As more and more money is poured into Internet ventures, online ads remain the unsolvable Rubik cube of advertising and marketing. Online advertisements, the lifeblood for many online firms, is an inefficient system. As reported in Businessweek, a little over 1 in 1,000 people click on banner ads. More complex than simply not having people diverted to the advertisements is the failure for those companies to to develop recognizable brand perceptions amongst web users.

Online firms that utilize the traditional advertisement system typically receive revenue for clicks or click-throughs. The problem: most web users are not on the site long enough to care about the advertisements. Moreover, there has developed built-in mechanisms in the consumers mind for blocking out advertising messages. As a consequence, brands fail to develop in the minds of consumers.

The solution, according to marketing guru Matt Freeman, charge advertisers for people’s engagement and attentiveness with the ad.Matt Freeman, the leader of Betawave, a small firm selling online ads, looks to increase brand awareness and attention through a series of videos and online games that integrate brands and products. Taking a cue from the TV industry, videos in various websites will have product placements dropped in the video. 

In addition to videos that naturally integrate with the specific website, games featuring a product will enter the fold. Revenue, in the above instances will come through time spent on the games and time spent with the videos.

Regardless of the outcome and success of the new approach to the online marketing game, Freeman represents a much needed change of thinking. Opening up an efficient and reliable way to brand firms through online advertisements would thrust the entire online industry and revolutionize the marketplace. For this to happen, more out-of-the-box marketers like Freeman will need to continually push the envelope and challenge the norms of online marketing.

In the break-through book, The Long Tail, the author Chris Anderson presents the new age of economics: an age of abundance rather than scarcity. This new age of abundance has been ushered in by the Internet and the ability the web allows for access to a plethora of niche markets versus substantial blockbuster hits. Instead of the consumer being limited to what is merely popular, the Internet allows consumers to inspect and discover numerous niches in the market place – i.e. the Long Tail.

Anderson’s Long Tail is no different as the social media phenomenon has taken off. In a market dominated by the “blockbuster hits” of Facebook and MySpace, there is a new age of niche social media networks. There is now a social network for every interest: travel, cooking, snowboarding, skateboarding, surfing, shoes etc. We have all seen the advertisements running on the right side of the Facebook panel asking you to join and try a beta version of a new social network.

Now the questions are, will these niche networks detract visitors from frequenting the major blockbusters in search of the focus offered by other social media sites or will internet users never truly accept smaller social networks, instead adopting for focused applications?

In my opinion, numerous niche social media networking guides could save time and money by adopting Facebook applications that offer the same services as their intended site. Here is the reasoning: the users are here and forcing them into another log-in and community is time consuming. Thus, while the economics of abundance has introduced an era of niche markets, the social media market could best serve their needs through adopting the platforms provided by the dominate players.

As was recently reported, and praised by an editor at AdAge.com, Starbucks has introduced a new form of “instant coffee” into the caffeine infused marketplace. In a time of economic downturn, it is imperative for companies to seek ways to maximize their revenue streams and open doors to new customers. Starbucks, sometimes scoffed at as Four-Bucks, has released Via, their new instant coffee as it attempts to rich a broader market of coffee-joes.

In theory, their attempts to reach a new selection of customers is what they need. They have struggled in the last year, as shown by their mulitple store closings and frantic efforts to rejuvenate the company. Via, as reported my Starkbucks, has been a long time coming (a pet project of CEO Howard Schultz) and looks to deliver the same in-store quality coffee in soluble form.

Here in lies the rub: in their efforts to access that much coveted consumer base, Starbucks loses focus and tarnishes a brand image. Starbucks Via also demonstrates a limitation of viral and social media marketing: the inability to promote an unfocused product without tarnishing a brand. All the blogs and Youtube videos that promote Via with praise will do so at the cost of the Starbucks brand itself. 

Starbuck’s violated a foundational marketing principle: remain focused. All the reputation management in the world will not be able to refocus a company that begins to settle for products misaligned with their brand.

Lesson to be Learned:Even the editors at AdAge who praise Starbucks’ Via effort as a way to recoup losses in an economic downturn should realize short term gain is not worth sacrificing for long-term brand management.

Riding a wave of controversy, Facebooks’ recent change to content rights has been reversed. Facebook had planned to own rights to all the content posted by the vastly growing user base. Catching wind of this were disgruntled users with a prerogative for claiming their privacy rights. The result was a unified body of Facebook users collaborating and petitioning for a change. Facebook, in looking to keep the peace, reversed their new privacy policy stance.

Facebook’s quick about face on the privacy policy represents a significant determinant in their hopes monetize the vast about of information provided by the 170 million plus user base. The initial change in policy said that even after a member deleted their profile, Facebook owned rights to the content. Such a new policy would have enabled Facebook to have more leverage with selling and monetizing this information to advertisers and research firms. Unfortunately for Facebook, users did not respond well to the change and this newly added clause was quickly removed.

The recent events in the past week represent a signficant moment both for Facebook and million of users for the following reasons:

• Financial Struggles:Facebook, operating between 100 million to 300 million in revenue a year, have failed to find their footing on a business model that will capture the potential of the vast amount of information posted on their site without stepping on the toes of members.
• Privacy Issues:The policy reversal demonstrated to Facebook that members value their privacy. Most influenced by the recent controversy is the fastest growing demographic, members above 30. Typically these users are more hesitant about posting information on the web and as a result, their favor of the Facebook of the brand image has lowered.
• Three Strikes: According to a recent poll, two-thirds of younger uses have a favorable perception of the Facebook brand. There is one thing that may hurt this: more events in which Facebook manipulates terms of privacy. Facebook should be careful in overstepping their bounds, as demonstrated by the quick collaboration of users last week.

For any company and new venture, success is a combination of a various factors including choosing the right target market with the right product at the right time. At the center of these factors is the ability for their relationship with each other to produce a profitable and successful revenue model.

A perfect storm of factors has not occurred for the prominent social networks, such as Facebook and MySpace. LinkedIn stands as a Web 2.0 company that breaks the model of unprofitable social networking ventures. At the heart of the company is an unorthodox, Oxford-educated entrepreneur. His strong mind for the finance and quick-decisions has created a network of users connected by means of business commonality.

A number of factors of have served to lay a foundation to LinkedIn’s success in a tulmultuous economic environment, including:

• User Base:Nothing speaks greater volumes about the future of a new ventures success then the user base. In LinkedIn’s case, more then 53% of users are in jobs where they earn more than 100k.What does this mean? It means it is an advertiser’s dream: a user base with a disposable income (forgot about those poor college kids on Facebook).
• Working Revenue Model: It has become a common thought that online advertising has yet to see the fruits of its labor. In order for many online ventures to succeed, there needs to be various channels of revenue. Fortunately for LinkedIn, the premium service is a subscription fee that works. Moreover, as noted above, there is a right demographic for such a service.
• Finance Savvy: As one great rap song goes, my minds on my money and my money is on my mind. For LinkedIn, the founding entrepreneur Reid Hoffman, he has a mind for venture capital, angel investing, and using it to leverage his company.

LinkedIn stands as a formidable business venture which has done what other social networks are failing to do: Be Profitable.