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The Bursting Social Media Advertising Bubble

Posted by samzenpus on from the cost-of-a-tweet dept.

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."

11 of 254 comments (clear)

  1. Tuning it out? by XanC · · Score: 5, Insightful

    I'll say we're tuning it out. With AdBlock we don't even receive it.

    1. Re:Tuning it out? by Anon,+Not+Coward+D · · Score: 5, Insightful

      i do use it... but i'd like to see statistics regarding how prevalent it's usage really is. I mean beyond the geek circle :)

      my guess is that adbloc isn't really an issue (unless firefox and chrome make it a default plugin).

      of course the point that marketing effect on consumer behavior is largely unconcious remains.. so that's the real handicap on this study

      --
      Sometimes it's better not having signature
    2. Re:Tuning it out? by ShanghaiBill · · Score: 5, Interesting

      of course the point that marketing effect on consumer behavior is largely unconcious remains.. so that's the real handicap on this study

      This "study" is garbage. Most people have always said that advertising doesn't effect them. They said the same thing back in the days of TV, radio, and print. Poll results mean nothing. Web ads link to specific landing pages that allow the advertisers to track the source of the click, and track it to any eventual purchase. If the ads weren't paying, the advertisers wouldn't be running them.

      My company runs web ads, and we know exactly which are working, and which aren't. Social media sites actually don't work well for us. Search engine text ads, triggered by specific search terms work much better. But social media ads appear to be working fine for many other advertisers.

    3. Re:Tuning it out? by Znork · · Score: 5, Insightful

      Social media advertisement is the sales guy sitting down at your table in the bar and trying to sell you a new refrigerator when you're hanging with friends because he saw you looking at refrigerators two weeks ago in a shop.

      Search or content related advertising is the sales guy trying to sell you a new refrigerator when you're looking at refrigerators.

      One of those has a chance to make a sale and might even be appreciated. The other is just irrelevant.

      For sales, it's pointless to know what a customer is interested in if you don't know when they're interested in it, which means you're always better off targeting content over people because content has both temporal targeting as well as interest targeting implicitly right, while person profiling and social media presentation only gets a generic long term interest profile and implicitly targets people doing something other than being interested in products.

    4. Re:Tuning it out? by s.petry · · Score: 5, Interesting

      Part of me wonders whether advertising actually works, or is simply a formalized form of hidden bribery

      Sure, advertising works. That's why we have had TV commercials since very early on. Does it work the way people claim it does on the Internet? Well, that is a different question and that answer is "depends".

      I think an important thing to remember, is that a metric assload of science has been done specifically for advertising. For some reason, that science is not really used with advertising on Web sites.

      What works? Easy. Products and placement with certain colors and sounds, targeting your average audience. This is why demographics for TV and Radio shows are important. Have younger females listening? Advertise woman's products, "light" alcohol, and healthier foods. Have a bunch of younger males watching? Advertise beer, fast food (Extra Big Ass Fries), and men's products. Have a mix of younger adults, run gender neutral ads for cleaning products, baby products, and "family" style food.

      The key here is that ads have to be appealing, not overwhelming. Sure, some people fall for the infomercial fast talking guy showing off their "Amazing (Billy Mayes TM)" products, but those are an extreme minority. The majority of web sites either don't care about overloading consumers or don't realize they are doing it.

      What does not work? Overload. Slashdot currently has dozens of adds, all blinking and flashing in an attempt to get your attention. This method of advertising is equivalent to having 10 TV commercials simultaneously sharing your TV screen. It's annoying, and the overwhelming majority of people won't click anything even if they might be interested. What they will do is open a new browser window and search in clean space for the product and information. This way they can get it without the overloading of senses. Web sites decided a while ago that since you can't target an audience by any rational means, the majority of the time, you have to overload people with everything they might possibly want and pray that a user clicks and generates a fraction of a penny.

      Services like Google ads try to make more sense of your audience so that you can target them more like TV/Radio commercials. Web sites on a massive scale may use the targeted ads, but are still overloading "hoping" for a click.

      Psychological studies have shown how good sensory overloading can be at causing discomfort and confusing the audience. Ever wonder why CNN and MSNBC have shit flashing all over the place? Overloading is a huge reason why, and yes it's intentionally done. Not for advertising purposes, but it's an interesting one to study.

      --

      -The wise argue that there are few absolutes, the fool argues that there are no probabilities.

  2. Are customer able to evaulate that objectively? by rastos1 · · Score: 5, Insightful

    62% of the more than 18,000 U.S. consumers it polled said social media had no influence on their buying decisions.

    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.

  3. Two things every bubble has in common... by Anonymous Coward · · Score: 5, Insightful

    1. It's always different this time.

    2. It's not different this time.

  4. Why "Sadly"? by unamiccia · · Score: 5, Insightful

    Why can't we celebrate how the Internet continues to resist freighting information with advertising? That's one of its best attributes.

  5. People don't understand branding. by gurps_npc · · Score: 5, Informative
    Look, there are two basic kinds of advertisement:

    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
  6. George Carlin said it best... by JoeyRox · · Score: 5, Insightful

    "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."

  7. Re:What do you think "secular" means? by hendrips · · Score: 5, Informative

    In English, it means "from age to age" or "generational." This meaning is actually older than the meaning you're probably thinking of.

    It ultimately comes from the Etruscan word saeculum, via Latin. In Etruscan & Latin, it meant the amount of time needed for a complete renewal of the human population, and if I'm remembering correctly, it was eventually standardized at 110 years.

    I believe that all Romance languages use some variant on seculo as their word for century.