Now that Facebook is a public company the world will see what many of us have known for a long-time…
It’s almost impossible to monetize social media.
Advertisers have taken note that one billion plus people have signed up to participate on social media websites (mostly Facebook), and as a result they have tried using it to generate traffic and sales through paid advertising. But positive revenue and ROI results have eluded most advertisers.
As a public company Facebook will now be reporting their revenue on a quarterly basis, and each quarter we’ll have a report card on the monetization of social media through paid advertising. Facebook will no doubt experiment with different techniques, like letting advertisers feature sponsored stories, and it will be fun watching to see if they can discover the social media equivalent of Google AdWords. That is to say – discover a form of highly scalable paid advertising that is not obtrusive and that even creates value to users, while generating clicks that turn into revenue for advertisers at a rate that’s high enough to justify their ad dollars.
That will require inventing a new advertising model that goes beyond simply letting advertisers pay to position their ads within a user’s activity feed.