Monetizing Social Media
written at March 5th, 2009 | Posted by Eric Reid
I had a lot of interest on a thread I wrote on my Brightkite account, so I shared it with Joseph - we’ve been kicking around the idea of how all these social networks are going to monetize for a while.
Rather than craft a whole new post, I’m just posting the exchange. Which you’re gonna love. Honest to God, we are that interesting.
Given what we were talking about a couple of weeks ago, I thought you might find the responses on this thread interesting:
Brightkite discussion: Would you be willing to pay for BK?
Seems a lot of people would be willing to pay, if they were getting something for it.
Eric
Very interesting, but people seem to forget they’re already getting something for what amounts to nothing at this point. People need to be willing to pay for what they have and additional features.
Joseph
True, but it’s encouraging that they’re willing to pay at all if it comes to it. I think a lot of these places should be offering something for free, not for my benefit, but for theirs - to get people in the door.
Maybe it’s really to the company to decide how much of their own service they’re willing to give away in order to get new users. I mean, if I heard of Brightkite today, and only had someone else’s write up of it, and no experience with it, and was told that in order to get a firsthand impression of it I’d need to buy a month’s worth of time, I’d just pass on it.
E
Oh I’m not saying there shouldn’t be free trials and such; I’m saying that as advertising dollars continue to prove incapable of covering all the bases, more sites should opt for a low cost for-pay option as a base. Something you could pay one or two bucks a month to use, with say a one-month free trial to get you hooked.
I think the free market would go to work and weed out all the crappy me-too services out there. Customers unwilling to pay at all are worthless anyway, IMO. If Facebook cost $5/mo and no one was willing to pay for it, what would that tell you about Facebook’s value and the value of Facebook users en masse?
~J
That’s really the nut of it, though, isn’t it – who’s really using this stuff? I think it’s mostly people with a casual interest. From most of the research I’ve done, Twitter is chock full of people talking about Twitter. So the hardcore users seem too myopic, and the casual users seem too cheap. Then again, that’s why this stuff’s really only good for branding and listening campaigns so far, as opposed to real social media marketing. Then again, that was true of the Internet itself like 12 years ago. These are indeed interesting times.
What I personally like about a free side/pay side is it gives these users indefinite time to figure out if they want or need more. I mean, I have a pro Flickr account, but it took me a year and a half to pay in for it.
E
It all comes down to cost vs benefit, and what I’d like to know is how much money the average “freeloader” costs a site like Flickr, Twitter, Facebook, etc. We know that these sites are often very expensive to keep running, so the sweetspot in any free/pay system is going to depend largely upon how much profit the company wants to make (or perhaps more accurately, how much revenue the company needs to stay in business). Of course that assumes you can simply draw a line in the sand and say “everything on that side is free, and everything on this side you have to pay for.” How does that work with a service like Twitter?
The one thing we seem to be ignoring in general is that social apps are all about the people using them – they’re not about the bloodthirsty Internet marketers and other companies looking to cash in. Social apps are huge because of the connections they help people make to other people. I bet you’d be very hard-pressed to find anyone who’d say that access to companies like Zappos is the reason they participate.
What I’d love to see is Twitter (and social in general) charging for commercial use. Individuals could continue to use the system free of charge, but companies (think Southwest, Discount Tire, etc) would have to pay. Marketers salivate over directed advertising and such, but people hate it. I hate it. I think social apps like Twitter, Facebook, etc. should be funded by the people who stand to make money using them. That means charging for advertising and charging to participate. Such a system would substantially reduce the amount of noise and lend credibility to the companies that stick around. It’s also far more equitable than an everyone-must-pay system would be. The burden of cost would fall on the shoulders of those making money. Companies could choose to abstain, but that would be foolish.
Dude, I’m so going to format this back and forth into a post on the blog, if you want to bill this time to something. 
Eric
Works for me!
Joseph
There are a LOT of social media sites. Sites for bookmarks, sites for news, sites for chatting, sites for reviews. Video blogs, audio blogs, slide shows, your Netflix list, your Amazon.com wishlist…
This is why I’m a big proponent of Friendfeed, yet another social media site – a social media aggregator. It pulls together all of your other social media sites into one tidy area. If a site has an RSS feed, it can be plugged into Friendfeed.
Beyond the different ways it can be used to enhance your experience, I’m going to explain Friendfeed in a way that will be helpful for beginners. People just coming to social media can be overwhelmed with everything that is going on with their new friends on all of these sites. I hope this helps - let me know if it does!
First, establish a new e-mail address for all of your social media doings. For this tutorial, I’m going to suggest you use Google for it’s personal page plug-ins that I will go into later.
Why do you need a new e-mail address though?As you go forward with several sites, you’re also going to get several notifications from them. New friends, direct messages, requests to look at someone’s something new and more will all come to this address. You can certainly use your current address, but you may find it difficult to deal with all of the new mail you’ll be getting. It can be especially difficult if you use a work email address, as you suddenly find notifications bundled up with more urgent messages. I find it’s simply easier to have a second e-mail address in place for them, and to check it when I go tooling around.
When you sign up, try to find a handle that you can use for all of your sites. This is the beginning of your social identity. I suggest something that isn’t necessarily your whole name, (which may be hard to find,) but something that defines you. Because my family is Italian and my name is Eric, I chose “Ciaoenrico.” That name was original enough it wasn’t already taken and I could register it most everywhere I went.
If you already have a username on Twitter, use that for everything else you sign up for. This will make it easier for people to know that you are you, whatever the site. Some sites, like LinkedIn or Facebook, require your actual name so don’t worry about this.
So now you’ve got your e-mail address. Next, go to Friendfeed.com and register your profile, again using your new “handle.”
Find a picture of yourself to use as your avatar. Like your handle, this should be used on every platform where one is asked for. Again, this makes you recognizable wherever you go.
Once you are registered, click on add/edit services. This is where you will enter the first site you frequent. I would start with Twitter, currently one of the largest “open” social networks in terms of user base.
Now when you go to your “home,” you should see all of your Twitter posts up to now. Each time you make a new post, Friendfeed will repost that information here. Once you’ve added more sites, they will also be listed in the order they are received.
There are currently 59 sites listed in Friendfeed for inclusion. If you belong to a site that isn’t listed, you can still include it if you know the RSS feed for your posts. Just select “Custom URL” from the list, and paste in the site’s RSS feed.
When you’ve done all of that, go back to your Google home page. If you’re still logged in, you should be able to just go to igoogle.com and it will be right there.
Click on “Add Stuff” to get to the Google Gadgets page. Search for “Friendfeed.” The first one up is the official plug-in and the one that you want. Click on, “add it now,” and go back to your home page.
Now your feed is visible every time you come back to your home page. You can come here to get updates on who’s now following you or messaging on your Twitter or Facebook or Linkedin, but you can also get a digest of what people are posting about – if they’re on Friendfeed too.
So you will want to start looking out for friends elsewhere that are also on FriendFeed. Or by doing searches on Friendfeed for subjects you are interested in.
By doing this, you will save yourself a lot of time in managing all of the social spaces you go to.
I just went to add a bookmark to my Google Shared Stuff account, and got this sad little note:
I hadn’t really used it much, truth to tell - but it was another of Google’s neat little toys. Now it’s gone, as even the giant of search has to scale back operations to save money.
There are a lot of other bookmarking tools to be used, of course - but this seemed like something necessary to Google’s larger social aspirations. There is still Google Reader, but that’s more of a FriendFeed competitor - and FF bangs Reader like a gong.
C’est la vie. There’s always Delicious. Perhaps Google will still have enough cash on hand to eventually buy Stumbleupon.
There have been rumors for a couple months, and now there is confirmation: Google updated their Display URL Policy and it is effective today, February 24th, 2009. This time, they are changing it so advertisers only use one display domain per ad group.
Here are some examples that are allowed:
www.offmadisonave.com
webinar.offmadisonave.com
http://www.offmadisonave.com/contact-us/
and some that are not allowed:
www.offmadisonave.com
www.mightyinteractive.com
If you are in violation of this new policy update, it is simple to fix. You can easily re-structure your campaigns and ad groups by grouping the keywords that use separate domains together. Note: You may lose some historical data and it will look like you are launching new campaigns and/or ad groups, but in the long run it will be worth it.
From a searchers perception, I do not think this will really change anything as it is more a back end policy modification. This is not like when they updated their Display URL Policy a year ago, which helped ease anxiety for searchers wondering where they would be sent when they clicked on an ad. That policy change made advertisers become more transparent about landing page URLs.
This new policy change by Google is simple enough to fix if your ads are getting disapproved, and hopefully this will help you organize your campaigns in the future.
