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To me, social networking websites appear to be a very promising place to advertise on. Teenagers are
there, even young adults are there, so no wonder if brands are so attracted by MySpace & co. However I
believe they need to learn how to sell their advertising spaces. I don't want my brand's ad to appear close
to a "click here & get your visa" ad (or similar) and this is happening rather often on MySpace (just to
make an example).
Social Network Advertising is a term that is used to describe a form of Online advertising that
focuses on social networking sites. One of the major benefits of advertising on a social
networking site (facebook, myspace, friendster, bebo, orkut...and many others) is that advertisers
can take advantage of the users demographic information and target their ads appropriately.
eMarketer predicts that $2 Billion will be spent this year (2008) on social network advertising
worldwide and that this market will continue to grow - reaching $3.8 billion in spending by
2011[1]. However, a large portion of this spending is predicted to be coming from the US market.
As Internet usage continues to grow in other parts of the world, and social networks continue to
proliferate[2], advertising dollars on social networking sites outside of the US will begin to play a
major role.
There have been many claims that Social Network Advertising will revolutionize the online
advertising market. Most famously, founder of facebook Mark Zuckerberg, announced that "For
the last hundred years media has been pushed out to people, but now marketers are going to be a
part of the conversation."[3] No doubt social network advertising is a significant new way of
reaching customers, but the market is far from being mature.
"In general, it's been improving but we still have a long way to go. Things have been going well this
year...it's hard to predict where social networking will come out." - Sergey Brin (Google Co-Founder) [4]
• Direct Advertising that is based on your network of friends - This can be the most
effective format but also causes the most controversy. An example is the facebook
beacon project.[5] Based on an action your friend has taken, you might see a message in
your news feed saying 'Bob has just bought a 'RadioHead CD from MusicWorld'. This
can be an extremely effective mode as often people make decisions to purchase
something or do something based on their close group of friends. However, there is also a
lot of controversy surrounding this as it can be considered exploiting the personal
relationships you have with your friends and also raises privacy concerns.
• Direct Advertising placed on your social networking site - This is a more traditional
form of web advertising. Just like you see banner ads on many other sites, this is a similar
concept, except on a social networking site. You can see these - for example - as a brick
in the top right of myspace pages, or as a banner on the left of facebook profiles and so
on. There are two differences however - One is that these social networks can take
advantage of demographic data on your profile and hence target the ad directly to you.
Secondly, these types of ads can also be placed by individual developers on their
application pages through ad networks such as AdParlor. They have access to the same
data and can generate income for application developers giving them further motivation
to create apps and giving advertisers a more engaging way to reach out to these social
networking users.
RELATED NEWS
The report by analytics firm comScore underscores the increasing prominence of social
media sites in the Internet landscape and broadening acceptance of the sites by brand
advertisers.
It also illustrates the increasing competition between social media sites and established
Internet companies like Yahoo Inc and Time Warner Inc's AOL which have long billed
themselves as the top online destinations for brand advertisers.
The study by comScore, released on Tuesday, said social media sites represented 21.1
percent of U.S. Internet display ads in July, with MySpace and Facebook accounting for
more than 80 percent of those ads.
"Because the top social media sites can deliver high reach and frequency against target
segments at a low cost, it appears that some advertisers are eager to use social
networking sites as a new advertising delivery vehicle," said Jeff Hackett, senior vice
president of comScore.
According to comScore, AT&T Inc, Experian Interactive and IAC/Interactive Corp's Ask
Network were the top three advertisers on social networking sites in July.
While social media sites have enjoyed a surge in popularity in recent years -- Facebook
is now the world's fourth-most visited Web site -- some observers have questioned
whether the sites can be effectively monetized.
Because the content on social media sites is created by users, and could therefore
prove racy or offensive, some have questioned the willingness of marketers to place
their brands alongside that content.
"They are sensitive to some extent, but nowhere near to the extent you might think,"
Sanford Bernstein analyst Jeff Lindsay said of advertisers.
The price of placing ads on social networking sites is significantly less than on a Web
portal like Yahoo or AOL, said Lindsay. The vast amount of Web pages available on
social networks means that advertisers can purchase a massive volume of ad
impressions at bargain prices.
The strategy may not be ideally suited to smaller marketers, or advertisers seeking a
direct response from their ads, said Lindsay.
"For big, national brands it works just fine, just like TV," said Lindsay. "It's a huge, huge
volume game."
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