PaidContent reports that MySpace CEO Chris DeWolfe has said that he is “cautiously optomistic” about ad revenue in 2009—in other words, the behemoth of a social network is still not looking at a blockbuster business model based on ads.
The good news, according to the source article, is that online ad spending isn’t supposed to take a big dive the way traditional ad spending is expected to. The bad news is that social networks have never been the fertile ground for advertising the way that search has been.
I wouldn’t be surprised if MySpace actually showed a growth in online ad revenue next year, but I think that the real revenue model for social networks is going to be elsewhere. Facilitating user transactions, for example, would be a great source of revenue.
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Roger 12.02.08 at 7:07 am
Social networks are not dead in the water as far as online advertising is concerned. Any place you have eyeballs in front of a screen is real estate for ad placement. The numbers of those eyeballs on social networks will give a positive ROI even with a low CTR.
The key is to understanding why people are on social networks and messaging accordingly.
Jason Preston 12.08.08 at 5:15 pm
Roger - yeah, you can definitely sell the real estate, and it’s great ROI from the perspective of an advertiser, but the fee structure needs to change for social networks to really find a solid revenue stream from it. At least that’s the perception I have.