Can Advertising on Social Networks Work?

Despite a flurry of announcements from social networks this week, digital media intelligence company, StrategyEye, today said ad agencies remain cautious about recommending social network advertising to their clients.

“We have seen much progress in social network advertising since the beginning of this year, but the fact remains that much social network advertising is failing to engage users,” says Isabella Thomas, senior analyst with StrategyEye.

The company claims it has interviewed agency executives who say banner ads on social networking sites don’t work, and that advertising at these popular destinations can be bad for a brand if the company is not clear on what it’s doing.

StrategyEye has posted the interviews with media execs on its home page.

Social networks are determined to monetize their sites and reassure advertisers. In a week in which the industry body, the Social Media Advertising Council (SMAC) was formed, LinkedIn launched its new ad targeting network and MySpace announced that its advertising business is in fact outperforming the marketplace.

“Social networks such as MySpace, Facebook and LinkedIn are now coming to the realization that traffic does not equate with ad revenues and are looking to provide reassurance and new possibilities,” says StrategyEye’s Thomas. “Certainly the increase in video content and use of widgets on social networking sites offer new opportunities to advertisers.”

StrategyEye describes itself as an “information platform that provides intelligence and analysis on over 600 industry categories, from online video to social networks to mobile devices.”

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