The Bankwatch

Tracking the consumer evolution of financial services

Cold Cash From A Hot Site

I admit it.  I continue to be the ultimate sceptic about internet advertising.  I hated banner ads, I was ultra sceptical about AdSense (does it generate purchases?), and I have yet to be convinced about social network /widget advertising, which is in effect interruption advertising.  Here are some results from MySpace, quoted in Business Week.

As numbers go, this one’s a whopper. Last year MySpace users called up an average of 31.5 billion unique page views per month. That’s as though everyone on the planet visited the site once a week. And yet, the big kahuna of social networking racked up a paltry $90 million in ad sales. Not exactly what Rupert Murdoch had in mind when his News Corp. paid $580 million for MySpace nearly two years ago.

Source: Cold Cash From A Hot Site

It is going to get better according to Merrill Lynch … (but)

Now Murdoch’s bet may be about to pay off. This year, if everything goes according to plan, MySpace could generate ad revenues of some $271 million, figures Merrill Lynch & Co. (MER ) analyst Jessica Reif Cohen.

271 million revenue on a 580 million purchase price sounds like a great projection, but lets check in, in a year and see what actually results.  As the article mentions …

Then there is the small matter of putting ads on a site whose denizens are averse to anything that clunks up the experience

Ads in a MySpace environment must be something of value to the users.  As the Business Week article mentions the users are also getting older … older means more sceptical. 

Relevance to Bankwatch:

OK, this is one of my more sceptical posts, but I just believe paying money to advertise in places such as MySpace really needs to prove out in at best, end purchases, or worst, brand enhancement.  I will contradict myself, and say that Banks must be in MySpace, Facebook, etc.  The key is doing it smartly, using software, and other tactics, while avoiding high advertising costs, that are based on pure activity, vs quality.

 

Written by Colin Henderson

April 2, 2007 at 23:12

Posted in Uncategorized

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