Will Social Networks Remain Low-Ad Districts?

By David Hallerman, Senior Analyst

Dave’s Comments (Digital Marketing Tutorial Blog): An interesting subject, but what I found even more interesting in this eMarketer article is the method this analyst used to monetize the value in advertising revenue of unique visitors to major online advertising Web sites!

“The question of whether social network sites will become major centers for online marketing is one that my colleague Debra Aho Williamson and I have debated for the past couple of years—she on the yea side, and me more on the nay side.

In the spirit of that debate, I set out to write a counterpoint to her recent piece, “Will MySpace Revenues Add Up?”—but, after some digging, my point of view has changed.

That change spins on two factors: money and people. That is, do a site’s ad revenues match its traffic? The relationship of traffic to revenues is not an exact one, since it fails to factor in elements such as the amount of time people spend on a site. However, matching eyeballs to dollars builds a rough estimate of how well any Web site monetizes its audience.

To research this, I gathered eMarketer’s projections for 2008 US ad revenues at five sites—MySpace, Facebook, Google, Yahoo! and MSN. Then, using Nielsen Online’s April 2008 data for US unique visitors to those sites and extrapolating that data across the whole year, I created a rough placeholder for unique annual visitors.

Simple math yielded the following estimates for US average online advertising revenues per unique visitor in 2008:

* Google: $65.55
* Yahoo!: $31.25
* Microsoft (MSN): $17.74
* MySpace: $12.85
* Facebook: $11.79

It is not surprising that Google makes far more from each visitor than both its portal competitors and the social networking sites. What is notable, however, is that revenues per visitor for the two largest social networks are starting to edge up on MSN’s takings.”

Read the entire article on eMarketer.com.