I was actually thinking about this on the way to work today, with respect to Facebook applications. We see lots of in-Facebook ad networks popping up (Zynga and SGN are two obvious ones), but a lot of their advertising is for other applications or services unrelated to the application (buy car insurance - get 10,000 poker chips).
It's the social network that's supposed to provide demographic data for targeted advertising. The applications in these network provide little benefit with regards to advertising inventory that can be targeted by large brands (who advertises on the Zombies application?) and few of them have business models that are generating revenue outside of advertising.
Won't there be a saturation point where other applications will stop paying for installs? Are advertiser's CPMs/CPCs/CPAs any better in these networks than they would be through AdWords? How will ad networks sustain themselves in a market saturated with inventory that (generally) adds little benefit on top of the social network within which those adds are being served?
Eyal Magen
· 1 year ago
Very true. My take is that new advertising media usually follows the pattern of first attracting some brand advertisers (agencies always like to sell "big ideas" to their clients), but in many cases the big bucks and the scalable model arrives when direct marketeers (which still bring the vast majority of online ad dollars) find a way to make the new media ROI positive.
As Nick said, there is no easy solutions but to work hard to be the first to find the way to combine "social" and "ads" in a way that will work for non brand advertisers. After that you just need to protect this magic model from being copied by Google and you are done :)
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It's the social network that's supposed to provide demographic data for targeted advertising. The applications in these network provide little benefit with regards to advertising inventory that can be targeted by large brands (who advertises on the Zombies application?) and few of them have business models that are generating revenue outside of advertising.
Won't there be a saturation point where other applications will stop paying for installs? Are advertiser's CPMs/CPCs/CPAs any better in these networks than they would be through AdWords? How will ad networks sustain themselves in a market saturated with inventory that (generally) adds little benefit on top of the social network within which those adds are being served?
As Nick said, there is no easy solutions but to work hard to be the first to find the way to combine "social" and "ads" in a way that will work for non brand advertisers. After that you just need to protect this magic model from being copied by Google and you are done :)