Google Impresses, But What About Their MySpace Problem? : SplashCast Blog

Google Impresses, But What About Their MySpace Problem?

Posted on April 18, 2008
Posted by Mike Berkley

Google’s impressive quarterly earnings report, showing a 30% increase in profits over first quarter last year, was buoyed by strong performance in search ads. This shows insulation from a deteriorating economic environment, which is great news for the online ad industry as a whole.

However, SplashCast is particularly interested in the performance of Google’s display (banner) ads, especially within MySpace. Here is a quote from yesterday’s AdAge write up:

Google executives also touched on social-media inventory monetization, saying that it has applied many new technologies, including demographic targeting, to the inventory. Three months ago, Google executives made comments about social-network inventory being more difficult to monetize, which set off speculation about whether the Google-MySpace ad deal was faltering.

“Demographic targeting has been very successful,” said Larry Page, president of products. “The challenge and opportunity is there’s a huge amount of inventory. … It takes some time for advertisers to realize they’re there and start targeting effectively.”

Improved demographic targeting may marginally help Google in MySpace. But we believe display ads in social networks have more serious issues. Click through rates are miserable not so much because advertisers can’t differentiate between a 14 year-old girl versus an 18 year-old boy… but because 1) teens are generally not in an “ad receptive mode” when they are socializing on MySpace or Facebook, and 2) teens have learned to block out force-fed advertising. This is why opt-in, social advertising (ie, SplashCast) will be such a compelling alternative for advertisers, and why Google, Yahoo, and MSFT will need a similar solution.

Comments

3 Responses to “Google Impresses, But What About Their MySpace Problem?”

  1. Sramana Mitra on April 18th, 2008 9:31 am

    Google is still not paying attention to verticals. Microsoft is. Have a look at this analysis:
    http://sramanamitra.com/2008/04/18/google/

    Sramana

  2. Mike Berkley on April 18th, 2008 11:52 am

    Nice in-depth analysis, Sramana. I would argue that Google has never paid attention to vertical channels because they use technology to target their ads, rather than finding (or creating) audiences around a vertical subject matter. That’s just not part of their DNA. They take a broad, horizontal market approach and let their tech do the targeting.

    But my point in this post is that effective advertising in social networks requires more than good targeting… it requires getting the consumer to “invite the advertiser in”. And this requires offering the consumer something valuable and/or entertaining. It’s a dance between consumer and marketer.

    Google’s current method of advertising in these social environments, even with highly TARGETED banner ads, is still a far cry from what’s required to be effective.

  3. yekqlbtzw rkxtm on May 3rd, 2008 7:16 am

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    SplashCast is a leading provider of social marketing solutions that gives brands direct access to teens and young adults where they live: social networks.



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