Brand Advertising Doomed On Facebook

Social networking sites may never be the cornucopia of conversions that brand advertisers want them to be, according to a new study.

Brand Advertising Doomed On Facebook A number of brand name companies have established outposts in places like MySpace and Facebook. Some firms, like those in the entertainment business, are well-suited to the younger audiences on social networking sites. An Resource Shelf) suggested the advertising scale needed to make these sites richly profitable may not happen, even with millions of people using social networking:

To generate new revenues in the future, IDC expects that most social network services will employ a mix of business models, including advertising, subscriptions, and ecommerce. Of these three models, only advertising scales well enough to make social networks interesting for portals and major media companies. So far, however, little advertising can be found on social networks. And while the issues underlying slow ad sales may eventually be solved, some services may never be able to attract brand advertisers on a large scale.

"Social networks cannot guarantee a brand-safe environment. Advertisers don't want to see their ads displayed alongside illicit content, for example," says Karsten Weide, program director of IDC's Digital Marketplace: Media and Entertainment. "The dilemma for social networks is if they start to control what content users can post, they will lose popularity, which is what attracted advertisers in the first place."