I strongly disagree with this article. Models like CPC/CPM and context based advertising will not work for social networking sites.
Even contextual ads are a pretty recent phenomenon that are still evolving. Web 2.0 has mainly been fueled by the evolution of advertising from general, non-targeted ads to more targeted advertising (behavioral advertising, search advertising via Overture, contextual advertising via AdSense). Web 2.0 sites can make good money if they have targeted content and a good amount of pageviews.
Now we have these large, sticky social networking sites that do not have targeted content, but very high social value and are tightly integrated with people's lives. The models for monetizing targeted content just don't work for sites like Facebook. There needs to be a new shift in advertising that has not yet come about. I'm not talking about gimmicks like virtual products and gifts, but something inherently even more valuable. Marketing that actually alerts people to things/services they _want_ to know about. We're still a long way from that, but the value available from these sites allow us to take a large leap towards this goal.
Even contextual ads are a pretty recent phenomenon that are still evolving. Web 2.0 has mainly been fueled by the evolution of advertising from general, non-targeted ads to more targeted advertising (behavioral advertising, search advertising via Overture, contextual advertising via AdSense). Web 2.0 sites can make good money if they have targeted content and a good amount of pageviews.
Now we have these large, sticky social networking sites that do not have targeted content, but very high social value and are tightly integrated with people's lives. The models for monetizing targeted content just don't work for sites like Facebook. There needs to be a new shift in advertising that has not yet come about. I'm not talking about gimmicks like virtual products and gifts, but something inherently even more valuable. Marketing that actually alerts people to things/services they _want_ to know about. We're still a long way from that, but the value available from these sites allow us to take a large leap towards this goal.