Posted November 18, 2009 5:30 pm by with 7 comments

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Dollars FloatingIn a headline from yesterday, the Wall Street Journal tells us that Digg CEO Jay Adelson has one less thing to worry about: “Profitability Is Not A Problem Anymore.” In an interview with Fox Business Network, Adelson addressed the issue of monetizing social sites—but I’m not so sure I’d say profitability isn’t a problem anymore.

Adelson says that last year was the big year for pressure to monetize social sites—”to monetize fast and to get to profitability quick. This year, not as much. We’re back focused on growth.” (That’s all well and good for them—they are “monetizing well.”) And growth is good—but haven’t we learned anything yet? Having a lot of users isn’t a business model. Relying on angel investors for the next 20 years is not a business model. (Then again, I guess focusing on growth means you don’t think about the “next 20 years” just the “next 20 users.”)

Advertising, however, is a business model—and one that seems to be working for Digg, despite the economic downturn. Despite his insistence that they have no need to worry about monetization anymore, Adelson does focus on Digg’s advertising efforts—and recommends their model to newspapers (typos corrected) (because I’m like that).

Right now what we do is we go to these advertisers and try to convince them to create content as advertising. Instead of the standard billboard or whatever you read on the Internet, we’re going to create ads – and we do create ads – that are literally content, so if you click on it you read an interesting story or article, and you put branding next to it. And we get literally get 100 times the clickthrough rate of what a typical ad would get, so that’s good for advertisers. Now if I can take that same concept and syndicate it and put it on a newspaper site and help them monetize it the same way, I can help them solve their problems.

But advertising isn’t a panacea, even for Digg—while Adelson says that “We’re making money which is the most important thing” (not growth? Hm.), he also notes, “I feel like we’re going to get to profitability” (but he’s not losing sleep over it).

What do you think? Could the content as advertising model work for newspapers or other social sites (*cough*cough*YouTube)? How would you feel if you clicked on content only to discover it was (partially) advertising?

  • Social media is turning into a marketing platform and this is just the next step to influence the reader. It is much more powerful that traditional methods.
    .-= Ahmad Barirani´s last blog ..Too Much Innovation Can be Fatal: the Case of Google Chrome =-.

  • I think maybe Jay is onto something here. Content advertising is definitely being led by the consumer’s desire for usable information.

  • I think it could work as long as the landing pages are relevant to the link the surfer clicked. Furthermore, it should add value and user experience.
    .-= Newsflx´s last blog ..Kttc =-.

  • HI

    The content advertising is definitely being led by the consumer’s desire for usable information.

  • True…traffic isn’t everything but if you don’t have traffic you can’t sell anything.
    .-= Steven Roddy´s last blog ..Are you Driven by Desire or Emotion? =-.

  • Hi Jordan,

    I’m not sure if the digg dude is right but what he’s trying to do is a lot more sensible
    than the blatant, overpriced, and less useful than ever newspaper ad strategy.

    It’s kind of silly if you think about how easy it is (at least for a real business),
    Give more of the help that customers need to help them choose you, and
    then receive the business you seek, and get it more willingly from them.

    Granted the technology has been and is a big hang up for
    many of us, especially the baby boomers like me. Thankfully that
    part has gotten a little simpler.

    I also think the reluctance to share knowledge that some business
    people have, may come from a tendency to distrust in general.

    I’ve donated a ton of work over my various careers in hopes of gaining a customer,
    and possibly a profit, only to be left empty handed when it came time to collect for my efforts.

    On the other hand, that’s exactly what consumers want today.
    Now more than ever we need to woo customers into our checkout lines.

    People also want to know that they’ll be supported in their decisions to spend
    their money with us, and that they’ll actually get the goods we say we’ll deliver..

    Social media provides incredible opportunities that seem
    almost “to good to be true” compared to the older forms of advertising
    as away to show people what we’re made of. There’s an openness that’s unusual.

    As service providers we must adapt to the fact that we can give freely to a
    wider audience, through the use of technology, and as a result if we don’t
    get the business from the one person we’re accustomed to pitching to,
    (the old marketing model) we’ll likely educate and inform a wider audience
    with our meaningful sharing, and (hopefully) ultimately get some business from that.

    It’s a great time to be a big kid for sure.

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