Unlock the value in social networks
With social networks opening their platforms to developers, brands have a new opportunity to engage with cynical users. But debate rages about how best to make money from such sites. By Richard West
Talk of eyeballs, monetising and even monetising eyeballs will offer a reassuring sense of déjà vu to those who remember the dot.com boom at the tail end of the twentieth century.
Social networking’s ability to create viable destinations means that some familiar dot.com concepts are being resurrected. Like the heady days of the late nineties, venture capitalists want to invest in sites that have a lot of users and hence are of interest to advertisers. But for all their reach and massive audiences, social networks are tricky areas for brands to get involved in.
make money from their websites and how will users react to the changes brought about by a more hard-nosed commercial approach? By focusing on the younger generation, social networks have been able to obtain high numbers of registered users. However, they have not been able to get high numbers of users with large amounts of expendable cash.
Without the cash factor, some social networks simply haven’t engaged with advertisers. And without advertisers, social networks are faced with the same cash dilemma that bedevilled their dot.com predecessors.
Prickly issue
But that is only part of the problem. Recent research conducted by YouGov revealed that almost half of social-network users are dismissive of the advertising that appears on these sites. Social networks also bring the prickly issue of ad intrusion right to the forefront.
Arriving uninvited into someone’s personal and personalised webspace is the equivalent of gatecrashing a party. For brands, this adds a new dimension – an increased responsibility to build trust and engagement. Consider the outcry that was sparked by Facebook’s Beacon when it emerged that data was being sent without user consent.
However, it’s the ability of social networking sites to build audiences relatively cheaply that makes them a tempting investment, and a growing number of global brands are seriously investigating their potential to deliver highly targeted advertising.
Edward Thomas, business development manager at Monetise, a UK digital-media property developer, believes that the potential exists, but that campaigns on sites such as Facebook, MySpace and Bebo will need to be focused carefully to avoid alienating users.
He says: “Social-network users are beginning to accept that there has to be a way to pay for the facility, but there are a limited number of ways to generate revenue. One way is for people to pay and another is through ad-funded sites. Of the two, the latter is more likely to be the way forward, but the issue facing brands is how far do they want to go?”
Thomas points out that compared to traditional advertising, online plays to a different set of rules. He explains: “Brands can underestimate the size of the commitment because it requires building a two-way dialogue with the user. They have to become part of the conversation and that means employing someone to ‘converse’ with – whether human or some form of automated robot. The next question is how much are brands prepared to bring to the conversation?”
Marketing theory
Simon Lubin, marketing director at the online soapbox Friction.tv agrees, but also believes it would be wrong to consign all marketing theory to the dustbin. He says: “When it comes to delivering effective advertising, social-media sites are no different from any other on or offline medium. They have to deliver a defined target audience and an environment conducive for advertisers’ messages to get under the radar and hit home. While these sites deliver huge numbers, the audiences are not particularly well defined and the invasive way many of the ads are served antagonises the audience rather than engages them.”
Research suggests that brands will have to work a lot harder to engage than they have done in the past. A survey conducted by Future Laboratory for MySpace found that nearly a quarter of 18- to 24-year-olds thought that brands needed to do more to earn their respect and one in nine said that social networks had made them expect more from brands.
However, with social networks opening their platforms to developers, opportunities are being created for brands to engage with the cynical online user. Widgets can provide one possible solution by offering brands a cheap way to spread across the Web, enabling them to keep in touch with users in their chosen Web environment.
Mini applications
Widgets are mini applications that can be embedded into webpages. From providing newsfeeds, to generating words of wisdom on Facebook pages, widgets have become an important part of online social networking. Users actively seek them and, most important of all, trust them.
Advertisers are beginning to realise the huge opportunity this presents. By their nature, widgets are viral, making them the ideal vehicle for online advertising and brand building. However, their popularity is not based on the brand, but how many times they are sent virally to other users – in other words through word-of-mouth.
More fashionable still is the current trend for applications – Web widgets created for specific platforms. Facebook has opened up its platform to third party developers, allowing them to build applications that will run across the Facebook network. By doing this, the company has demonstrated that when sites make their platforms accessible to developers, the results can be staggering. Last May, the social network site opened up its platform to applications and within 12 months has more than 20,000, ranging from games to content, hundreds of which are branded.
US media group Slide has quickly established itself as leading applications developer. Its products, which include SuperPoke, Fun- Wall and Slide photo albums, have up to 143 million social-network users. In the UK, advertising sales are handled by Monetise, where business development manager Edward Thomas explains that applications offer brands innovative ways to engage with social-network users.
He says: “Applications like SuperPoke and FunWall are extremely popular on the social networks and the opportunities for brands are potentially huge.” As well as the more obvious examples, such as film distributors feeding a video clip of an upcoming feature film in a Fun- Wall – which Thomas claims can reach up to 500,000 users in less than a week – there are also the more creative applications, such as sending virtual gifts to friends or even turning them into a virtual Sweeny Todd meat pie – courtesy of the Slide-developed Meat Pie Poke.
On Valentine’s Day this year, confectionery giant Mars took the concept of virtual gifting to its logical conclusion when it launched Celebrate, an application that allowed users to send chocolate bars to friends. Users were able to select, for example, a virtual box of Maltesers and send it to a friend on Facebook. When this message was opened, the recipient was asked to enter their mobile number and, in return, received an SMS barcode. Participating stores would redeem the code in exchange for the chocolates.
The launch of Celebrate is evidence that brands are now looking beyond simply forming Facebook groups. However, brands in certain sectors, such as insurance, are less likely to launch applications than others. Whether it is content, games, advertising or brand building, the benefits of widgets and applications are still being assessed and media owners and brand marketers have lessons to learn about advertising on social networks.
Ten years ago, at the height of the dot.com boom, marketers never really trusted the metrics and this made it impossible to agree on how to measure the effectiveness of online advertising. By the time the industry had agreed on a way to measure “eyeballs”, the dot.com bubble had burst and online went on hold for several years.
User-generated content
Today, while some brands still have reservations about social networking, distrusting the format or nervous about the idea of user-generated content, the market for them is just beginning to develop. The way forward depends on advertisers taking chances and developers thinking outside of the box.
But how will media buyers put a value on the impact of user experience and its importance in building an emotional bond with the customer? For all the differences between Web 1.0 and Web 2.0, some of the issues that had brand owners scratching their heads ten years ago have come back to torment them. Developing a new system of measurement based on engagement value, rather than traffic and clickthrough, is one of the challenges for the new generation to tackle.
Brands need to understand that social-networking etiquette is important, but it is also difficult to navigate because it is still developing. One thing is certain – social networking sites make online advertising more interesting and challenging for brands than it has ever been before. The cheers for brands that get it right will be loud – the boos for brands that get it wrong will be even louder.
