Steve Gillmor makes an interesting case in a rather dense blog entry:

“Social advertising doesn’t work because users are there for friends, not buying stuff.”

As Sam Rose summarizes the argument:

“I think the basic insight stems from the fact that the average person sees well over a thousand advertising messages a day

So, people tend to tune out ads, block them from their field of vision (if not literally blocking them as Joseph does)

For a while, perhaps 7-8 years ago, search/text advertising seemed to work. But ultimately people tuned this out, too.

Part of what the article is talking about is how these big moneyed companies are buying audiences by way of buying up each other, or cutting deals. They think they are buying users, like the Microsoft/Yahoo deal, this article you link to speculates that maybe Microsoft is interested in Yahoo because MS can “buy” users for it’s “Live” web platform products, for instance, to counter Google’s threat to them, where Google is making useful free web applications available that have people throwing out their Desktop MS apps in favor of Google Web-enabled offerings.

The author also seems to be speculating that what MS and some others (Myspace, etc) are missing is the social protocol in platforms like Twitter and Facebook, where “gangs” of people can create mutually agreed upon message passing channels around different interests (both in twitter “follow/follow”, and in Facebook super walls, both of wich can produce email messages). The author of the article you linked to is saying that these mutual social contract channels are where many people’s attentions are most strongly focused, and where influence is real, online. Mostly because people have the transparency of knowing who info comes from via ongoing relationships. So, most people will only bother to pass messages in these channels when they really actually like and care about what they are talking about. Otherwise, it can often be possible to see “marketing” based motives in these channels.”

This echoes the argument made by Mark Pesce about Salience:

“All the marketing dollars in the world can foster some brand awareness, but no amount of money will inspire that fifteen year old to forward something along – because his social standing hangs in the balance. If he passes along something lame, he’ll lose social standing with his peers. This factors into every decision he makes, from the brand of runners he wears, to the television series he chooses to watch. Because of the hyperabundance of media – something he takes as a given, not as an incredibly recent development – all of his media decisions are weighed against the values and tastes of his social network, rather than against a scarcity of choices.

This means that the true value of media in the 21st century is entirely personal, and based upon the salience, that is, the importance, of that media to the individual and that individual’s social network.”