for Game of Thrones it probably isn't too hard for them to nail GOT watchers on Facebook with pinpoint accuracy and to make sure the ads were even episode specific. But for NBC to remind people to just watch NBC in general, probably a waste of money.
So basically I would dismiss anyone who makes any generalizations about social media advertising as either being good or bad. It is a very specific tool that is very good for a narrow range of jobs.
...by the poll results, of a majority of people saying the social media ads have no influence on them. I'm kind of surprised that anyone expected otherwise. How many of us would say that traditional print, TV and radio ads have influenced us? Most would say they've not been affected. (And, some of those claims would actually be correct.) Yet, money keeps pouring into advertising, so, the ad buyers are convinced that it does make a difference.
And if they surveyed people on how much TV advertising affected their buying decisions I wonder what the result would be? Above or below 30 percent? And what multiple of social media ad spend is spent on TV advertising again? 10x, 100x? By thatmettroic everyone in America better say they are not only affected by TV ads, but they cause them to buy two of everything.
I know rice krispies exist, and I may like them okay. But if all I see are frosted flakes and lucky charms, I might forget about my beloved rice krispies. If they're not in front of my eyes when I make a shopping list, I might just replace that box of frosted flakes that's getting low.
More to the point, if I'm looking for a new car -even just thinking about it (or dreaming about it), I might click on an ad for a car I might not normally chose just to see some pretty pictures and feel-good video about how happy people are in their new Foo SUV. And it may not make a difference to me, but it might if I happen to remember that beautiful couple that looks just l like what I want my GF and I too look like in a cool new vehicle with people complimenting us on our taste in fine automobiles, and it's a coin toss between that car and some other car I didn't see beautiful people fawning over in an ad that I've forgotten about but is still in my subconscious.
Because then it's not a decision, it's just a feeling that I like Foo SUVs over everything else 'cause they just feel happier. Yeah. I just like them better. There was never any advertising that influenced me. Sure I saw the ad, but it didn't really make a difference, I just like this one better. And advertising played no role at all, and the money that company spent was clearly wasted because I would have bought that car anyway.
Is it just my observation, or are there way too many stupid people in the world?
I do not know if anyone else recently clicked that Facebook: "give us feedback" link.
I was interested in what Facebook was currently working on, so I did. It was a unabashed survey used to try and make ads less visible and more like the rest of your feed. So I think that FB would agree that 60 odd percent is a failure, but they are continually working at integrating ads better into all of our feeds so that we do not even know that they are there.
Troll is not a replacement for I disagree.
62% of the more than 18,000 U.S. consumers it polled said social media had no influence on their buying decisions
sure, there are of course individual ad campaigns that fails, but this isn't how you come to that understanding.
while i'm not a professional "pollist", this seems tremendously flawed. first, advertising's effects are largely on the subconscious. it's not like you see an add for mcdonald's and think out loud to your self "i'm going to get some mcdonalds". it's more like you see 500 ads for mcdonalds where multicultural hipsters are hanging out and having fun eating mcdonalds on youtube and the next time you are driving through a pack of fast food restaurants, your familiarity with mcdonalds makes you lean one way. it's why restaurants like mcdonalds, burger king, taco bell, applebees, dennys, and so on make so much $. it's not because they are good, it's because people are familiar with them (usually combined with them not being terrible).
second, people like to think they are individuals with free will. if you ask them if they are driven to purchase goods and services by ads, of course they are going to say no.
advertising WORKS. you can see this by the fact that companies continue to up their spending, hundreds of billions year after year. if there's one thing i do know, it's that corporations like money. they wouldn't continue to shell out greater and greater sums every year if they weren't measuring positive results.
Many here would basically diss ads, but they might sing another tune when all of this stuff you get for free now, like email, news content, etc, ends up costing even more money out of your pocket in addition to what you spend on the internet connection itself. Be careful what you wish for. This is the sheer stupidity of the "ad busting" thing, how the hell do you think that the companies that provide these free sites to you pay their bills? Do you realise that without the ads these sites would not exist or would go behind a paywall?
Yes i do pre pick my soap, i once broke out in hives from kirkland branded stuff so i never stray from lever2000 ever
Soap was just a proxy for 'things people buy at the grocery store', we really aren't that interested in your soap buying habits specifically here.
And unless you break out in hives whenever you vary anything the argument holds... and if you DO break out in hives over any little change... you are hardly remotely representative of 'normal'.
I'm not so sure about that. As someone who literally doesn't have the opportunity to tune out ads (because I pirate things and the files simply don't have the ads), I find myself occasionally hearing non-geeks referencing TV ads. There've been many an awkward conversation where someone says something, I blank-stare not getting their point, and they say "like in that ad." Or "have you seen that commercial, where...?" or even "I want to see [name of a movie that doesn't have any reviews yet]". People are seeing and perceiving that stuff.
If they learned to tune out, then they must have forgotten whatever it was that they learned.
(BTW it's not like I'm any smarter or less programmable than them; I just have it firewalled off, so the attacks never get as far as my weak mind.)
that USA will be energy independent in 30 years.
If you know your energy, you'll be able to decide the quality of their fact checking.
Ad revenue was mostly shooting in the dark until now. With targeted web ads, they are still shooting in the dark, but at least now they know what direction to shoot at.
They have no better option.
Survey studies have little to no influence on my understanding of human behavior. Who actually believes that people know what influences their purchases? At least get some real-world observation.
If you want to force people into it, then put your content behind a paywall. Then you will find out what it is really worth.
Be careful what you wish for. Without taking sides on the ad blocker debate, I'm just going to point out that:
1. the most valuable content that is available freely (not behind a paywall) today is exactly the content that could successfully be moved behind a paywall tomorrow, and
2. a lot of significant parts of the modern web, from discussion sites like this one to services like search engines and social networks, provide indirect benefits rather than content of their own that can be similarly monetized, and if you take away their funding model we don't yet have distributed, community driven alternatives of the same quality to fill the gaps.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
Your nick indicates your favorite drinky is something other than sugared soda. Two Slashdotters one cup?
That sounds a lot like my family. 18 years clean and sober here.
A lot of the most interesting websites I frequent are created and maintained by individuals who are enthusiastic about the topic of the page, and create the web content for no renumeration.
Yes, that should bring a 'chill' down the spine of all you 'web programmers' who want to do it for a living. But remember there will always be sucky web pages you can develop for people who pay you to do so.
From what I've been learning, there is a particular gene associated with chronic, hardcore alcoholism.* If it runs in your family, I hope you're as careful with alcohol as you would be with any other deadly poison. If you haven't drank much yet, it can grab hold of you without warning.
Of course if you're in your 40s and have done plenty of drinking without any trouble, you may be comfortable that you dodged that particular bullet.
* not to be confused with simple hard drinking. I refer to thekind of alcoholism where people literally drink themselves to death because they can not stop.
I'm looking at a window right behing this one with Facebook open where there's a scam ad lying about government discounts on life insurance. Nobody with an IQ over 70 would click on that or take it seriously. So if someone actually had a moderately priced CPU or SSD for sale, which I could normally buy, I'd assume it's a scam site. They ruined it by making it all look bad.
Or the more worse alternative where websites become sponsored by interested parties. (With said sponsorship maybe or maybe not being disclosed)
X Hardware Review Website : Sponsored by Microsoft - In our latest article we discuss how the SP3 totally trumps every other tablet out there and why people are buying them by the truckload.
Much of it may also become paywalled, which is fine when it's a small amount of the content out there but if it becomes more mainstream we end up with issues of equality where a lot of information is really only accessible to the wealthy.
Ryans Tutorials - A collection of technology tutorials.
Is the article suggesting we short FB and TWTR stock?
most people ... don't waste energy trying to extract some form of revenge in such a useless manner
I also react negatively to out-of-context adverts. It isn't "revenge". If I see a company obviously spending a lot on ads i consider that less of my money will be going into quality. For example I recently bought a pressure washer and deliberately avoided Karcher because their ads are everywhere - even on the back of my heavily used road atlas in case I forget. Knowing how much adverts cost, so I am guessing that at least half of what a Karcher washer costs is going on its adverts.
Other ads are just so damn silly that I don't want to be associated with the product - especially some beer and lager adverts tend to show a complete and utter wanker as the "hero", typically on the theme that everything in his life goes wrong (because he is an idiot) but he gets consolation by drinking a pint of their brand. Sorry, I don't identify with them, and don't want to either.
You can bet your bottom dollar if you force a flash movie on me and I have to pause it, your product just made my "never buy" list.
Coke isn't a billion times tastier than Joe's cola. It sells a billion times as much because it's been advertised a billion times as much.
I prefer [Mexican, sugar-based] Coca-Cola to pretty much every other cola out there on the basis of flavor, no matter how much advertising I consume. Which for me, is very little. I probably hear more commercials while shopping than in the rest of my life combined because I consume streaming and not broadcast media, and I use ad blockers.
A friend of mine used to have movie nights with a considerable number of people. I brought some Canadian Coke (also sugar based) and decided to do my own blind taste test with corn syrup Coke. In every single case, between two unmarked glasses, everybody picked the sugar Coke as being better than the corn syrup Coke.
Social Media reminds me of the Coliseum in Rome. It was built to placate the citizens of the capital with greusome and meaningless spectacle, while the Empire destroyed the last vestiges of the Republic. The Senate had become the rubber stamp of a ruling oligarchy, just like the U.S. Congress is becomming. What really makes me angry about Social Media is that its prattle is replacing real human events on broadcast news and that the people being brought in a much more marketing types that journalists, on the News Broadcasts, remember. Crap like what is "trending" on Twitter or You Tube.
Social media is fickle and shallow, a bunch of fleeting impressions, something forgotten after a "like". If you don't believe me, consider how little has really changed in Egypt and places where Twitter was supposed to have brought change, nothing. The reason is that after that facile interest is very simple sentiments, nothing happens because the real work, which requires sustained concentration, still has to be done the old way which entrenched power structures know how to manage.
Some obviously marketer type pointed out here the the OP's cited study is flawed because it doesn't take into account the subliminal effects of the advertising, but that it can't be measured. Well, if it can't be measured then how can the effect of social media be judged? A different approach is to judge if there is that much more room to squeeze ads on existing social media sites, and is the available resource built out into a bubble that is about to burst? I don't know, but I am hoping so. Like in 2000, maybe the expectation of investors has raced out ahead of the ability of the Social Media Companies to deliver continued growth and one day soon they will wake up and start pulling their money. That seems to be a foregone conclusion about the way investment and markets work, so one can hope. I would love tp see Social Media fall from favor, if not funding, to see something better than websites with blogs as the form of communication and discussion. I am hoping that the cited study really reveals is saturation and boredom and that even if Social Media on the Internet isn't dead that people who really want to talk and solve the world's pressing problems will take it off to the Dark Net or some non IP network and kick the money changers out of the temple.
Slashdot's audio ads? when ever I hear some bullshit coming out of my speakers I close/reload slashdot. what does that do for your ad revenue .
Interesting. As someone who had alcohol as a reason, I agree it wasn't an excuse. Not for long, anyway. When I was 16, I acted like an idiot because I was drunk. When I was 18, I KNEW that getting drunk would result in me acting like an idiot. When I was 20, I stopped getting drunk so I would stop acting like an idiot.
I don't think my brother had exactly the same choice. He had an overwhelming compulsion to drink when he was 20. I don't blame him for being unable to resist. When he was 21, he was introduced to a group of other people who had the same compulsion, but they also had a solution. They were sober alcoholics. They told him how he could get sober and stay sober . It was only after the solution was shown to him that it became his responsibility to do it, in my view.
Hobbyists and amateurs will always be free to create content; but a professional news-gathering organization, or a site like C|NET that attempts to provide impartial product reviews, needs ad revenue. Heck, even Slashdot needs some revenue to keep the lights on.
That that is is that that that that is not is not.
Web 2.0? Yeah. Right.
Birds are not dinosaur descendants;birds are dinosaurs, for all useful meanings of "birds", "are" and "dinosaurs"