I agree that as Social Media sites are currently structured that advertising on them is never going to be as effective as search. There is no reason, though, that they can not provide their own search function along with their own ads.

When you can easily search for and find recommendations and reviews from your peers on Social Networking sites and advertisers can position their ads on the results of those searches in exactly the same way AdWords works today users will stay on their favorite Social Networking site instead of switching to a search engine.

There is also one kind of contextual ad that can convert even better than search. That is placing ads for a specific product next to a review or recommendation of that specific product – especially when it is is new and not widely available or it is being heavily advertised.

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My two cents worth
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Ads displayed in forums would be considered content ads and those will never convert as well as search ads. In the first case you get curiosity clicks and in the second someone is actively searching for a specific product or service.

They could convert well IF the topic being discussed in the forum is how to buy something or what specific solutions are most viable AND the ads were displayed in the thread, triggered by a system that uses semantic search to insert related ads at the appropriate points in the discussion.

I have not yet seen a system like that; however, I have recently seen a semantic search called TipTop that pulls accurate related information from Twitter.

What forums, blogs, and Social Networks must do is create optimum opportunities for adds. For example, they could write posts announcing new products in their niche and feature ads for that product within or in close proximity to those posts. That will convert well – possibly even at a higher rate than search.
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I’m really glad you use Zemanta so the incoming link from one of my post could lead me to your blog. Even though we’re both active at Twitter and FriendFeed I had not come across your work before.

What I’m suggesting in this post fits Social Networking sites – especially those with large amounts of user-generated content. StumbleUpon has or had pages that contained the best of on every tag and featured the users most active on that topic. They did not have ads but if they added highly relevant ads users would benefit as would merchants.

For sites like yours or mine I prefer to control what gets displayed and only accept advertising from companies I can personally recommend, especially small businesses.

Thank you for telling me about NewsGator widgets. I will research them further. My first question would be is the income they can generate worth giving up control and that much prime real estate.
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