The ad revenue model is blurring the lines between social media and advertising

In the early days of social media it was hailed as the replacement for advertising. The interruption model of advertising was so twentieth century and the permission model of social media was the darling of the new millennium.

Brands that were early adopters were especially excited because they viewed social media platforms as a non-commercial marketing channel. Instead of renting space in magazines or commercial time on broadcast networks, social media offered the hope of connecting with purchasers on a one-to-one basis for less cost. Brands flocked to Facebook populating their pages with helpful hints, events and special deals for those who “Like” their brand.

As social media platforms matured, it became apparent that in order to sustain their business they needed a monetization model to pay the bills.  Google figured this out early. Ad Words (the purchase of key word search terms) made Google extremely profitable and allowed the search engine to continue to provide a free service.

Social media platforms such as Facebook, Twitter and LinkedIn had lots of users but struggled with developing a monetization model. The one thing they did have were copious amounts of data about their users. Access to this data was attractive to the advertising community. It held the promise of being able to target advertising to an individual user based on their profile, interest and browsing habits.

Social media channel?

As the social media platforms grew the sheer number of users dictated that brands develop a social media strategy instead of just maintaining a presence.

Social media platforms responded by offering sponsored advertising.  Sponsored advertising solved several problems:

• Now the social media platforms had a monetization model leveraging their vast proprietary database.
• Brands could better target their advertising based on the users profile.
• Digital analytics provided a rear looking ROI measurement.

So what began as a non-commercial peer-to-peer network is transforming into a branded media channel.

Using social media to influence purchasing

The premise of social media is word-of-mouth advertising. Brands understand that a negative comment or a positive review can affect brand perception ultimately influencing the purchasing decision. Many brands have adopted social media as an inbound marketing channel.

For example:

• Airlines producing their pre-departure safety videos to become branded forms of communication.
• Firms like GE have dedicated social media pages about locomotive and jet engine engineering and production.
• Dell computer uses social media to answer customer questions and solve technical problems.

All of these strategies have one thing in a common – to connect, engage and influence the purchasing decision.

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