November 11th, 2007
Via The Economist, an interesting look at the impact of Facebook, MySpace, and other social networking sites on advertising.
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According to the article,
“…the announcements this week by Facebook and its larger rival, MySpace, which has a similar ad system, could amount to a big step forward in conversational marketing. If new technologies that are explicitly based on social interactions prove effective, he thinks, they might advance web advertising to its fourth phase.
In the past decade the internet has already produced three proven advertising categories. First came “display†or “banner†ads, usually in the form of graphical boxes on web pages, now often with embedded videos. Today these account for 32% of online-advertising revenue. Next are classified ads, now 17% of the total. The bane of many small-town newspapers, these are the postings on sites such as Craigslist. The third, and now largest, category is search advertising, with 41% of the total. Proven though not invented by Google, the biggest search engine, these are the text snippets that appear next to search results for a specific keyword.
Together, these three types of online advertising are already transforming entire industries and businesses. This week IAC/InterActiveCorp, a struggling web conglomerate, said it would break itself into five separate companies, primarily so that its advertising-focused sites—including Ask.com, another search engine, and Match.com, a dating site—could be valued separately from the retailing, lending and ticketing sites. Meanwhile, antitrust watchdogs in America and Europe are scrutinising (but seem unlikely to block) the acquisition by Google of DoubleClick, a big display-ads firm, in response to fears that Google might become as dominant in that category as it is in search ads.
From the point of view of marketers, these existing types of online ads already represent breakthroughs. In search, they can now target consumers who express interest in a particular product or service by typing a keyword; they pay only when a consumer responds, by clicking on their ads. In display, they can track and measure how their ads are viewed and whether a consumer is paying attention (if he turns on the sound of a video ad, say) better than they ever could with television ads. Yet now the holy grail of observing and even participating in consumers’ conversations appears within reach.
The first step for brands to socialise with consumers is to start profile pages on social networks and then accept “friend requests†from individuals. On MySpace, brands have been doing this for a while. For instance, Warner Bros, a Hollywood studio, had a MySpace page for “300â€, its film about Spartan warriors. It signed up some 200,000 friends, who watched trailers, talked the film up before its release, and counted down toward its DVD release.
Facebook, from this week, also lets brands create their own pages. Coca-Cola, for instance, has a Sprite page and a “Sprite Sips†game that lets users play with a little animated character on their own pages. Facebook makes this a social act by automatically informing the player’s friends, via tiny “news feed†alerts, of the fun in progress. Thus, at least in theory, a Sprite “experience†can travel through an entire group, just as Messrs Lazarsfeld and Katz once described in the offline world.
In many cases, Facebook users can also treat brands’ pages like those of other friends, by adding reviews, photos or comments, say. Each of these actions might again be communicated instantly to the news feeds of their clique. Obviously this is a double-edged sword, since they can just as easily criticise a brand as praise it.
Facebook even plans to monitor and use actions beyond its own site to place them in a social context. If, for instance, a Facebook user makes a purchase at Fandango, a website that sells cinema tickets, this information again shows up on the news feeds of his friends on Facebook, who might decide to come along. If he buys a book or shirt on another site, then this implicit recommendation pops up too….”
This entry was posted on Sunday, November 11th, 2007 at 4:00 pm and is filed under Blog. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
