Social network advertising

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.

The Social Network Advertising Market

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 [ [http://www.emarketer.com/Article.aspx?id=1006278&src=article1_home Social Networking Ad Spending Update] ] . 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 [ [http://www.socialadblog.com/2008/05/social-networking-world-map.html Social Networking World Maps] ] , 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." [ [http://www.economist.com/business/displaystory.cfm?story_id=10102992 Economist.com - Word of mouse] ] There is no doubt that social network advertising is a significantly new way of reaching customers, however 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) [ [http://uk.reuters.com/article/internetNews/idUKL1572456720080515 Reuters - 'Brin says Google social network ad business "improving"'] ]

Forms of Social Network Advertising

There are three major classifications of Social Network Advertising:

*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. [ [http://www.facebook.com/business/?beacon Facebook Beacon Project] ] 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 [http://www.adparlor.com 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.

*Indirect Advertising by creating 'groups' or 'pages' - This is an innovative marketing technique in which a company will create a 'page' or 'group' that users can choose to join. They will use this to build up 'subscribers' or 'fans' and use this to market a contest, a new product, or simply just to increase brand awareness. These groups can quickly grow in numbers of subscribers and fans and become a very effective marketing tool.

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