For all their popularity, social networks have turned out to be barren soil for advertisers. Facebook famously has 901 million users, but it only saw $4.12 in revenue from each of them last year. Twitter has taken even longer to implement a business plan for monetizing its 140 million users. But as it reveals its strategy, it’s starting to look like it may have an edge over Facebook in selling ads online.
The problem with social network ads is longstanding and simple: People don’t click on them. MySpace users clicked on 4 in every 10,000 ads, hardly enough to make the site a profit machine. Facebook took a shrewder approach: mining user data to target ads, enticing users to like brand pages so that brands showed up in their friends’ news feed and, more recently, putting as many as seven ads per Web page.