Market research firm eMarketer has cut yet another ad spending estimate for 2009, and this time it's social networks. The social-network advertising industry is now pegged at $1.3 billion next year, down from $1.8 billion. For 2008, it's been lowered to $1.2 billion from $1.4 billion.
That's a big drop. Looking at individual social networks, eMarketer has cut its estimates for MySpace from $755 million to $585 million this year, and from $265 million to $210 million for Facebook.
"As consumer usage of social networking sites continues to flourish, advertising has not kept pace," a release from eMarketer explained. "In 2008 and 2009, the recession will affect all forms of online ad spending, but experimental formats, such as the ones available on social networks, which cannot always demonstrate a proven return on investment, will be hit particularly hard."
eMarketer has already cut its ad spending estimates for the overall Web multiple times this year.
But marketers shouldn't write off social networks entirely, the report said. "Monitoring social network discussions about a brand or product and interacting with consumers in a community are still valuable--and probably essential--activities."
Marketers ought to be aware that some consumers are suspicious about the phenomenon known as "behavioral targeting," a new report from eMarketer says.
Called "Behavioral Targeting Attitudes: The Privacy Issue," the report released Friday explores the digital ad strategy, which collects consumer information and uses it to serve up ads that they may find interesting or relevant. This has been the basis for high-profile programs like Facebook's Social Ads and MySpace's HyperTargeting, as well as Google's extraordinarily successful AdSense. (That's why you'll see ads for vacation homes in Gmail after you've been e-mailing back and forth with your friends about wanting a weekend getaway.)
The takeaway point from the report: "Consumers want ads that are relevant to their needs, but they have mixed feelings about how that relevancy should be determined."
eMarketer cited a TrustE study which found that 70.5 percent of Internet users polled seemed to be decently aware that their browsing activity could be tracked by third parties for advertising. But only about 23 percent of them said that they were OK with having their behavior monitored, even if they were assured that the data would not be shared and no personal information would be divulged.
Targeted advertising is an extremely sensitive subject, with privacy advocates on both the left and right ends of the political spectrum voicing concerns. Internet service providers have been criticized for behavioral-targeting campaigns, questions of legality continue to arise, and top executives at tech companies have been brought into the debate.
The study suggested that advertisers should ensure that consumers are educated on the fine print of behavioral targeting, and that they're offered an opt-in choice. "One way to ensure that consumers welcome rather than reject behaviorally targeted ads is to ask them to give their consent to receive them," a release about the report wrote. "Tell them about the real benefits of saying yes, including more-relevant advertising." That's what the Internet Advertising Bureau has recommended, too.
But perhaps a more serious issue for the ad industry is accuracy. The TrustE numbers cited by eMarketer said that only 12.6 percent of respondents said that more than a quarter of the targeted ads they were delivered were relevant. Ouch.
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