PT thanks New York–based marketing consultant Rich Kelley for his reporting.
Can you get a good ROI in social media? That was one of many questions on the minds of hundreds of publishers and advertisers at the International Advertising Bureau’s Leadership Forum on User-Generated Content and Social Media in June.
Speakers and panelists agreed on one thing: Social media advertising is not like search, banner, or e-mail advertising. As Tim Kendall, Facebook’s Director of Monetization, put it, “Search is about demand fulfillment. Social media is about demand generation.” He used a prom dress as an example. A girl might use search to browse and buy a prom dress. In social media, several friends share a conversation about prom dresses that their other friends can join—which could easily lead to multiple prom dress purchases.
The 72 million U.S. users on MySpace and 36 million U.S. users on Facebook make them the dominant players in social media—and many advertisers give Facebook the edge. Facebook is adding users faster internationally—early in June it caught MySpace in global unique visitors—but its Social Ads tool is available to anyone and is far more intuitive than MySpace’s SelfServe Hypertargeting initiative. Facebook users can now choose among more than 28,000 applications. MySpace is not far behind with its 20,000 apps. And Facebook and MySpace are certainly not alone. The size and numbers of other players—LinkedIn, Bebo, Friendster, Xanga, Orkut, hi5, Tagged—are growing (see a list here).
Companies can create pages on both MySpace and Facebook that allow users to sign on as fans. Last November, Facebook and MySpace both launched major advertising initiatives. While negative user reaction turned Facebook’s Beacon program into a PR fiasco, its Social Ads tool enables anyone to create an ad and estimate how many users will see it based on age, gender, location, and interests. MySpace introduced a major redesign, MySpace 2.0, on June 18, and its impact on advertising will be interesting to follow.
How should a new advertiser get involved with social media? “Start a conversation,” recommends Seth Goldstein, cofounder and CEO of SocialMedia. “Ask a question. In social media, questions are the equivalent of search keywords.”
Terri Walter of Razorfish offered a vivid example of how advertising campaigns have to be reframed for social media. To publicize the new season of Project Runway for Levi’s, Razorfish created a Levi’s 501 Design Challenge in which online users designed their own variations on Levi’s jeans and trucker jackets and encouraged their friends to go online and rate their designs. Such a campaign requires a different metric, Walter cautioned—not clickthroughs and purchases, but number and length of visits, uploads, and blog coverage.
The Promise of App-vertizing
Are widgets the key to monetizing social media? At a workshop hosted by Pointroll, an agency specializing in widget creation, account executive Kym Lewis claimed that 40 percent of Internet users, or 81 million people, viewed a widget in April. And the possibilities of widgets seem limitless. Ads can appear inside widgets or widgets can appear inside ads. Most importantly, specialty agencies like RockYou.com, Clearspring, and Gigya are building widget business models, offering publishers, advertisers, and developers access to networks of millions of widget users. Clearspring has a widget wrapper that tracks placement, visits, clicks, and the viral spread of the widget. Lewis noted that ads with widgets consistently surpass benchmarks. And some widgets can even refresh content dynamically—like the widget offering video and news for this year’s Sundance Film Festival or can be designed to allow users to upload their own content. An Irish Spring widget encourages you to upload your picture into the ad, add your own text, and e-mail it to a friend. This was built by Oddcast, one of many sites (Sprout Builder is another) that allow you to experiment with building your own widget. You can view a gallery of widgets at Widgipedia.
Ian Shafer, CEO of interactive ad agency Deep Focus, had one final exhortation: “Become the champion of social media in your company. You will be remembered for it.”
