Issues with Social Media Advertising
Social networking sites face three problems: first, the basic rule of supply and demand. Social networking traffic is abundant, and in most cases undifferentiated from one publisher to the next. This excess supply has driven down CPM prices to a low equilibrium.” noted Raleigh Harbour, the Rubicon Project’s VP of Ad Network Development. “Second, user-generated content (UGC) still “spooks” advertisers. To an advertiser, UGC is an unknown risk exposure that is in constant flux. Real or perceived, this fear factors into pricing. Finally, long user sessions result in lower performance. For example, a typical social networking visitor may spend 40-50 ad impressions deep into a site, versus 5-10 for a typical news or sports site. This lowers the probability that the same user will click (and therefore convert) on an single ad impression, hence reducing the value of that inventory for advertisers.