It would be easy to be bearish on the monetization prospects of social media. The lackluster performance of high profile IPOs has created a wave of negative headlines that has much of Wall Street (and Main Street) convinced that the space is a lot of hype, and maybe even the second coming of the dotcom bubble.
But those headlines ignore most of the key trends we see happening right now across the social media space and here at Mashable. Although we may be a biased observer -- after all, digital advertising keeps the lights on at HQ -- there are several compelling reasons to be excited about the marketplace heading into 2013 and beyond.
The Closing Mobile Monetization Gap
The skepticism around social media stems largely from the perception that the audience -- especially on bellwethers like Facebook and Twitter -- is moving quickly to mobile devices, where monetization has proven difficult. Kleiner Perkins partner Mary Meeker illustrated the monetization gap in her widely circulated annual trends report, which showed that although mobile now occupies 10% of people’s media consumption time, it commands just 1% of advertising budgets.
But there are signs of hope. Facebook is now making 14% of its ad revenue through mobile advertising thanks to its Sponsored Stories product (more on that in a moment). Twitter, which doesn’t publicly disclose its revenue numbers, is reportedly doing even better. And Google, the dominant player in mobile advertising, has grown its mobile ad revenue more than 160% this year, according to analyst estimates.
Part of that growth is the predictable trend of ad dollars finally starting to catch up to consumer preferences. That said, I would argue that part of the growth is also the result of the introduction of much more compelling mobile ad formats.
Responsive Ads
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At Mashable, our redesign adds a new level of sophistication to our native advertising solutions with a product we call Content Lift. Now, when an advertiser works with us to create a custom program -- like BMW’s Global Innovation Series or Aloft's Day in the Life Series -- they can amplify the reach of that content through units that appear in the stream of content on our homepage and channel pages.
As a publisher, we’re excited about the evolution of our native ad program for a number of reasons, not least of which is that it allows us to create some of our most compelling content. Our docuseries about startup life “Behind the Launch,” which aired earlier this year, was viewed 3 minutes and 15 seconds on average; impressive when you consider each episode was only about 4 minutes including the credits. The recently completed Innovation Index 2012, which was sponsored by Visa, engaged tens of thousands of users across social media sites as they voted for their favorite innovations of the year.
On average, we’ve found that our readers actually spend nearly 50% more time on articles created as part of a custom content program versus organic posts. The data also tells us that our readers click on the ads associated with these programs about twice as much as they do on non-contextual advertising.
The conclusion then is that native advertising not only represents a way for advertisers to reach an engaged audience, but also allows us to do work that our readers love. As our former Editor in Chief, that is a media business model I can get behind. And, coupled with the innovation we’re seeing across the industry in ad technology, a good reason to be excited about the future of the digital advertising market.