BILL TOWNSEND: Social Media Is Not Replacing Advertising Soon

Mat you are right about advertising as we know it being a dying model, but I’m not ready to concede that social networking is going to take its place or become the be-all for the future of advertising. Certainly there is a lot of interaction taking place between consumers on the Internet. There are chats, discussion boards, instant messaging, text messaging via mobile, and much of this is done in an environment of similar interests. But what is “Social Media”  and how does it play into all this?

We all are familiar with Facebook, Linked In, MySpace, and Yahoo! Groups. Those are good examples of large websites that attempt to group people by similar interests or the people they know. In my neighborhood we call this interacting with your friends and neighbors and we have fancy terms for these self-segmenting groups: football boosters, PTA, bunko night, soccer practice, bridge club, etc. But you don’t have advertisers intruding into these groups, trying to make sales. You have the members of these groups making recommendations to one another: “Oh, Bob, he’s a great plumber;” “I bought that new Braun razor and it is fabulous;” and “I’m not into my second month on BeachBody and look at how lean and fit I’ve become.” These are all consumer-to-consumer interactions.

The challenge that social media has is that breaking into the intimate conversations of consumers is difficult. Push too hard and you are not believable. Show up as advertising and you’re suspect. Attempt to create a viral marketing tool like a web video that is passed around to millions and you may have a hit, but most likely will not (it’s estimated that only .001% of all web videos are seen by more than 1 million people.

I’m not saying that social media advertising is not going to change and become relevant, I simply believe it is not going to do it in the next 3 years.

Comments

[Matt Griffith - '09 Baylor eMBA]

Bill, thanks for that great presentation. There was a lot of useful information that was basic to some, advanced to most. This brings me to my point - It's amazing to me just how uninformed the general community and even our "plugged in" Executive MBA class is with regard to the changing environment of advertising. It is very clear to me that delivery of information via the web and other technical media (e.g. iphone) is where the real opportunities lie.
My opinion as a business person is that selling information and the relaying of information is the most profitable business model out there. There are many of examples of large and small companies whose bread and butter is passing information or affiliate based advertising (see cnet.com or vertive.com). The general business world either gets it or they don't and there doesn't seem to be much in between. The younger generation and few business savvy people will capitalize on that trend and as you and Matt said, the world will change.