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How social networks are courting marketers

How social networks are courting marketers Pete Snyder

This has truly been a landmark past few months for online marketing -- and social network marketing in particular -- with the biggest developments since the advent of AdWords occurring within days of each other.

Most of us have followed these developments closely, but here's a quick recap: Google fired up the hype machine with the launch of OpenSocial, which allows widget developers to easily port apps from one social network to another. MySpace then announced profile-targeted ads and a self-serve product for small- to mid-size businesses. Less than 24 hours later, Facebook unleashed a trio of revolutionary offerings for marketers: Social Ads, Beacon and Pages.

Also worth noting is that all of these launches are either soon or immediate, giving strategists little time to assess, plan and evaluate which tools are right for their business. 

Here's a quick overview of what these tools have to offer advertisers, with commentary to follow:

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A deeper look
OpenSocial will probably have the least impact near term for marketers, as developers are the main beneficiaries. The ability to create an application once for multiple platforms is certainly an improvement, but one that will be relatively negligible to users' every day behavior.

While moving from one network to another is a convenience on an individual scale, people usually migrate in packs. And although the open platform of Facebook has paid great dividends that Google is trying to siphon away, widgets are a secondary driver of social networks' popularity. Facebook's growth was astronomical before the platform launched because of a much harder to emulate factor: trust.

It will be interesting to see how widgets evolve on Salesforce and LinkedIn, where throwing sheep and vampire battles will give way to hardcore productivity and networking applications.

Social networks have long concealed a dirty secret: Display ads usually have a much, much lower clickthrough rate than even the anemic response they generate on the rest of the web. And it's no surprise why: Activities on networks usually generate a ton of page views, and the content users are viewing is exponentially more relevant than a random display ad.

MySpace's Self-Service solution mines users' profile data and serves up ads based on their interests. In theory, this should produce a much higher response, as the ads are more meaningful than blanket-demo display advertising.

I say "in theory" because of the perceived low credibility of some of the profile information, and the noisy nature of typical MySpace pages that will make it hard for even the most personal branded messages to break through the clutter.

That said, a very intriguing application of the Self-Service tool resides in local advertising, as 98 percent of local advertising is placed offline -- and with good reason: It's tough to target local consumers efficiently on the web.

While AdWords made it easy for businesses of all sizes to connect with consumers who were looking for their services, it's not the best vehicle to drive local awareness. For example, although I might search for local Chinese restaurants, I have no idea that a fantastic Korean restaurant just opened, as it would not turn up in my results. The new service solves that issue in spades as businesses can now engage users during the consideration and pre-purchase phases. One can only imagine what competing nightclub profiles will look and sound like on MySpace, but it is a great opportunity for that type of business.

Like MySpace, Facebook is also using profile data to serve ads, but with a twist: Not only do actions within the network signal potential interest, actions outside the site can trigger ads as well. For instance, if I place the sixth, and penultimate season of "Magnum PI" on my wish list at a partner site and share my Selleck via Beacon, all of my friends see Magnum's obsession with short-shorts on the newsfeed. The double opt-out method should make accidental/unintended disclosures of my Higgins' fascination to a minimum.

User control of brand engagement is also the key to Pages, which allows brands and businesses to create Facebook profiles that enable users to become "fans." What makes this different than what Myspace has been doing for years? With Facebook, this has been tied to the Social Ads from the start (which is how the money is made), which will directly tie the reach of a campaign to how effective a profile has engaged users. Many early MySpace corporate profiles were novelties or mini-sites crammed into a page -- the creative limitations of corporate Facebook pages are actually a strength in that they will force marketers to focus on creating a two-way dialogue deeper than "OMG! Your product is SO GREAT! LOL!!!"

What it all means
As a marketer, if I shill my brand's profile I'll most likely turn off users, reducing the reach of my campaign, and thus will most likely never reach brand advocates. However, if I let the Facebook "Social Graph" do the work, my brand, and others, will begin to experience what widget developers found out very quickly: Steady, sustained, organic growth hits a tipping point, and then the viral pickup explodes suddenly.

It is difficult to plan around the whims and quirks of users, but it also illustrates that basic marketing principles need re-thinking. If I treat a profile page as another ad unit, users will correspondingly treat it as less relevant, and engagement will be minimal. If, on the other hand, I view it as the cornerstone asset of a constant conversational marketing program, there is no flight, and it morphs from yet another distribution vehicle into a rallying point for fans and advocates.

In the not-so-distant future, it is within the realm of possibility that the basic online call-to-action changes from "Click here to visit the site" to "Add brand X to your favorites." Emphasis then moves from prospect/shopper to owner/advocate, and incentives become focused on post-purchase reviews rather than pre-sale reinforcement.

Already, we are observing a three to five times higher review rate of products (mostly books, music and movies, although activity on CE is picking up) on Facebook than on ecommerce sites, and the reason is clear: To write a review for an ecommerce site, I need to have confidence that my opinion will be of value to a complete stranger, but on a social network, I only need to think it may be of interest to my friends, a much lower bar (no offense guys).

The early blogosphere reactions of "Who would friend a product?" are misguided, in that for better or worse, brands are inexorably woven into the fabric of conversation.

The other overlooked aspect is the opportunity for local brands, as it is the rare person who doesn't want to share his or her opinion about a great sports bar, BBQ joint or vintage clothing store. People have a much higher affinity for the local businesses that shape their neighborhoods, and once they get used to interacting with local businesses, the leap to national brands is not as outlandish.

Demographics have always been an imperfect method to match the right message to the right user, but we have relied on them so long that we overlook the fact that many basic ad strategies were designed to compensate for their inefficiency. Flights, disruptive media and frequency all make up for the fact that a lot of money is talking to the wrong people.

Who wouldn't choose to say exactly the right thing at the right time to the right person, all the time? In doing so, you become the McDreamy of marketing, with consumers melting at every word. And while we're not quite there, recent events have taken us a step further in that direction.

Pete Snyder is CEO of New Media Strategies. Read full bio.

Pete is the Founder and CEO of New Media Strategies, the industry pioneer and market leader in Online Intelligence and Word-of-Mouth marketing, headquartered in Arlington, Virginia. Drawing on his background as a nationally-known pollster and a...

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