News

Social Sites Come Up Short

Written on: February 5th 2008
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After announcing numbers that failed to reach expectations last week, Google executives said that the firm was having a difficult time creating revenue from ads served on social networks and figuring out the right ad format for YouTube.

Microsoft which owns 1.6% of Facebook and has a long-term deal to sell advertising on the site, may be losing money from this deal as well, reports the Wall Street Journal. This concern is significant for the search engine/technology firm as it looks to acquire Yahoo and have access to its 500 million users worldwide.

The slower growth of online revenue from video content and social networks may also be attributed to the escalating economic issue globally.

The report continued to say that giants such as Google and Microsoft have not given up yet though with the estimation of ad spend on social networking and video increasing in the U.S. about 70% this year to $1.56 billion; it will decelerate to a 29% increase to $2.02 billion 2009 according to eMarketer Inc.

Google CEO Eric Schmidt aid to WSJ in an interview that “It’s taken longer than I thought for us to find the right combinations (of ad formats) but it will ultimately be very, very successful for [Google] and the industry.”

Reader Comments.

Social sites are not yet an ideal environment for online advertising. The ads are many times a distraction and run counter interference with the content and connections..

Posted by Jack Roberts | 5:51 pm on February 5, 2008.

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I believe that the Social Network traffic is way overvalued at this time and as advertisers keep pulling their marketing dollars away from Social Media, Facebook and others will need to come up with rates that could spell out PROFIT instead of LOSS.