In an article posted today by the Financial Times, Chris DeWolfe speaks about MySpace’s advertising strategy, “We’re not going to compete against Google and their 20,000 employees. But where we’ve made strides is against guys like MSN and Yahoo on the display and branded business.” It’s pretty obvious that their strategy is a portal strategy when you visit the site’s homepage. Every day there is another branded page wrapper slapped across the MySpace homepage.
Whether or not you think it’s a tacky look, it is most definitely an effective one. As Jeff Berman, who’s President of sales and marketing at MySpace, tells the financial times, “In the last six months, we have really broken out of that (referring to ‘hypertargeted’ advertising campaings). Instead of going up against other social media sites for experimental dollars that might be five- or six-figure advertising campaigns, we’re going up against the portals for seven-figure campaigns.”
It’s a clear shot at Facebook who has been launching a number of new engagement ads including the their new polling engagement ads launched yesterday. Facebook has been aggressively testing out new advertising system but it appears that none of them have been as effective at generating revenue as MySpace’s arguably tacky branded portal strategy.
One campaign that was most definitely effective was CNN’s partnership with Facebook on inauguration day, but we don’t know if that was actually a revenue generator for Facebook. One other challenge for Facebook is finding that group of dedicated advertisers who are building businesses through the company’s advertising platform. Google had a massive group of affiliate advertisers that helped the company grow into the multi-billion dollar business that it is today.
As far as I know Facebook doesn’t have as large of a dedicated base of advertisers which is a serious problem. A few people that attended the recent Affiliate Summit West said that while Facebook was present at the event, the company wasn’t heavily invested in building up their reputation with affiliate sales people. That’s heresay though so take it as you please.
The main point is that Facebook, while growing by leaps and bounds every day, has yet to build up their advertising revenue to the levels currently seen by MySpace. Given that the company is a media company, just like any other free internet site on the web, it would make sense to become more heavily invested in building more robust sponsorship models.
Engagement ads are currently a great opportunity for large brands but Facebook is leaving a lot on the table when they offer “five- or six-figure advertising campaigns” as Jeff Berman puts it. The New York Times recently began offering advertising on their historically ad-free newspaper front page. Will Facebook have to begin doing the same to maximize profitability? What other models could help them generate more revenue?
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did you all note that google is now showing ad's in the image search's now, and right through to the financial pages.
Comment by Michael Nielsen — January 28, 2009 @ 10:05 am
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