The MySpace Paradox

After Techcruch wrote about Google's $900 million ad deal with MySpace yesterday, at least a half dozen readers griped about "watered down searches" from "a nightmare userbase"; it's "the last thing advertisers need" because the low conversion rates will result in "a total waste of money". "Dr Evil", in particular, commented that

At the end of the day I’ll advertise with the company that can get my ad in front of a quality audience that generates a good ROI. MySpace is NOT that audience.

Meanwhile, I'd just read on Micro Persuasion that eBay sellers with a MySpace presence are seeing increased traffic and sales. And C|Net reported last week that unsuspecting kids are falling victim to overly effective MySpace marketing. For instance, Wendy's and Burger King, collectively, have conned over 175,000 undiscerning teens into agreeing to be their "friends". According to the New York Times, even Wawa, the convenience store chain, has several MySpace fan clubs.

Back in 1997, online advertising was so new and exciting that I was able to sell banner space for $100 per 1000 impressions, just by claiming to have a relevant audience. And two years ago, when I first signed up for GMail, my friend Chris and I were so fascinated with Google's contextual ads that we sent each other emails just to see what marketing messages the system would match us with.

Nowadays, MySpace banners reportedly go for just $0.10 per 1000 impressions. I think what the 1000x devaluation means is, consumers' attention is now 1000x harder to come by.  Even contextual matching doesn't help; when I log into GMail, those ads don't even register any more.

So all those unhappy Google advertisers are right. They won't see an ROI from MySpace, because its almost-100 million members visit the site to socialize rather than to buy.

On the other hand, MySpace does too offer a quality audience. According to Business 2.0, the 16-24 age group influences $250 billion in annual spending. Instead of complaining, maybe marketers ought to adapt to new ways of selling. It's time to get on MySpace and make some friends.

Comments

[Mat]

> So all those unhappy Google advertisers are right. They won't see an ROI from MySpace, because its almost-100 million members visit the site to socialize rather than to buy.

Impulse buying is alive and well, and even though 100 million members might not be coming to the site purchase services or products, an interesting ad can convert several users. In fact, I sat with my wife a few days ago, while she surfed MySpace talking with her friends, and she was very content to play the flash games many advertisers display. She might not be interested in the product, but she had valuable brand exposure that is hard to pay for.

I think most people have come to the conclusion that branding != ROI. Just because you get an extreme low tracked cost per acquisition doesn't make the advertising useless.

NewsCorp has a huge amount of personal data that people have willingly given up and want displayed publicly. That information is worth more than all of the cumulative impressions of MySpace. Besides, how can 100 million users be wrong :)

[Isabel Wang]

Mat - Do you remember which advertisers' Flash games your wife played? Does she? If not, then her particular experience with these brands != ROI. But even then, the ad message would be the problem, not the ad venue.

BTW, another interesting thing I recently read on Micro Persuasion was Starwood Hotel's preview of its new hotel brand in Second Life. The actual hotels won't be built until 2008, but a virtual version will be up and running this September. Now that's a marketing campaign that's in alignment with the audience...