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Should You Advertise on Social Networks?

I recently presented a short case for advertising online. But before you take the plunge, here’s a bit of news you should consider.

A study last week from the research firm IDC suggests that you’re better off spending your online budget on traditional ads rather than on social networks (socnets). According to IDC, just 57 percent of all socnet users clicked on an ad in the last year (vs. 79% of all Web users), and only 11 percent of those clicks led to a purchase (vs. 23% on the Web at large).

To me, the most plausible explanation is that users are more engaged by the content within the socnet than they are by the advertisements, as Nick O’Neill posited one year ago. As yesterday’s New York Times put it, “It turns out that marketers are not so interested in advertising on pages filled with personal trivia and relationship updates.”

Furthermore, at least with respect to MySpace (still the world’s largest socnet), users tend to embellish their profiles. This decreases the reliability of socnets’ singular virtue: the deep data they provide for you to microtarget.

What’s your experience with socnet advertising? Let us know in the comments.