Tuesday, April 15, 2008

Contextual advertising and social networks

Anand Rajaraman makes a counter-intuitive but compelling argument that having a close relationship between people who view a page reduces the value of the page for contextual advertising.

An excerpt:
Consider the difference between a Facebook profile and a TripAdvisor travel review. A typical [Facebook] pageview ... is by someone known very well to the creator of the profile – a close friend or acquaintance ... A TripAdvisor travel review is seen by people completely unrelated in any way to the person or persons who wrote the reviews on the page.

The "affinity" of a social media service is the average closeness of relationship between a content creator and someone who views that content. The affinity of Facebook is very high, while the affinity of TripAdvisor is very low.

There is an inverse relationship between the affinity of a social media service and its targetability. Why is this true? The act of viewing a Facebook profile gives us very little information about the viewer, other than the fact that she is friends with the profile creator; when someone views a TripAdvisor travel review, she is definitely interested in traveling to that location.
When a page draws from a wide audience, the people who manage to get to that page often will come from search and will be interested in the content of that page. So, they can easily be targeted by targeting the content of the page.

When a page draws from a narrow audience, like a group of friends, those people are not as interested in the content as the person. So, targeting the content, as contextual advertising does, will be less effective than targeting the people.

I have said before that lack of commercial intent is the problem on social networking sites, but Anand makes the good point that diversity of interest may be a better way of describing the problem. By summarizing why people come to a page, affinity may explain the difficulty of targeting advertising to that page.


Anonymous said...

Agree. I just don't see a future for on-site advertising in social networks (banners, etc). They do have tremendous value in their profile data but alternative business models will be the way to really tap into that....

Shirish said...

That is definitely interesting.

When I first read about social search, I convinced myself with the following. An year back, many of my friends finished their Masters and everyone was interested in H1's, visa stamping, greencards etc. Social search in such a situation definitely help.

I do agree to your point that the lack of intent will thwart the success of advertising on facebook/Orkut etc.

Mike said...

I think it's probably true that normal banner ads will be less effective on Facebook and its kin. But i think there's value in the fact that social networks have already identified people with similar interests. For example, if somebody puts their Amazon wish list on their Facebook page, it would seem more likely that their friends would click through to Amazon than would a random person discovering the same list on the person's blog. The trick is getting the Facebook user to voluntarily surface their preferences with respect to some commercial service. Marketing firms are popping up already to take advantage of this.

Anonymous said...

to what I can see on FB, they have a lot of data but they could not turn it properly into information that can be used for advertising.

Time will come when algo, knowledge and processing power will improve...