What Marketers Can Learn From The Google-MySpace Ad Deal Failure

“Social Exchange” is a column focused on the evolving roles of social media in online advertising.

Social ExchangeToday’s column is written by Andrew Pancer, Chief Operating Officer of Media6Degrees.

When Google and MySpace inked a $900 million dollar search and contextual ad deal back in 2006, many heralded it as the coming of age of social networks and the beginning of a new era in digital advertising.  Fast-forward to the present day and it would be a challenge to find someone who thought the nearly billion dollar agreement wasn’t a complete failure.  MySpace has been in decline almost since the ink dried on the deal’s legal documents, usurped by Facebook and left without an identity.  When the pact runs out in August, the social network will try to find another search partner, but will struggle to find anything near as lucrative again from the likes of Google, Microsoft and Yahoo.

We’ve had the last four years to dissect why things didn’t work out between the search giant and the then blossoming social network, but ultimately it can be boiled down to a few factors.  First, brands were unwilling to risk being adjacent to inappropriate content, an ongoing problem that is only now starting to be addressed.  Second, search advertising and social networks turned out to be a poor match.  Site visitors were in “social mode” not “research” or “purchasing mode.”  Users came to MySpace to see what their friends were doing, not seek out products or services. A result of this socializing was that the average number of pages viewed per session was typically much higher than a standard publisher site. The likelihood that someone will click on a sponsored link decreases as time spent on site increases. Add to this the fact that finding contextual relevancy based on stated interest turned out to be incredibly difficult.  The end result is a ton of pages with an incredibly low yield per page.

A postmortem of this deal might lead marketers to think that advertising and social networks just don’t work well together.  I’m here to argue otherwise.

The fact is: with the proper brand parameters in mind, social networks can be a good place for marketers to serve advertisements.  The important things to keep in perspective:

  • Ad size and placement – Many social networks believe they need to sacrifice advertising to keep visitors happy.  The result is that the highest impact ad units, such as the 300 x 250, are not always used and many times ads are relegated to suboptimal placement or put below the fold. Heatmaps, eyechart analysis, and focus groups have consistently shown a pattern of how people typically view a page. If advertising is not in the consideration set of how a page should be structured, then the marketing message will get lost.
  • Targeting – Whether using social targeting or other forms such as interest based or behavioral, some form of targeting needs to be used.  Endemic advertising around contextual relevancy is difficult at best. And it is definitely not scalable. Targeting based on the characteristics of the browser provides many more opportunities for marketers to achieve the reach and frequency metrics they are aiming for.
  • CTR and conversion rate – Certain social networks are performing as well, if not better, than portals and top tier ad networks in terms of click and conversion rate.  This is regardless of price paid and based solely on CTR and conversion rate as a percentage of total impressions served. These social nets are also the ones who have a clean page layout with advertisements intelligently placed to optimize for performance.

With that in mind, the question now becomes what to do as a marketer?  The first thing to get straight is figuring out whether or not your brand makes sense on a social network.  Determining this right from the start will save a number of potential headaches.  Next, utilize a brand protector to ensure that your ads are nowhere near any inappropriate content.  Marketers will also want to research and invest in the best targeting solutions available.  This will help trim down the audience to those that are really ready to engage with the specific brand.  Lastly, take a long, hard look at the social networks you are considering.  If advertising is an afterthought of their design, they may not be the best partner for your marketing efforts.

The Google/MySpace deal might have run its course with little success, but that doesn’t mean that advertising across social networks is a dying practice.  There’s plenty to be learned from what went wrong and savvy marketers will take advantage of the past missteps to fully leverage the capabilities of social networks.

Follow Andrew Pancer (@apancer), Media6Degrees (@media6degrees) and AdExchanger.com (@adexchanger) on Twitter.

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