Posted by When something becomes popular, the fashionable thing to do is to figure out what comes next. Even if we still haven’t really figured out the value of the thing we’ve already proclaimed dead (or slowing down).
On July 13th, 2009, Winston Ross posted to his Blog the article, The Next Twitter?, which was supposed to run on the Newsweek website but got killed because Time Magazine did a Twitter cover story around the same time. Within his article/Blog post was a very interesting quote from Ian Muir (a web developer with Amplified Studios):
“A lot of the things these sites have to do to make money are the same kinds of things that drive users away. Part of the reason Twitter has so many users is there’s no ads, no noise. They’re also not making any money. Facebook, as they’ve brought in more ads, they make more money per user but their growth rate has slowed way down.”
Are we really at the point where consumers now want everything for free and they will leave if this freeness comes with ad support?
Are we also saying that if you introduce ads and start making money that this is a sure sign that your growth rate will slow down?
This can’t be the case. Consumers who get free platforms, content, etc… understand that it comes at a cost and that cost has, traditionally, been advertising. The model seems to work (just look at the deluge of iPhone apps and how the free versions have ads, but the paid versions are ad-free with some additional services). The challenge with this model is more about inventory and options than growth rate or abandonment. The reality is that with so many online newspapers, Blogs, portals and platforms, there is a plethora of ad space available and this drives both CPM and CPC prices lower (it’s becoming the opposite of a scarcity model… welcome to the abundance model).
People don’t leave when companies make money or run ads, they leave when it’s no longer valuable to them.
We also have to careful about how we measure/define success going forward. A lot of the conversation about how we define success with Social Media and Digital Marketing revolves around the sheer mass volume of people – not the engagement, connection of wealth of data and information that comes from within. Ads and the "things these sites have to do to make money" are not the same things that drive users away. In fact, it may not be driving anyone away, it could simply mean that there is fatigue with the usefulness of the platform or that the mass number it currently reaches is the critical mass.
Advertising is never what drives people away. Do you agree?
Never another podcast episode or article 
agreed!!
I agree – advertising never drives people away. People want and need to know about valuable products and services. Advertising has been a feature of the television landscape for decades, yet the latest research show that people are watching more TV than ever.
All businesses effectively go through three phases – a “startup” phase, a “rapid growth” phase, and a third phase that leads to long-term stability based on innovation and tapping into new markets. In the case of Facebook, the “rapid growth” phase was remarkable, even historic. No company can sustain that kind of rapid growth. If they’re still adding users (albeit at a slower rate) and they’re retaining their current users, this is a sustainable model.
A case for the effectiveness of Facebook advertising can also be made – look at the success of games like Farmville and Mafia Wars, which built their customer base largely off of Facebook. Like with television, users do not care about advertising if they’re getting quality content for free.
as the latest post mentions of my blog/entertainment value is everything/if people are entertained they don’t care whats going on, this includes, well, everything (ADS)/what is needed specifically with regard to ads is a non linear method that is tactile, beyond clicking on link enabled letters. you wanna know what i mean, go to my blog and ask, you don’t, i could care less either way, your going to live it soon enough
I am not sure what Ian Muir is talking about. Little about that comment is true.
Facebook, if anything, has been introducing less interruptive, more user-controlled and more seamlessly social advertising products over time. Banners are now only on tier-three pages, the “social story” that once ran in newsfeed is gone, replaced with a single “sponsored” box on the home page, which is the only ad unit on homepage, and which only runs advertising from major, direct-booking clients. Self-serve ads have been removed from home page – and self-serve advertisers include the dating, get-rich-quick, diet, plastic-surgery and other marginal SMB clients who were annoying (which is precisely why facebook moved these ads off homepage – reserving homepage for premium clients).
As for growth slowing? Facebook has exceeded 14 million active monthly users (and not eyeballs – it’s closer to 20 million according to comscore) in canada and 300 million worldwide and has become the 3rd most visited site on the web – meaning they acquired 50 million new users worldwide and 2 million in Canada in the past 6 months alone. If growth is slowing in Canada, it’s because they have hit market saturation (as is true – nearly all 13-24 year old online canadians use facebook). The continuing growth around the world, speaks to the success of their clean environment and non-interruptive, micro-targeted, accurately-measured ad platform.
Meanwhile, it is Twitter’s growth that has flatlined recently – and they have yet to launch their advertising platform.
The one social media site that Mr Muir’s comment does apply to is Myspace – who’s environment lacked visual consistency and was saturated with old-school banner ads. And it is indeed shrinking like crazy. So much that we don’t even discuss Myspace much anymore.
It’s alright for mr muir to make a comment like that but, it’s seems completely baseless.
CPC and CPM rates are dropping – but so are CTR rates and they go together. And as sites like Yahoo experience this (and other market pressures) the advertising they run seems to become increasingly intrusive and interruptive, which floating, drop-down, pre-roll etc all over. Which is ironic as that is the kind of truly annoying advertising that is likely fanning the flames of poorer CTR and overall drop-off in usage on sites that use this kind of advertising.
So yes, what mr muir says is true about Online advertising in general – but not about Facebook, or Twitter.
I agree. I actually prefer to have free apps with ads versus paying for an app without an ad (for my iPhone for exp) it only gets annoying when you’re bombarded by adware and have to swim through it to get content (think of those terrible blogs that have google adsense EVERYWHERE)
I think myspace lost its popularity to facebook because of several factors: spam, slow loading pages due to the over allowance of personalization, and overuse of ads and the idea that it was an unprofessional site with a bunch of younger kids.
Pandora used to run all the time with no ads. They recently introduced ads on their webpage which was fine. Now they run audio ads between music, which is annoying but tolerable. When they decided to cut my listening time to 40 hours a month and try to charge me after that – that’s when I stopped listening. I’m don’t believe it’s fair to bombard a user with ads AND fees.
While Twitter is ad-free and great, I think they could add a few advertisement and still not drive users off. I think it’s all about balance between value and monatizing the site.
I agree Mitch. I think that Ian’s post suggests that there should be straight-line growth in everything, but really, this is the result of s-curve growth. It’s hard (impossible?) to make much money on web ventures before they hit the flat part at the top of the growth curve. This suggests that any time a site makes money it will tend to come at a time when growth is slowing.
Hey Mitch,
I actually do believe that it has nothing to do with advertising.
I believe that it has a lot to do with culture. We as human beings are always looking to be and feel unique. These motivations make us constantly search for the next revolution, while at the same time abandoning an older one – one that is now a part of mainstream culture. I believe that we are witnessing exactly that with Facebook and we will continue to see such movement with twitter as well.
For me, the key is to use those platforms that my consumers (in my case its people who consume what I have to say) think are relevant to their culture.
Your thoughts?
Cheers,
Ujwal
@interpretivist
I absolutely agree.
To be honest, the advertising doesn’t really phase me, it can, for the most part, simple be ignored.
I think what drives a person away is a shift in the culture, it changes. For example, when facebook first sprung into action college students were attracted to the culture in which it provided. It was a place for friends to hang out virtually. Within this last year or so the facebook culture has changed immensely. It’s not just a club for college students, it’s a family reunion. Everyone and their Grandma is attending. Like you state in the post, they leave when it is no longer valuable to them — the space has changed.
Thanks
@EricUngs
Amazing to see so many people crashing the “There’s nothing wrong with Facebook” party – if I see one more MafiaWars ad, I’m liable to spit.
Still.
Advertising is not as old hat as people think; anyone following Scoble’s blog will have read the bit on Twitter’s possible advert scheme (here: http://bit.ly/6C6KEC) which, if it turns out how he’s hoping, may actually be the opposite side of the coin from a lot of what you see on websites. Helpful advertising with a more utility-oriented schema rather than blinky lights would be refreshing.
While we’re on it; free apps with ads are sometimes annoying, but when they’re the most useful of the set (UberTwitter for BlackBerry, for example, compared with the new Seesmic port) most of the people I know will go for ad-driven utility. But the utility has to be there, it’s the key behind the app after all.
No one likes being sold, but everyone loves to buy. I don’t think it’s time for ads to go away, free culture limits itself believing anything should remain totally free. I just hope that advertisers, if not the facilitators like Twitter and Facebook, can find a better way to interweave the advertising with the stream – rather than breaking the flow with commercials. Sponsorship is one thing, “More after this” is a different proposition, at least on the net.
We seem to forget the trade-off, even free comes with a cost associated with it. Advertising won’t kill Twitter…annoying advertising will. Example…MySpace, place is a friggin’ train wreck.
Looking at MySpace, I don’t get the impression that advertising drove anyone from that network. Facebook became more popular, and since many of the functions were redundent, people decided to use Facebook as their social hub rather than MySpace. Why? I think there were a couple reasons. One, users were attracted to the cleaner look of Facebook and the ease with which Facebook allows you to find other people, essentially by bringing suggestions to you of people you might know. This allows anyone who signs up for an account to very quickly get a community started. This almost instant community means new users will come back after checking it out.
Did advertising drive users from MySapce? I don’t see any evidence of it.
If advertising drove users away, then the MLB, NBA, and NFL would have long ago gone out of business.
I think advertising is more or less expected on the web. It’s not a surprise.
I agree that people leave when they no longer receive value for a service, or have found another service that provides more value.
I generally agree but I think it’s much easier if the product or service has some kind of monetization plan up front and that is clear to the users. That way everyone knows what they are signif up for before they invest their time and effort.
Advertising will drive people away when it’s poorly integrated and irrelevant. But done well, it adds to the overall experience. I think Foursquare’s implementation of ads has actually been quite useful. Similarly, I’ve found the ad network like The Deck to be incredibly relevant and I’m more than pleased to support the apps and sites that are a part of the network.
Never is too big of a word. Sometimes it does, thought that may be the minority of the cases. Like Ryan above me said, it will certainly drive people away when it’s poorly integrated and irrelevant. I can think of several time’s I’ve found another place to watch a video when I was tired of YouTube’s ads popping up.
I’d like to use the example of YouTube… I won’t stop using the website on account of its (now extremely intrusive) ads, but I am definitely going to check out some other video hosting site like Vimeo if I ever plan on getting any clients’ videos on the Web.
And if Twitter started sending out advert tweets, I’d drop it like it’s hot.
In my view An enterprising person is one who comes across a pile of scrap metal and sees the making of a wonderful sculpture. An enterprising person is one who drives through an old decrepit part of town and sees a new housing development. An enterprising person is one who sees opportunity in all areas of life. To be enterprising is to keep your eyes open and your mind active. It’s to be skilled enough, confident enough, creative enough and disciplined enough to seize opportunities that present themselves… regardless of the economy.
‘d like to use the example of YouTube… I won’t stop using the website on account of its (now extremely intrusive) ads, but I am definitely going to check out some other video hosting site like Vimeo if I ever plan on getting any clients’ videos on the Web.
http://www.onlineuniversalwork.com
As charlesbrooks already mentioned, youtube is a good example of advertising driving users away, at the very least it drove me away. Transitioning from limited to no ads to aggressive advertising is a huge problem, and one a lot of venture funded start-ups will hit headlong at 60mph when the start-up funding begins to wane.. Advertising in and of itself isn’t a huge problem, but desperation to monetize most certainly is. There are plenty of sustainable models out there (craigslist, google, hulu), most balance the content value with advertisement subtlety.
I just read your comment.I agree with everything you quoted. One must stay innovated and aware at all times therefore you are keeping up with the times and creating all of the time which in turn helps everyone develop at the same pace.
Ads may draw users away from a site if the ads aren’t relevant to the conversation are useful to the visitors. For example, I wouldn’t leave this blog simply because ads were included as the information is useful. 🙂