Is social media eating its (ad)tail?

Advertising is the business that fuels free, no doubt. It is the be all and end all answer to online economy. As long as there is traffic, there is always the opportunity for ads which – in turn – makes free a viable price for all kinds of online services. This may be especially true of social media services, not least Facebook and YouTube. At the same time, these services offer companies direct channels to the audience. Businesses have online-identities and interact with customers online. Viral marketing allows business to tap into the social dynamics of networks and let consumers broadcast the message. Cleverly done, there is no need for buying ad space, better to spend the energy on smart viral campaigns. Or create events that generate their own buzz. Last week at video games show E3 in Los Angeles, 64 players played the new Battlefield-game live for a global audience of online spectators. Surely the event cost a small fortune, but after that there was no need for the makers of the game to buy ad space. Social media users spread the message for them. This begs the question: is the core functionality of social media undermining its business model? Or, put differently, how many times have you clicked an ad on Facebook?