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Ways To Pay – Opinion By Michael Nutley
Posted: Monday 13th Aug 2007
In the attempts to make money out of emerging media platforms, there only ever seem to be two possibilities, advertising and subscription. And those two choices quickly narrow down to one, as the received wisdom is that people won’t pay for anything online.
But three recent events started me wondering if we’re being too blinkered in our thinking.
The first was the discussion of advertising on social network sites that followed New Media Age’s discovery that ads for household name brands were running on the Facebook Group page for the BNP. This prompted a number of those brands to pull their ads from the site and ask for reassurance from Facebook about future ad placement. The problem for Facebook, and other social networking sites, is that they are victims of their own success. Their size and speed of growth, which make them attractive for advertisers wishing to reach early adopters and identify themselves with the latest consumer trend, also make it all but impossible for them to monitor their content. This, in turn, means they can’t offer advertisers guarantees about the type of content next to which their ads will appear.
The consensus seems to be that advertisers and site operators will work together to develop technological solutions that will allow brands back onto social networks, because advertisers go where the audience is. But if, as research carried out for NMA by YouGov suggests, 49% of social networking site users are unhappy with advertising on their personal pages, is that a solution worth pursuing?
The second event was a discussion of the future of the red button approach to interactive TV. A contact of mine who works for a company supplying technology in this area was suggesting that red button advertising had become template-driven and stale, and offered little attraction to consumers. His view was that the next stage in the use of red button would be in programming, where it could offer viewers far more choice, and a much richer experience.
And the third event was being asked, yet again, if this would be the year mobile advertising finally took off. Anyone who’s followed the mobile sector will remember that advertising on mobile has been about to break through for the past six years; it’s failure to do so has been variously blamed on screen size, data costs and the intensely personal nature of the handset itself. But at the same time other forms of marketing communications are developing successfully on mobile, mainly centring around customer communications and CRM.
In each of these cases, it’s worth questioning the assumption that advertising must be a source of revenue, if not the most important one. I think in some cases this springs from the idea that these are media properties; a mobile screen and a social network page look like media, so let’s slap ads on them. But consider them as communication tools and a different set of assumptions arises, centred around subscriptions. European MVNO start-up Blyk may be confident that its young target audience will accept text message-based advertising, but I’m certainly not aware of anyone trying to fund a telephone network by selling the time before a call is connected as an advertising opportunity.
The dismissal of the subscription model can also be somewhat glib. Undoubtedly you can find pretty much anything you want, or something like it, for free online. But despite that, people are paying for things. Sales of digital music downloads, for example, are growing dramatically, because some people believe in paying for music, don’t have the inclination or the expertise to master the technology involved, or don’t want the risks of viruses associated with illegal downloads. These people certainly aren’t the majority of downloaders, but as a niche they’re well worth cultivating.
This, after all, is the promise of the internet. Its combination of reach and cost is such that building and exploiting niches becomes feasible. And if you can deliver a niche audience exactly what they want, or perhaps slightly more, then experience shows they’ll pay for it.
Beyond all this, there is another way of looking at these emerging platforms. The “because effect” is being explored by bloggers such as Cluetrain Manifesto co-author Doc Searls and JP Rangaswami. According to Searls, “the because effect is a kind of jujitsu. While other people look to make money with something, you’re finding ways of making money because of something”. So their view is that you don’t make money from, say, blogs; you make money because of them, because of the impact they have on the way people think about and talk about your brand. This chimes with the idea recently expressed by NMA columnist and Rights Marketing Company founder Michael Bayler, that “in social media, you don’t buy media, you earn it”.
The problem here is that advertisers, used to the internet industry’s promises of accountability, are proving reluctant to commit themselves to approaches that are less accountable and trackable than, say, search. The challenge for the industry is to find ways of valuing these less tangible effects and charging for them.
Michael Nutley is the Editor-In-Chief of New Media Age.