The Ad Devolution

Throughout my weekend at PodCamp3 Boston, woven in amongst the learning, the collaboration and the intensely communal environment, were the marketers and monetizers. I have nothing against marketers, public relations people, and people who are all about making money by monetizing the social media arena, but in the context of the weekend, I watched the focus on ads eventually hamper every discussion.

Whether it was an impromptu, informal cafeteria session with Chris Brogan, myself, Paul Gillin, John Herman, John Coyne and 40 other people who wanted to talk about old media versus new media or my session on Busting the Clique of Social Media, at least one person asked about ads or mentioned ads as a revenue stream in some way. In my session we were able to steer the talk back on point but in many cases that question derailed many a session from useful to yawner.

Don't get me wrong, I realize that social media desperately needs a revenue source, an overall business plan. I just don't think that ads are the holy grail of income any more. To continually focus on ads as the one, sole way to make money is to shoot yourself in the foot as a social media company or user and to devalue the conversation about new social media ideas. People flat out no longer look at ads.

How can I say that? Think about how you watch television to put it in perspective. If your house is anything like mine, the invention of the DVR and availability of television shows on sites like Hulu (or for the more stupid daring in these RIAA/MPAA policed times, BitTorrent sites) has allowed you to avoid having to watch commercials most of the time.

When you find yourself forced to watch regular programming in real time what do you do during commercials? If you are like my household, you get up and go do something else, complaining all the while about the fact that there is advertising interrupting your program. Newspapers and magazines are the same - all of those pricey ads that we collectively ignore.

The internet isn't any different. Google is noticing a drop in ad revenue as more and more people find ways to tune out even the least obtrusive AdSense text ads by running AdBlocker and similar browser plugins. I still recommend putting ads on your site to catch those few people who haven't caught on to the ad blocking movement yet, but in the long run you are better off to think outside the box as far as how you will monetize your social media application, site or other online venture.

How do you monetize something that is, for all intents and purposes, an intangible? How do you make money on the concept of being social? Than answer is that for every company it will be different. A company like Zappos that sells tangible goods using social media will have a far easier time that one like Twitter, who sells a service. That said, Twitter should be able to leverage its usefulness to companies like Zappos into value, whether it is by charging for SMS use over a certain level, or charging heavy users a nominal fee for the strain on the fail whale carrying birds servers.

Another hurdle to monetary success is attitude. We have bred an attitude that everything should be free, and we are paying the price for that. There is always a cost to someone, somewhere for any service. It may be behind the scenes in servers, bandwidth, SMS charges, staff to keep it running, etc but there is always money involved. Every social media business should begin its life with a business plan and more than one idea of how to make money.

Users will pay for a service they find valuable. Shoot, to use a silly example, I pay Pogo.com a miniscule $5.99 every month for a site membership on the off chance I want to play social card games or similar, all to keep my avatar and game history on their servers (I am phoenixxrisingg on Pogo, by the way, feel free to friend me up). I know that storing that information costs them money, as does running the service, so I'm happy to pay it. Also, they picked a price point that is small enough it doesn't feel painful to my wallet, something else that is key.

How do you think social media sites, platforms, clients and applications should monetize? What's your big idea for breaking the ad mold? You should have your plan in place, because the end of the ad era is coming, whether we like it or not. The world is moving to engagement marketing - how are you going to use that to pay the bills?

Image courtesy of ByrdBaggett