Advertising divided

Om Malik in his review of the Apple-Bebo announcement to sell iTunes through Bebo’s social network asks “Can we expect more such deals’?.

He believes we will – in large part because social networks are not attracting advertisers at the rate their incredible page views would suggest.

I’d agree in the short term that such deals will increase – because they potentially increase the bottom line of social sites and offer advertisers something they understand –
longer term I believe that much of the 3R portion of purchase decisions (referral, review, recommendation) that is now on available on e-commerce sites will move to social networks – because the value of that information (and therfore the likelyhood of acting on it) increases when you can also access the reliability and knowledge of the source.

This will be part of a larger process as advertisers segment the buying process into measurable sections and apportion value to those segments.

Currently most of the advertising dollars go to traditional media advertising that generally promotes brand awareness and occasionally calls to action. Some money (thought still only a small portion of the overall advertising budget) goes to search – which enables a brand to insert itself into a category by showing up on a search list at a time of research or purchase.

The buying process is very complex and social networks offer the opportunity to access the social parts of the buying process. What are needed before this will happen are mechanisms to measure these processes – and assign value to them.

I expect that long term traditional media will lose dollars associated with brand awareness to search that provide ‘last chance’ awareness and price arbitrage. The big winner will be social networks that will take brand awareness and convert it to associations and recommendations that are unique to that social network.