December 21, 2008

Social Media Advertising: Crossing the Streams

By Eric Berlin of Online Media Cultist (FriendFeed/Twitter)

Can you hear it? That's the sound of social media companies scrambling, hustling, and scraping to find new revenue-generating models to beat back the hounds of this wacky economy.

Most recently, we're starting to see talk of experimenting with the insertion of advertisements into what users normally expect to be ad-free content streams. In movie metaphor terms, it's time to look to Ghostbusters for inspiration.

As we all know, Dr. Peter Venkman (played by the amazing Bill Murray) advised that the streams of the ghostbusting team's Proton Packs were not to be crossed… right up until the end of the movie, when they had run out of ideas in defeating the Stay Puft Marshmallow Man. It was a classic "it's so crazy it just might work" movie moment.

Are some social media companies reaching a similar "crossing the streams" decision point? For instance, Techmeme, the well-known technology news aggregator, has actually employed the practice of inserting "sponsored posts" into its stream of algorithmically generated story and blog post clusters for some time.

Techmeme Interweaves Sponsors' Posts With News

With a clear label of "sponsored post" and a different colored background on what is essentially an "advertorial" ad unit, Techmeme is leading out a new form of online advertising that other social media companies might be looking to adapt.

A story on TechCrunch this week called Digg's Sorry Revenue Stream, And Rumors Of An Experimental Ad Product was illuminating in a number of ways.

Key takeaway:
One experiment Digg is working on, says one source close to the company, is a self service advertising product that will be somewhat similar to Google Adwords, but with a twist. The product would insert advertisements into the Digg news stream (presumably clearly marked). Where those ads end up, and how much an advertiser pays per click, would be based on user feedback.

So users would have the ability to vote on advertisements in the same way they vote on stories. The better ads, as determined by Digg users, will get more prominent placement and a lower cost-per-click.
I think allowing users to vote on ads that they like and have them "bubble up" to the top, social news-style, might be a rather clever addition to the Digg platform. That said, we can imagine that some of Digg's famously rowdy commenters would be incensed at the prospect of any advertising inserted into an area previously set aside for user generated story submissions.

How incensed is hard to say, but we can look at the reception that ad network Magpie received on Twitter to get an indication. To be fair, Magpie is an independent service - it has no formal affiliation with Twitter - that offers to sell "tweets" on Twitter user profiles. So its revenue model aims to cut microbloggers in on revenue, and not Twitter itself. The reaction thus far from the Twitter community has been pretty negative, and indeed signs are that Magpie is gaining very little traction.

That said, it's perhaps doubly interesting that Twitter CEO and co-founder Evan Williams would mention inserting ads into Twitter streams as a potential revenue option during a recent interview. However, he noted that they are "looking into other options." Maybe it'll come down to a "don't cross the streams" decision?

It's worth considering if Internet audiences will be generally more accepting of seeing "sponsored posts" on Techmeme – or indeed inserted into the "blog stream" on well known tech blogs such as Mashable – versus user generated content-driven platforms like Digg and Twitter.

In any event, social media companies are going to be looking for new ways to keep the lights on and servers humming, and that will likely mean seeing more forays into previously ad free content zones.

What's your opinion on crossing the streams?

Read more by Eric Berlin at Online Media Cultist