The Wall Street Journal published an article today on adverting and social media titled "Social Sites Don't Deliver Big Ad Gains".

The article offer a pretty good overview of the current state of online advertising with the backdrop of Microsoft's hostile takeover bid of Yahoo.

As Microsoft Corp. makes a $44.6 billion bet on Internet advertising with its unsolicited offer for Yahoo Inc., there are signs that some of the biggest new places where consumers are flocking on the Web -- social networking and video-sharing sites -- are yielding advertising revenue slower than some Internet companies had hoped.

Here is the thing: ADVERTISERS ARE STILL TRYING TO USE THE SAME WEB 1.0 ADS FOR THESE SITES. I doesn't surprise me at all that social networks are slow to take on advertising, and that those that do are finding "crude" tools like adwords more effective than simply shoving the same dated banner ads down community member's throats.

The secret sauce for success (I believe) lies in adhering to general good community building techniques.

- Know your member (consumer)
- Offer them something of value
- Craft the offer in a human voice
- Be transparent about your intentions
- Be respectful of the member (privacy, needs, wishes, intelligence)
- Accept feedback
- Have thick skin
- Continue to innovate (i.e. try, try again)

We have some early examples of attempts at innovation, including Facebook's beacon, but there are still miles to go in this race.