Signal to Noise in the Social Web and the viability of the river of news with advertising

I came to a small realization this weekend; this is big, traditional media is dead!

Gone the way of the dinosaurs. Twitter is breaking more news these days than CNN or the Wall Street Journal. The news papers or bleeding life. Subscriptions are down. Pew Internet studies state that younger generations are going online to get their news and dont read traditional publications. Here’s the rub, social web and social media still lack a proven business model.

The real question is business model; Web 2.0 witnessed a resurgence of advertising. In the late 90s we used to laugh at new web portals coming to market with the idea that they will just sell some ads on the site to sustain their business. Interestingly, networks like Google and others brought ads to the little people. Or more appropriately it is the ad networks that became outsourced ad sales forces that could be easily consumed to enable even poor monetization on a web property. It has amazed me at how many new ideas are not betting the farm on Google’s ability to sell ads into their channel. Let’s not forget the death of Google AdSense when Google enabled the advertiser to opt-out of the Google publisher network. This killed the revenue for many publishers (side note: the quality of these publishers is in question but that’s another topic).

If we look at ad effectiveness; why is it that we always see mortgage ads, even after I just refinanced my house. It’s because the ad networks have access to their traffic data which by itself suggests that certain ads performe and monetize better than others. We say profile based ads in the 90s become contextual of the early 2000s. And now we have behavioral being all the rave. Behavioral is really just taking the profile and applying as context over time. If I read the front page of ESPN a lot, perhaps I like sports related stuff. So even as I am reading an editoral page on a remote site or a blog, I still might be intereted in sports. We have found time and again that behavior and profile dont always work. Advertisers are still struggling with how to get their signal through, when they are surrounded with all of this noise. It is this ratio of signal to noise that determines relevance. With the flood of information; relevance is dying. It is becoming harder and harder to find what you want on Google through all the cruft. Does Google search have a similar fate to that of AltaVista? Excite? Inktomi?

Enter’s the world of social media and the socail web. MySpace (the trailer park), Facebook (hey look at me), YouTube (check this out) and the many others all embrace our primal needs to network and congregate especially in a virtual world. We still have yet to see advertising in these new mediums find true success. Frankly, most of the ads on Facebook are terrible.

It is my feeling that advertising is not going to be as effectiven the social web or social media as it has been in pure search. There I said it. Traditional online advertising in social media does not work. Many may ask why, its mainly because there is too much noise and the message gets lost. Long gone is the billboard, radio ad, or TV ad that big brands have been built on over the past 30+ years. 

Once again that turtlehead called relevance is poking its head out again. With so many social updates, in a modern world with a river of news; you can either

a) only see what flows by you when you decided to engage or
b) find new ways to parse, sort, and consume the massive amounts of information being fed through a fire hose.

The river of news which was once a babbling brook is now nearing a class 4 rapids. Strap into your wooden barren and hope for the best as the information sweeps you away. Niagara Falls here we come! 

Returning to the arguement of business model. If users do not want to be engaged in a traditional commerical mechanisms; how do you get the message out? Do I want to friend a brand? Should I be a fan of a brand? More practically will injecting ads within the stream work? Along side of the stream? or will ads even work in this space.

Why do most ads in search either find labels of “Sponsored” or “Advertisement” or “Paid Listing” – Let’s not forget that women still buy beauty magazines for the ads. This is a perfect example of how relevant advertising when wanted; is considered content. What a novel idea? How do we make advertising more useful and content-like?

The answer lies somewhere in the idea of joining the conversation. What are the many conversations relevant to a brand? a consumer? a product? a company? and other interested parties?

Its funny the resurgence of advertising on the web, build it and they will come… great traffic strategy, bad business model. We are on the eve of needing something new. We need new leaders to usher in new innovation in business models to support this new method of information dissemination.

We are all witnessing the precursor to this business revolution… What’s next?