Cup of Joe: Monetizing The Medium
You might already know that I hate advertising. I think ads are bad marketing, bad at monetizing, and bad for branding. So then you might be asking yourself why do companies like Google do so well with Ads? The success of Google’s ad program is due in large part because they have positioned their ads along side their user’s intentions. For example if I go looking for a new set of wheelchair tires, Google will show ads that match my intention. Google’s ads are positioned to be an integral part of their service. Now don’t get me wrong, it often seems that Google is expanding their ad program to an almost obnoxious level, but at least their model still fits the medium.
However, ads do not fit other mediums. For example when I go to Facebook or Twitter I am not there to buy products or even research them. Because of that their ads serve as a distraction and interrupt my experience. Instead social networks should be developing innovative approaches to monetizing that fits in with their core offering. Like for example it would be cool to have a premium chat app for facebook. Or the ability to build private twitter networks for corporate intranets. Or better yet monetize the underlying protocol.
Pinterest recently started adding affiliate links to outbound links to merchant sites. While some grumble and complain, I think it is an extremely smart move that should be replicated by other social sites. Pinterest decision to attach affiliate links shows that they understand the power of monetizing their medium. It means that they can continue with an innovative and clean UI that users love, without ads that interrupt and distract. And potential “ROI” should be much higher as affiliate commissions generally generate more revenue than ad sales.
In my opinion Pinterest will be profitable for much longer than other sites that rely on advertising. But making this decision I am sure was a tough one for Pinterest executives. They are taking a risk by trying something new. Users may view the move as trying to exploit user involvement for profit. Building a content site outside the ad centric internet is going to take courage but in the end I think it creates more sustainable web sites that users enjoy to engage with.