Battelle put me over the top and inspired me to write this.
Today, he writes "PS: I Think There is A *Huge* Business in Social Advertising"
Sometimes web people are so isolated, it's a bit ridiculous. Update: That wasn't very nice. Or accurate. These are very sharp guys...
John Battelle (or Scott Rafer w/ Lookery or Seth Goldstein w/ Social Media) trying to predict how small business advertising will be affected by social networking is like 3 rocket scientists debating how to bake a cake.
These guys are so far removed from the practicality of running small local service based businesses. When's the last time any of you talked to a contractor, a restaurateur (in a small town) or a massage therapist about how they get new business?
Role of referrals: Nearly 60% of respondents said that more than half their business comes from customer referrals and “word-of-mouth,” while 30% said that “more than 75%” of their business is from referrals.
Do you really think happy customers of small businesses are going to start using facebook to make recommendations? Ahem. No.
This process might move online. But, there's no money in it. People will recommend the people they got great service and products from; the people they trust; the people that have proven they can deliver.
It might happen over a platform. It might happen on facebook. But, the transaction isn't going to be monetized.
Never before has an organization had such a lock on our attention like Google has. It'll never happen again either. Our attention is and always will be given to the people we trust. Ant it's not that monetizable. There will be no middleman.
That's why "Social advertising" is not and will not be a big business. Of course, automated behaviorially targeted advertising will be a big business. But, it's only an incrementally better solution than current ppc networks. And google, yahoo, msn will own that game. The barrier to entry is too high for an upstart ad network to beat them, even with a few nice targeting tricks.
Yes. Sponsored Content or "Conversational Marketing" will be a growth area too. But, not everyone is going to start a blog so that they can host sponsored conversations. And conversational is just that: it benefits the advertisers that join the conversation. Not the ones that pay the most $. It won't be brokered. It doesn't scale like an ad network does.
Most people will just send an email or talk to their friends when they need a recommendation. Maybe there'll be a site that can help them do it a little more efficiently. But, it's not going to be a billion dollar business.
Social media is free. Social Marketing will be close to free. Social advertising won't be a revolutionary new big business.