According to Urstadt, there are several reasons why advertising has not worked on theses sites. The first is that people are not paying attention. Whether it is a MySpace page or the home page of CNN, we have gotten used to ignoring the ads. Advertisers make them bigger and brighter, but we just find that more annoying because we are on those sites looking for very specific information. We are not looking to be ‘sold’ on something and it is a bad time to try to reach us. Another problem is what Urstadt calls content adjacency. Advertisers cannot control what pages or with which content their ads will appear. It could possible reflect poorly on your brand or offend the customer you are trying to reach.

I think that the biggest issue with advertising on social networking sites is privacy. All along, advertisers biggest draw has been the ability to target specific demographics through these sites. This can violate users privacy and harm the social networking site if they are not careful. In the end, it just does not seem worth it at this point to advertise on these sites. That leaves the social networking sites to rethink how they will make money off of their millions of customers. If they start charging for services, it may alienate customers or create an opportunity for new competitors. If people are used to the site and all their friends are there, perhaps they could charge them and make a no advertising promise. Since it seems that no one is willing to accept that there may not be a way to make millions or billions on these sites, they are going to have to get creative and start thinking of new options.

To read the full Urstadt Article, click here.