Ignoring the Buyer Purchase Decision Process Online

It has been an incredibly busy time over the last couple of weeks: SXSW, the post-SXSW SARS, board meetings, hiring, massive system failure on my Lenovo laptop. Despite all this, one of the talks at SXSW, "Peas in a Pod: Advertising, Monetization and Social Media" continues to bounce around in my head. The talk featured Kent Nichols (Ask a Ninja) and Tim Kendall (Facebook), Ellen McGirt (Fast Company) and Seth Goldstein (Socialmedia Networks). The talk was timely because Livemocha is thinking a lot about monetization these days, and advertising is certainly a candidate.

The premise of the talk was to address the well-publicized disappointment of social advertising. Essentially, advertisers are disappointed with the click through rates they've seen in advertisements surfacing on social networks. I actually experimented very briefly with Facebook ads, and I can verify that the performance wasn't nearly as good as what we're seeing on Google.

Depending on what you're selling, how you sell it is highly contextual.

The talk contained what seemed to be 2 un-spoken themes:
1. The success of your advertising is dictated by your goals (and your goals are dictated by where you're playing in the user's purchase decision-making process).

Anyone that has taken marketing 101 knows the purchase decision process, but in tech we're obsessed with advertising as a means of moving a user from evaluation of alternative->purchase. As a social advertiser, if purchase is your criteria for success, you'll be disappointed. The pop culture's current wisdom says, CTRs on Google are much better than social advertising because when I'm searching, I'm looking to buy. When I'm on a social networking site, my focus is on interacting with my friends.

The point is, sometimes advertisers aren't looking to sell something RIGHT NOW, their goal may be to stay top-of-mind, or be perceived as a premium brand.

Kent Nichols (ask a ninja) made a good point: Tech people's obsessions with automation and scale have made them myopic about advertising. Unless it's measurable, and repeatable tasks can be done in an automated way, we tend to shy away. Ask a ninja has been successful in acquiring sponsorships because he worked the old-fashioned-way: "networking/ having dinner with people who sweat" (those were his words). In other words, he recognized that his "Phoenix University" ads weren't performing well, so he sought sponsorship partners (Yes, there are more advertising options out there than just banner ads) who were looking for creative ways to promote their products further back in the decision making process.

2. There are 2 types of brands: aspirational and functional (or, NO I don't want to play a video game about soap)

With the launch of the Facebook Platform, we heard a lot about how Facebook Apps are a great way for brands to engage their users. Further, Facebook Pages allow me to express my support for a specific brand so my friends know I love Mac computers or Nike shoes, or whatever the case may be. The idea here is to extend the school yard "cool kid" influencer to the online world - my friend Andy is cool, and he likes Nike shoes, so I should get a pair too.

The problem is: not all brands lend themselves to aspiration. Maybe I think my Mac computer says something about me, but I don't personally identify with my soap, and certainly my friends don't care. The table here provides a break down of advertising options based on the advertiser's context.

I can understand the appeal of online games by clueless big brands, with stats like these being thrown around:

Predictions for the size of the market for in-game advertising by 2010 range from $1.5bn, according to Citigroup, up to $1.8bn, according to Forrester. With the videogame industry being worth some $25bn in 2005, according to analysts PwC, it's clear that there is enormous scope for advertisers to work with the gaming industry.

But seriously, what was aquafresh thinking?