Does Money Belong in Social Media?

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Let me answer my own question immediately by saying: Yes, money belongs in social media.  It costs money to host social networks, develop social applications, create content, moderate dialog in social channels, and launch community platforms.  VCs want to see money returned, Facebook and Twitter want to earn money, marketers want to invest money wisely and brands want people to spend money. 

But should money be everywhere in social media?  That's the question that came to mind as I read about a new social ad program being launched by Domino's Pizza.

While building value-based relations with bloggers is a smart and relevant strategy, I'm not a big fan of paying cash to bloggers in exchange for blog mentions.  In a world of full disclosure, will readers be inclined to find a blog post authentic, worthwhile and persuasive if it begins with a mention of the cash the blogger received from the brand?  In his report, How To Sponsor Conversations The Right Way,  Senior Analyst Sean Corcoran notes, "Backlash from consumers in social media can damage a brand's reputation and live on forever."

Of course, advertising on blogs doesn't require disclosure.  An ad isn't an endorsement so long as it is clear and conspicuous that the consumer is viewing an advertisement and not editorial content.  Still, even within the traditional advertising model, are there ways of being more social and less focused on the Benjamins?

Domino's Pizza is launching a new program that combines the advertising format with an affiliate model.  Consumers can place an ad widget on their blog or social pages, and if a visitor clicks the ad and completes an order, the blogger will receive commission of 0.5%.  If a blog visitor clicks the ad and spends $20 with Domino's Pizza, the blogger will earn a dime. 

Domino's Pizza will have to monitor the behaviours of participants to ensure FTC compliance, because this pay-for-performance ad model could be open to abuse.  An ad that just blinks on the side of a blog doesn't require disclosure, but an ad appearing next to a blogger's endorsement of Domino's Pizza would be cause for careful consideration of disclosure requirements.  The brand recognizes the potential risks and notes, "Any consumer that uses the widget will be able to promote products or services within a framework of designated brand guidelines."  (Emphasis mine)

While this program seems interesting, I wondered if it might be more successful if the ad weren't based on an exchange of cash but instead provided bloggers with the opportunity to earn free food.  In other words, could the ad program be made a little more social and authentic? 

Allowing bloggers to earn food would have driven them into Domino's Pizza locations.  While there, the consumer might have purchased related items and created incremental revenue for the restaurant.  More importantly, the restaurant chain would have provided bloggers with an experience that resulted in more authentic Word of Mouth; for example, bloggers might have tasted a new pizza and decided to recommend it on their blog or via a social network. 

In this case, writing out checks ensures interest and impressions, but does it spark influence?  Think of it this way:  Whether bloggers were rewarded with cash or with free pizzas, they'd have to disclose the material relationship when promoting Domino's or the ad.  Which disclosure sounds more enticing to you as a blog reader?  "I can earn 0.5% every time you click on that ad and buy, so please do so," or "I love Domino's Pizza and can earn a free pizza if you click on that ad and buy"?  Both fully disclose the exchange of value, but only one sends an authentic, persuasive, peer-to-peer message in social media.