Advertising in online social spaces is a bust. You can blame it on the economy, but there’s a better reason–people are resistant to advertising in general, but much more so in media environments that they actually control.
The Wall Street Journal looks at how the reality of this is now playing out.
Slide Inc. which was started by PayPal co-founder Max Levchin and has raised a total of about $75 million, makes some of the most popular applications on social-networking sites, including a game called SuperPoke, where users can send their friends virtual hugs, slaps and sheep.
To capitalize on its popularity, Slide opened an ad-sales office in New York last summer and hired a team to sell standard online ads, such as the graphical ads that border a Web page. It typically sold such ad campaigns for $50,000 to $200,000.
Now, Slide is scrapping those ad efforts. It recently fired its ad-sales team and instead is focusing on selling so-called branded entertainment campaigns, where an advertiser is incorporated into games that are already popular among consumers. It is also ramping up its virtual-goods business, such as spoofs of famous works of art. It hopes that segment will account for the majority of its revenue this year.
Slide is far from the only ad-supported company seeking another route to profitability. I’m convinced we’re going to see more and more newspapers and magazines (and maybe a few blogs) begin to charge for online access to their content–a move that’s long overdue, in my opinion.
In related news, Ben Kunz, writing in Adweek says “traditional media still rules.” U.S. consumers watch 5 hours and 9 minutes of live TV daily, according to Nielsen, versus 2.4 minutes of online video. Yet, we continue to hear about the mountains of money to be made in online video. It’s incongruous–the hype and reality simply don’t meet.
I think what led us to this place is pretty simple to identify. Something new and shiny came along and it stirred up a lot of hopes and dreams on the part of seekers. Digital media is a new gold rush, but like the last one, there’s a limited supply of gold and only those few who are lucky enough to survive and shrewd enough to prosper get to transfer said raw materials into viable currency.