Lately, I've been thinking a lot about the utility of ad placement on social media sites, and whether it's the most enlightened way to monetize services like Facebook or Twitter. I'd posit that there are two broad, and somewhat mutually-exclusive schools of thought on the subject: one looking forward, and the other back.
The forward-looking model is extremely hopeful, and suggests that online commerce occurs within self-contained ecosystems. Activities and pricing are determined by transparent communications and the other attributes of efficiency. These principles apply to all types of commercial communities, whether eBay or some proprietary site for sourcing industrial parts. Participants will pay for the value they receive for access to these services, whether as buyers or sellers.
Interestingly, when applied to social media sites, it's assumed that the value to participants of their participation is zero, and that the cost of that participation to the operators of the sites is effectively free.
People don't pay for chatting or trading funny links, as if the content is somehow an externality to the pricing model. The forward-looking model suggests that such content will always be value-less, and that profits will have to emerge from activities "around" it, like ad placement, sponsorships, and other ways of charging commercial interests for the privilege of accessing the folks doing all the free stuff.
I think this approach is distinctly old-fashioned, at least going back to the days of broadcast TV, when channels gave away content, and then charged advertisers for promoting before and after it. The only difference is that Facebook or YouTube are outsourcing the programming, and getting it for free. The efficiency of behavioral ad targeting is what makes it new. Didn't online portals do sort of the same thing a decade ago? We know how quickly those futuristic visions faded into past tense.
Which brings me to the other approach for understanding value in social media, which is looking back...not just back to the heyday of mass media, but really back, like many hundreds of years prior, to the model of the medieval marketplace.
Markets emerged (and thrived) before there was a thing called "legal tender" or anything even approaching a standard currency. People bartered merchandise, gossip, and traded their time for the very experience of participating in a local confab. They paid for the privilege, and got paid for it, only not in cash. Value was a quality of the participation itself. The monetization -- cashification, if you will -- came later, and not always in the best interests of the markets themselves.
So you probably don't go to social sites to transact business or spend money, right. But value still drives every visit; you wouldn't go if it didn't. That value isn't an externality to the experience -- at least not for the experiencers -- but rather central to the purpose and function of the "social" market. You do pay for your visits, and you get paid for visiting.
Just not in cash.
I wonder if we could invent ways to better recognize and reflect this type of value, instead of taking it for granted?
- Could a sponsor offer a way to credential users, in a real and meaningful way (i.e. not just allowing them to anoint themselves as "power users"), that allowed for their voices to be better heard and appreciated?
- Could brands help visitors find meaningful sections or areas on sites, and somehow improve how content is shared?
- Imagine a loyalty program that awarded points for frequent visits, or if participants paid for admission, so to speak, because they received some added benefit from conversing with one another, or with a corporation?
We human beings have long believed that the most important things in life are free (or priceless, as MasterCard recently reminded us). Only maybe there's no such thing as "free" but, rather, just instances wherein we can't (or won't) assign and measure value.
Ultimately, I suspect that the opportunity for social media is to do just that.
Watch the video version on DIM BULB TV:
Original Post: http://dimbulb.typepad.com/my_weblog/2009/05/value.html