This may seem hard to believe in today's economic environment, where advertisers are less likely to experiment with their ad dollars, favoring the more prudent response-driven marketing that search engines offer.
But it's not hard to understand why advertisers would want to target social media sites, given the enormous audience base such communities are attracting. Recently, comScore announced that Facebook ranked in the top 10 most visited sites on the Web.
Wetpaint doesn't provide ad solutions for social networks. Rather, this startup allows media companies to create social networks around their shows. It's a service that's offered by many companies in different forms. But Wetpaint appears to have done something right. To date, the company - which has raised a total of nearly $40 million - has helped 1.3 million sites build communities with wiki features. This means that each site is crafted by the crowd. Think Wikipedia for Dancing With The Stars. In fact, a fan site for this popular show is powered by Wetpaint. Elowitz said that one action - a comment, a thread, a picture uploaded - happens every second across hit network.
Now regardless of the activity and the breadth of sites Wetpaint has, social networks aren't exactly a draw for high CPMs.
"What’s happening is that while CPMs are dropping from ad networks, the overall spend is continuing to increase," said Elowitz, in a brief interview right before lunch at the AlwaysOn OnMedia conference in New York, recently. "There is a massive increase in inventory, so even though the rate is dropping, the overall dollar volume is increasing."
Marketers are cutting offline ad spending and some areas online, he said. "They're not cutting experimental."
Advertising isn't exactly the business model companies want to be targeting these days. But I've seen the ad market disappear and come back. Ad-supported startups that stick it out with a product/solution that survives the recession and is around by the time the ad market comes back will probably be in pretty good shape.