Social Networks Ad Revenues up to $4 Per User – Kids Need to be Ad-Literate

We need internet companies to be successful and make money, so the news that Deloitte believes the average revenue per user (ARPU) of social networks will reach $4i this year is great news – if users are ready for the responsibility.

Deloitte’s findings also estimate social network membership will reach about 1 billion users worldwide this year, meaning total social network ARPU should equal around $4 billion.

Applying this projection to Facebook would mean that with their base of 500m active usersii , the company should be seeing $2 billion in ad and other revenues this year.  Internet companies also generate revenues through selling virtual goods, and some types of user information, and so on, but the vast revenue comes from selling advertisers access to consumers using the company’s sites, and nowhere is this truer than on social networking sites.

Social networking publishers were responsible for 34% of online display ads viewed in the US during December 2010, according to a new white paper from comScore.

ComScore’s data also shows that in 2010, US internet users received a total of 4.9 trillion display ads- up 23% from 2009.

Given their market share, it isn’t surprising that Facebook.com delivered the highest volume of display ads with more than 1 trillion ads in 2010, setting an all-time record for ads delivered.  (To put this in perspective, if there are half a billion active Facebook users, and ads were distributed equally, then each user would have been served 2,000 ads over the course of the year, or roughly 5 ½ ads per day.

Compare that to Yahoo Sites, which ranked second with 529.4 billion ads, followed by Microsoft Sites with 243.9 billion ads, Fox Interactive Media with200 billion ads, and AOL, Inc. rounding out the top 5 with 130 billion ads.

Given the sharp rise in advertising, are our kids prepared?

It’s no secret we’re surrounded by advertising on TV, radio and the internet, busses, playgrounds, buildings, clothing, and – if some legislators get their way – ads will even begin appearing on government buildings and online sites.

Unfortunately, we aren’t doing a great job of teaching our kids to be savvy enough to distinguish hype from truth, emotional marketing vs. product marketing, or a scam vs. a legitimate offer. Few youth are able to consistently answer the three basic questions of: Who’s behind the ad? What are the actual claims of the ad? And what is the ad asking of me?

Kids aren’t prepared to match wits with the battalion of psychologist being deployed, not to sell the product, but to build an emotional connection with the target audience.  In an age of constant connectivity and increasingly sophisticated means of advertising, the old concerns over subliminal ads where images of popcorn were hidden in movies have become downright quaint.

Several years ago, a PBS “Frontline” show called “The Persuaders,” examined how advertising significantly shifted approach in the lead up to the new millennium going from “what the product does and why this product is better” to “emotional branding” I need this product as part of my life/lifestyle.  Though it aired first in 2004, it remains shockingly relevant and is a great show to watch with your kids to start a discussion about how to evaluate the advertising messages you receive.

Last year, to address some of the issues around advertising, the Federal Trade Commission created an online interactive educational game called Admongo to teach kids critical thinking skills. In the game, kids gain points for identifying ads and understanding the motivation behind them. It’s a game that’s good to play together with your kids as I think parents will struggle to navigate the game, so kids can navigate and parents can talk about the concepts as the game progresses.

Keep the conversation going. Consider using everyday ads you come across as conversation launchers with your kids, the more you give them practice with a variety of ads – commercial, political, cause driven, and so on, the better skilled and savvier they’ll become.

Linda


i “Technology, Media & Telecommunications Predictions 2011″

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