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Is there value in buying display ads on social sites?

This post was written by Mirna Bard, a social media consultant, speaker, author and instructor of social media at the University of California at Irvine.

SmartPulse — our weekly nonscientific reader poll in SmartBrief on Social Media — tracks feedback from leading marketers about social-media practices and issues.

Last week’s poll question: Have you bought ads on social networks? If so, did the ads deliver a high return on investment?

  • No, I have never purchased ads on social sites — 64.86%
  • Yes, I have bought ads on social networks and the return on investment was low — 27.03%
  • Yes, I have bought ads on social networks and the return on investment was high — 8.11%

U.S. advertisers spent $1.99 billion on social ads in 2010, and they are estimated to spend $3.08 billion in 2011 — a 55% increase over last year, according to eMarketer. If you are like me and intentionally ignore advertising on social networks at least 99.9% of the time, then you and I probably have the same questions: “Why is the ad spend on social sites growing so rapidly, and will it continue?”

I am astonished by these ad-sales figures, since everyone I seem to ask either says they’ve never purchased social ads, or they have bought ads, but would never do it again because of extremely low return. I thought maybe I was asking the wrong audience, but the bulk of respondents to this week’s poll say they agree.

I think it is safe to say that most individuals don’t like ads, and intrusive advertising on social networks is no different, given that people are there for relationship-building, not unsolicited banners on their profile pages. However, there is no doubt that social networks provide a platform to purchase highly targeted ads based on people’s behavior and interests. These social ads seem like they must be working for someone, since ad-spend expenditures are so high.

Luckily, Google and Mozilla are already rolling out ways for people to opt out of so-called behavioral advertising. In addition, the Federal Trade Commission is working hard to find a way to control online solicitations, which may probably change the way ads are displayed on social networks. It will be interesting to see where the social-advertising realm is headed.

What has your experience been with social ads, either from an advertiser or consumer point of view? Would you opt out if legislation gives you the option?