Economy will boost social app explosion

One of the biggest shifts in ad innovation this year will be the explosion of social application business models. I am not referring to the current widget distribution with an overlay ad, but deeply engaging and innovative social application marketing platforms and solutions.

All the disappointment and talk lately that display advertising needs to change to become more effective only paves the way for marketer acceptance to go from experimental to mainstream. As marketers transition to social apps (and other social media), it will become one of the more dominant forms of online marketing. Everything from display, search, and even our current social app/media advertising will undergo a social innovation transformation. The need for better ad effectiveness is one of the very reasons that Yahoo’s revenue is down nearly 80 percent as of the writing of the post.

The first half of this year was spent with ad companies reeling from economy shock and the next half, now that the economy shock is wearing off will be focused on new, more effective and engaging forms of advertising. The economy was just the spark needed to light the innovation fuse. One of the biggest reasons for the social app explosion will be an accountability shift. Social apps will move from a time and material model to a pay-for-performance model (similar to cokes recent request for agencies to innovate to pay-for-performance).

Other reasons that social apps will become a dominant advertising model is because 1) they can tell you (if you build them correctly) a ton about the users life-stage and lifestyle, 2) They can be made fun and engaging, 3) the are inherently social 4) they allow for a truly authentic consumer/brand experience and 5) they can help drive real results and revenue rather than a focus only on a brand message.

About a year ago I put a video together from a collection of speeches given by Eric Schmidt, CEO @ Google. His speeches are from as far back (seems like ages ago when looking at it from a speed of technology perspective) as 2006. Mr. Schmidt is giving his perspectives on the rise of web 2.0 and the massive impact, change, opportunity, and questions that it has presented from an advertising perspective.

The message in the video is how web 2.0 (has anyone noticed web 2.0 is seldom used now and has been replaced with “social” this and “social” that!?) is changing the Internet advertising arena and how with the continued growth of web 2.0, our advertising will become very personal and targeted. Most people know the Internet presents the ultimate platform for perfecting targeted/unobtrusive advertising (the holy grail), but the key question most people are still wondering is a) what is the solution to extract that data to better target users? and b) what is the “vehicle” that will make this possible? I believe that social apps for many of the reasons I listed above will explode and play a key role of the ad personalization Eric Schmidt discusses in the video.