NEW YORK — While Google struggles to make back the $900 million it guaranteed to MySpace in 2006, Facebook revenues will maybe top $300 million in 2008 — which would put the price paid by Microsoft for its tiny piece of the social network at 50 times revenues. Why can't the social networks make more money? Don't ask Google's top U.S. ad salesman, Penry Price. "There's no answer yet how to monetize some of the places we're working today," Price told the audience at EconAds yesterday. At the same event, NeoAtOgilvy COO Greg Smith said "We're still trying to put ads on MySpace and everyone's asking why its not working. It's because its the wrong solution."
Smith told the crowd that the big spends agencies like to make for the clients on TV actually go too far on social media. With $100 million, Smiths said, he could purchase and track 1,500 TV ad spots for a client. Spend a tenth of that much on a social media site, and suddenly, "There's a huge wave of data we're not prepared to deal with." That overflow of information is one reason advertising on social media requires "more resources" from agencies.
More work to spend less of the client's money? That doesn't appeal to agencies. Besides, social media advertising — which is all about engaging consumers on a deeper level — is not always worth it for packaged-goods advertisers, which just want to move product off shelves. Smith said it best: "No one wants a relationship with their mustard." (Photo by Marshall Astor)