Analysts predict that companies will spend more than $10 billion per year on social media ads by 2017. And social networking sites are ready for the flood.
Sites that spearheaded social media advertising, such as Facebook and Twitter, are upping the ante with mobile video ads and APIs. And other social media sites are exploring ads, too. Pinterest’s paid advertising product, Promoted Pins, went live in October. Instagram recently announced plans to include sponsored posts in users’ news feeds. And Foursquare now allows small businesses to create their own ads for the site.
These announcements have been met with largely positive reviews. But not every social network has been so lucky. In the early days of Facebook, ads ranged from discount clogs to big-name brands such as Verizon — and the company received criticism for its random smattering of advertisers.
Still, Facebook’s first foray into advertising wasn’t the biggest social media ad fail out there. Check out these social media sites that tried and failed to integrate ads — and what we can learn from their mistakes.
The fail: Pinterest made waves in 2012 when it was revealed that the site was quietly profiting off user-generated pins. Pinterest was using a third-party marketer, Skimlinks, to add affiliate links to pins featuring items sold through Amazon, eBay, Target and other retailers. Pinterest then received kickbacks from retailers when customers purchased items through the site.
It wasn’t the kickbacks that Pinterest users protested – according to Skimlinks, many sites employ similar tactics. Instead, it was the lack of transparency. Pinterest users were upset that the social network had failed to be forthcoming about their money-making efforts.
The lesson: Be open, honest and transparent with users – don’t try to hide attempts to advertise or monetize. Most people expect social media platforms to profit, so they won’t be surprised to find out you’re making money. But people spend a lot of time on social networks – and they disclose a lot of personal information. Social media users expect the sites they frequent to be equally forthcoming with them.
The fail: In 2009, the news aggregator tried to implement contextual ads that worked a lot like Digg stories. Sponsored posts showed up in the homepage feed for users to upvote or downvote. The price and position of the ads would depend on user feedback. And ideally, Digg users would only see ads relevant to them.
Digg readers didn’t hate the new ads, but they didn’t love them either. Users called them “annoying,” “deceptive” and “insulting.” And they didn’t work all that well, at least as a monetizing effort: Digg, once worth $300 million, sold in 2012 for just $16 million.
The lesson: Listen to your core users, and also consider what makes sense for the masses. According to some, Digg lost its chance at profitability because it overly catered to niche users. Instead of appealing to the mainstream, Digg launched a half-hearted advertising program that no one liked anyway – and ultimately failed.
The change was short-lived, but the backlash was fierce. #BoycottInstagram was trending on Twitter almost instantly, and many users – including high-profile ones, such as National Geographic – threatened to abandon the site. Luckily, Instagram listened and the site reversed the policy change just one day later.
The lesson: It’s a lesson Instagram could have learned, at least in part, from Pinterest. Don’t try to hide major changes from users, and don’t mess with the content they generate. Instagram narrowly avoided a user rebellion for just thinking about selling photos to advertisers.
What’s next for social media advertising?
As Americans spend more time on social media, social media advertising becomes more inevitable. And the options are nearly unlimited. Video ads, ads targeted to specific individuals using the wealth of available social networking data, and native ads that blend seamlessly into user streams are just a few advertising options we can expect to see.
But making social media advertising work will take effort on the part of social networks – and some consideration for their users.
Alexis Caffrey is a freelance writer with a focus on technology, new media, and design. In a former life she was a graphic designer based out of New York. She actively (some would say obsessively) follows entertainment news and pop culture. You can reach Alex via her e-mail.