Social Network Users Less Receptive To Advertising

More than half of U.S. consumers with Internet access use social networking services (SNS), such as Facebook and MySpace, and penetration will continue to grow. According to a new study from IDC, consumers are also spending ever-greater amounts of time on SNS, a fact that has advertisers drooling over the opportunity represented by SNS.

IDC found that consumers who use SNS also tend to visit the services often and spend a lot of time per visit. More than three quarters of SNS users visit at least once a week, and no less than 57% visit at least once a day. During each session, 61% of SNS users spend at least 30 minutes on the respective site or stay logged in permanently, and 38% spend at least one full hour per session (or stay logged in).

There are four major reasons why consumers use SNS: to connect and communicate; in response to peer-pressure; for entertainment; and for work-related purposes. Advertising does not factor into consumer motivations. In fact, users are less tolerant of SNA advertising than the best tolerated forms of online advertising. Ads on SNS have lower click-through rates than traditional online ads (on the Web at large, 79% of all users clicked on at least one ad in the past year, whereas only 57% of SNS users did), and they also lead to fewer purchases (Web: 23%; SNS 11%).

One of the potential benefits of SNS that the advertising industry has discussed is whether peoples’ connections (i.e., whom a user knows or is linked to) could be used for advertising. For instance, publishers could show a car manufacturer's ads to a user's contacts because that user's online behavior has indicated that she is interested in a particular brand of cars. Anecdotally, there has been some indication that this "social advertising" might be more effective than behavioral targeting. However, that idea is stillborn. Of all U.S. Internet users, only 3% would allow publishers to use contact information for advertising.

IDC expects that lower-than-average ad effectiveness on SNS will continue to contribute to slow ad sales unless publishers get users to do something beyond just communicating with others. If the major services succeed in doing so, they will become more like portals, such as Yahoo! or MSN, and they will come closer to the audience reach of the top services. If that happened, publishers would be better able to monetize their SNS.

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