When will Social Media...

...have its "AdWords" moment?

I use quotes because I don’t mean the literal selling of AdWords adjacent to Social Media. Instead I'm talking about the more general notion of replacing a predominant, but less efficient monetization of a very large amount of traffic generated by several players around a fairly well understood user context with a much more efficient monetization by one player that can be bought at scale by advertisers.

Those were the characteristics of the Search Business circa 2000 (prior to the victory march of AdWords' version of paid search). Interestingly, the Social Media Business of 2008 is in much the same state:

Here’s an illustration of Social Media’s current issue: Dell.

If the data at Spyfu (a service that as of 2/1/2008 was scanning over 500M Google results on over 2M keywords across nearly 10M domains) is to be believed, then as of 2/16/2008 Dell is spending an estimated $236K/day on Google advertising. That is an approximate annual investment of $90M. Dell, one of the most instrumented direct marketers in the PC (or, for that matter, any) business has the ROI data (marketing invested to benefits—including revenue—generated) to know that this investment is worth it, or they would be taking their money elsewhere.

Speaking of elsewhere, could Dell take that $90M towards Social Media and get better performance (the way advertisers took their money from Yahoo to Google)? At CTR's one to possibly two orders magnitude lower than high performing online vehicles, no ability to go to one source and buy $90M of Social Media and no proven conversion performance of the resulting customer, the answer today is most certainly “no”.

But, as a CNET producer told me a decade ago, the Internet is in perpetual beta, so the question is not whether Dell could take the $90M towards Social Media now, but whether they will in the future.

Only if Social Media can surface an efficient (for media company, advertiser and end user) monetization method that can be bought at scale.

That will be its "AdWords" moment.