Social networks may never find the ad dollars they're hunting for because they don't really have a right to them, said Ted McConnell, general manager-interactive marketing and innovation at Procter & Gamble Co.
In a talk to the Digital Non-Conference, a program by Cincinnati's Digital Hub Initiative presented by the Ad Club of Cincinnati and attended by about 190 people, Mr. McConnell pointed to the drumbeat of complaints about social networks being unable to monetize their sites.
"I have a reaction to that as a consumer advocate and an advertiser," he said. "What in heaven's name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?"
He went on to apply a similar standard to the broader world of consumer-generated media. "I think when we call it 'consumer-generated media,' we're being predatory," he said. "Who said this is media? Media is something you can buy and sell. Media contains inventory. Media contains blank spaces. Consumers weren't trying to generate media. They were trying to talk to somebody. So it just seems a bit arrogant. ... We hijack their own conversations, their own thoughts and feelings, and try to monetize it."
While it's not a company policy, but rather a personal preference, Mr. McConnell said, "I really don't want to buy any more banner ads on Facebook."
That's not to say he believes P&G should end all involvement with Facebook. He cited Facebook applications as a potentially valuable vehicle for advertisers, one in which they can create an environment that's favorable for their brands and consumers alike.
But while he appreciates the power of targeting afforded by Facebook, Mr. McConnell said, it also makes him uncomfortable.
He said a subordinate of his did an experiment in which he set out to use Facebook to find a 22- to 27-year-old female P&G employee living in Cincinnati "who likes sex and Cocoa Puffs -- that was literally the target ID he asked for Facebook to find." And he found such a person.
"So the targeting is fantastic," Mr. McConnell said. "You can do really amazing things. But I'm not so sure I want to be targeted like that. ... I don't think everything every consumer says to someone else and writes down is somehow monetizable by the media industry."
More broadly, Mr. McConnell said he believes marketer dollars will continue to flow online, but that won't necessarily be a boon to online publishers, because online display inventory continues to grow faster than the dollars going after it.
He cited research by Morgan Stanley showing cost-per-thousand rates on banner ads falling from $3 to $1 on average during this decade. And despite rapid growth of internet audiences in markets such as Brazil and China, he said, advertisers are able to pay CPMs of about 5 cents because of the even more rapid explosion of inventory there.
"Fragmentation thwarts artificial scarcity," he said, noting that CPMs for rich media have held up somewhat better. Search CPMs are growing largely because of Google's quality-scoring system, he said.
Despite the growth of online classified-advertising alternatives, Mr. McConnell said, classified revenue for offline publishers continues to dwarf online classified spending, leaving plenty of remaining revenue for newspapers and room for growth for online alternatives.
But the divergence of fortune for pay-per-click and other performance-based models vs. CPM-based models will only intensify as the economy worsens, Mr. McConnell predicted. "'Spray and pray' is a little harder to do when you're under economic pressure," he said. "So performance-based advertising will gain share over CPM."
Larson note: Since when does media need to be something you buy. As a person and company which practices guerrilla marketing I think free (or inexpensive) is good. Its all in the results or Return On Investment (RIT) that is important. Laughing, right off the bat the big company guy(s) need control. Control in SM oh come on! Not going to happen, you either learn to make it work for you or don’t work it. Either the big boxes will learn that time in an investment as mush as money is or they will be locked out of all Business Social networking really can offer a company. Let them have pay for clicks, banner ads, and those things they can manage by money.
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