Young donors and volunteers, snubbing traditional appeals such as direct mail and phone calls, are satisfying their philanthropic urges on the Internet. They’re increasingly turning to blogs and social-networking Web sites, such as MySpace and Facebook, to spread the word about — and raise funds for — their favorite nonprofits and causes. They’re sending Web-based fund-raising pitches to their friends and families, encouraging them, in turn, to forward the appeals to their own contacts.
At the same time, a growing number of charities — ranging from start-ups to established names such as the Salvation Army — are launching profiles on popular social-networking sites, hoping that young people will link up to the pages. Some are also encouraging bloggers to mention the causes on their sites, raising thousands of dollars in small donations from readers.
Many of the nonprofits that have embraced social networking are themselves run by people in their 20s and 30s, who already spend a good portion of their lives online. Some of them also appeal to donors by offering them tangible results of their gifts by directly linking contributors with recipients.
Social-networking sites, for their part, are offering new tools to help attract nonprofits and contributors. In May, a social-action start-up called Project Agape launched a new program on Facebook called “Causes,” in which users can create online communities to advocate for various issues, charities and political candidates. Since then, the program has attracted more than 2.5 million Facebook users, raising some $300,000 for nonprofits and politicians, says Joe Green, 24, the project’s co-founder.
Social Networking for Charity November 24, 2008
Social Media ad Spending decline, demands inproved results November 24, 2008
The future of marketing is results driven advertising. Pay-For-Performance models stand to dominate in down market trends.
Power to the people: The new era of social network marketing November 20, 2008
The world of social networks is a daunting one for marketers. At last count, MySpace.com had over 300 million users, Facebook boasted over 62 million active accounts and business networks such as Plaxo and LinkedIn featured over 15 million profiles each.
Social networks hold huge opportunities for brands. The personal, interactive nature of social networks mean that brands have the chance to present themselves to users in their own, personal space – allowing for a more memorable, individual interaction.
Added to this, brands can leverage the natural endorsements given through groups and personal associations with brands, almost functioning as free market research into their specific consumer set.
But, how do you successfully leverage your brand within a social network?
1) Create a brand profile
Register your own brand group as the ‘official’ offering on the relevant network. You can then make access of related groups and communities, inviting them to join this sanctioned brand group.
2) Continuous communication
To ensure your community is constantly up-to-date and involved, make sure that relevant content is always available and a host of topics offered to allow users to personally interact with the brand.
3) Encourage collaboration
Run a contest to devise a new campaign slogan or solicit entries for the next advertising spot – it will enable users to interact on a new level, whilst providing cost-effective creative straight from your target consumers!
4) Register your own network
A very big idea but one that is sure to win you prosumer praise. Represent the interests of your consumers by starting a social network i.e. a fantasy league network for a sporting goods retailer.
The people formerly known as the audience have transformed. Blogs and social networks have become vital tools in the arsenal of marketers worldwide and any brand looking to promote and protect itself should seriously consider the influence these resources have on consumer purchasing behaviour.
The new era of prosumers is here and they’re brand-savvy, marketing-aware and prime for the taking. Ensure your brand harnesses the potential of these new ‘super-consumers’ before you are left behind, choking on the dust…
Mercedes Intros ‘Generation-Benz’ Social Network November 20, 2008
| Mercedes-Benz USA wants an invited group of Gen Y netizens to open up about the brand. So it is running a social networking marketing program called Generation-Benz, intended to bring younger consumers into the brand while giving Mercedes insights about the 20-somethings.
The site, at www.GenerationBenz.com, via Los Angeles-based firm Passenger, is an invitation-only forum by which the company will mine the Gen-Y attitudes, lifestyle and brand preferences. The company says that with the new program it hopes to get a new group of consumers into the brand and shape the brand for the future. Said Stephen Cannon, Mercedes-Benz U.S.A.’s VP/Marketing, in a release: “When our customers join the brand, they tend to stay. Our Generation-Benz community is a natural extension of our desire to broaden the Mercedes-Benz family, and establish a dialogue with future buyers to guide us with the design of our vehicles and direction of our brand.” The company wants feedback and perspectives on vehicles, brand positioning and sociocultural trends. The netizens will preview advertising and marketing campaigns, and engage in real-time discussions. Mercedes-Benz is the second automaker to conceive and execute such a program. Ex-sibling Chrysler this March launched a similar program, also via Passenger. Chrysler’s Customer Advisory Board comprised some 2,000 consumers. Justin Cooper, co-founder, chief marketing and innovation officer at Passenger, says the scope is similar for all of the firm’s clients. “With Mercedes, it’s how they apply it.” He says that the majority members of Mercedes’ site are actually non-owners of Mercedes-Benz vehicles. Cooper says that the firm has signed another automaker to create a similar program. |
Sonys Social Network- Playstation home and xbox talk…. November 20, 2008
Xbox Live takes on new look
Magnolia Pictures, other services to be offered
On the eve of an overhaul of the Xbox 360’s online service, Microsoft Corp. announced Tuesday one more entertainment offering in the United States: the ability to watch movies from Magnolia Pictures on the video game console.
The deal is small — Magnolia has distributed about 70 films — but it represents yet another move to beef up the online service, called Xbox Live, which Microsoft is counting on to broaden the console’s audience and differentiate it from rivals.
With Live, gamers can watch movies, download new games, chat with friends and play games with others. The service will be relaunched Wednesday, with a new user interface and a host of other features, including the ability to stream Netflix movies.
The introduction comes at a critical time for the Xbox 360, as sales have jumped in recent months because of a price cut, with the holiday season still ahead.
“I think it’s the most important week since we launched the platform, frankly,” said Marc Whitten, the general manager of Xbox Live.
By some counts, Microsoft already has succeeded — wildly — with the service.
 |
||
 |
Microsoft Xbox Screen Shots | |
| The old Live interface, heavy on text, had become outdated. An Xbox exec said it was designd for the 200 pieces of content in the Xbox’s marketplace in 2002, not the 15,000 that now exist. | ||
Last week, at a conference in New York, Mindy Mount, the chief financial officer of Microsoft’s entertainment and devices division, referred to Live as a “little secret sauce to us,” crediting it with increasing the number of games each Xbox 360 owner buys because it makes it easy for users to try out new ones.
During a recent interview at his Redmond office, which is set up as a living room to replicate a gamer’s environment, Whitten rattled off a set of statistics to demonstrate Live’s popularity.
The majority of Xbox 360 owners also use Live, he said. As of last quarter, there were 22.5 million Xbox 360s on the market worldwide and 14 million regular Live users.
Overall, Xbox 360 owners — who have downloaded more than 500 million pieces of content through Live — also tend to use their console’s online offerings more than owners of Sony’s PlayStation 3 or Nintendo’s Wii.
So, for instance, in games that are not exclusive to the Xbox 360, such as Guitar Hero or Rockband, the majority of song downloads take place on the Xbox 360.
Microsoft has profited handsomely, reaping more than $1 billion in revenue through Live, partly through a $50 “Gold Level” annual fee needed to play games with others with the service.
Still, Whitten said, the Live interface — which is heavy on text — had become outdated.
He said it was designed for the 200 pieces of content originally in the Xbox’s marketplace at launch in 2002, not the 15,000 that currently exist.
So the new user interface allows users to shop for items looking through images, instead of just text.
There’s also a heavy emphasis on Live’s social networking features, which let users communicate with one another while logged in.
Each user will now be able to customize an avatar, down to its hairstyle and clothes. Logging in, a user can see various avatars representing his or her gamer friends. If they’re playing games, the avatar stands next to a title; if they’re not active, the avatars appear to be snoozing.
In addition to the deal with Magnolia in the U.S. (and a similar one with MGM and Paramount in Italy and Spain), Xboxers will also be able to stream more than 12,000 Netflix movies and TV episodes on their consoles if they are also Gold members and are Netflix members.
About 300 Netflix movies and TV episodes will be available in high definition.
Whitten said the new Xbox Live was designed for the “next 20 million, 30 million” Xbox 360 users.
Microsoft executives have said that because of the recent price cuts — which brought the price of the low-end Xbox 360 Arcade to $199 — they expect the majority of Xbox 360 sales are yet to come.
According to the NPD Group, sales of the Xbox 360 jumped 78 percent in the United States in September, surpassing sales of Sony’s PlayStation 3. Last month, sales were up an additional 7 percent.
At last week’s conference, Microsoft’s Mount said the company expected the total worldwide installed base of the Xbox 360 to reach 25 million by the end of the month, surpassing the popularity of the original Xbox.
“It’s a great milestone for us, but it’s only a start when you consider that history shows that more than three-quarters of a console’s sales come at a price of $199 or lower,” she said.
Microsoft’s primary competitor — the PlayStation 3 — is advancing its own online efforts.
Microsoft executives say the PlayStation 3 targets the same audience as the Xbox 360, while Nintendo’s Wii, which has lapped both consoles in sales, is bringing in new gamers to the industry.
Sony’s online offering — the PlayStation Network — boasts 14 million registered users, up 136 percent since January. There have been 273 million downloads.
Susan Panico, the senior director of the service, said that earlier this year, the company revamped its own store.
In July, the company also announced its own service to download and watch movies and TV shows through the PlayStation Network. She said content can then be transferred to a PlayStation Portable device so that users can take it with them, which she said was the service’s “biggest differentiator.”
She also said that with the PlayStation Network, users can play with others online for free.
“Online gaming is one of those tenets for a gamer that should be free,” she said.
The company also plans to start a social network — called PlayStation Home — later this year, with its own “highly realistic” avatar system.
Still, Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles, said that in online services, Microsoft had the lead, albeit with a head start, because it launched Live several years before Sony started the PlayStation Network.
He said for Microsoft, the goal with the new Live is twofold: to get Xbox 360 owners to use Live and to get Live users to talk up its features.
In that sense, he said, the Netflix tie-in might be most significant.
Pachter estimates 8 million Xbox 360 owners pay the $50 annual fee. Of those, roughly 10 percent are also Netflix members.
“You’re going to have 800,000 really satisfied customers immediately,” he said.
Verizon’s Interactive Video Sharing Service and Mobile Social Network November 20, 2008
FunMobility, a leading provider of innovative wireless community and media services, today announces the launch of America’s Best Mobile Flix(TM) (aFLIX), the first interactive video sharing service and mobile social network, on Verizon Wireless. aFLIX will enable Verizon Wireless customers to easily create unique mobile video experiences and share user-generated content with other mobile phone users across multiple carrier networks.
Using aFLIX, Verizon Wireless customers who have phones with video capabilities may share their mobile videos as life happens. Customers can upload videos into categories such as Comedy, Kids Vids, Crazy Pets, Sports Hijinks, and many more, or create a profile with their videos and share public or private messages with other members. Customers can also review, comment, rate and share every video on aFLIX right from their mobile phone. Videos with higher ratings are featured in a special “best videos” category every month, and customers are automatically presented with the highest-rated video they have not yet seen when they open the aFLIX application on their phones.
“Today’s mobile consumer demands creative freedom and giving them the tools to generate their own media is the next step in broadening and deepening their mobile experiences,” said CEO of FunMobility, Adam Lavine. “aFLIX represents the next evolution of mobile media creation, giving users the ability to point, click, and immediately share their personal videos with millions of others.”
“Today’s mobile phones give our customers the flexibility and opportunity to create their own media,” said Barry Ross, associate director, Digital Media at Verizon. “Our relationship with FunMobility is focused on helping our customers do that, and we’re thrilled to offer a greater selection of personalization options and applications like aFLIX, which lets them capture some of their favorite moments on video and share those experiences from almost anywhere.”
The FunMobility aFLIX service will run alongside its existing America’s Best Mobile Pix application (aPix), FunMobility’s popular photo sharing service that generates over 20 million mobile impression votes per month. FunMo.com, will power the aFLIX application, which can be downloaded directly from Get it Now or Media Center for a $4.99 subscription. Additionally, aFLIX is available on FunMobility’s direct-to-consumer website at http://www.funmo.com.
Marketing Executives Networking Group Survey Finds Social Media Practices Still in Infancy Stages November 20, 2008
There is Opportunity for Growth in Web 2.0 Practices; Most Marketers Still on Learning Curve
Despite the fact that many marketers feel like they are losing the race to adopt social media practices, the Marketing Executives Networking Group (MENG), today announced the findings of their social media membership survey which reveals most marketers are still in the early or experimental phases of adopting and measuring social media. The premier organization of executive-level marketing professionals conducted the survey last month and found that 67% of respondents consider themselves beginners at using social media for marketing purposes. Additionally, more than 87% of respondents are not regularly measuring the ROI of their social media marketing efforts.
“Our members are excited about the potential of social media, but most have not yet fully integrated social media practices into their traditional marketing efforts,” says Richard Guha, Chairman of MENG. “While many marketers are worried they’re missing the boat, in reality even the Fortune 500 companies don’t feel they’ve mastered social media just yet.”
The survey was conducted to gauge the role of social media in today’s marketing practices, and nearly 75% of respondents define social media as media that is based on conversations among users. While more than 67% report they will increase their social media advertising budget in 2009, nearly 80% say social media is not a fully integrated component of their marketing programs.
“Many marketers are unsure where to start with social media,” said MENG member Dwight Griesman, Chief Marketing Officer at Forrester Research. “It’s important to make the decision on what to do based on your target audience and your strategy, not the technology. As noted in Forrester’s book Groundswell: Winning In A World Transformed By Social Technologies (Harvard Business Press, 2008) following the four step POST process provides marketers with a framework for leveraging social media to achieve their goals. The first three steps cover People, Objectives, and Strategy. Only then does Technology factor in. Focusing on the audience first is the right place to start as marketers formulate their approach to social media.”
“An important thing to remember is the initial foray into social media should always begin with listening to your consumers,” said MENG member Bert DuMars, Vice President E-Business & Interactive Marketing at Newell Rubbermaid. Newell Rubbermaid’s Graco brand implemented a social media strategy designed to humanize and increase positive perceptions of the brand. “Ask them how they would like to engage with your brand, find the communities where they are already active, and immerse yourself in the social networking environment. Also, always be transparent to your consumers, and remember it is a conversation not an interruption…and always start with listening.”
Earlier this year MENG launched Social Media University, a webinar series designed to help MENG members brush up on social media tools like RSS feeds and podcasts. The webinar series, designed to help members take advantage of current trends, was one of the highest-attended this year. In addition, local chapters are also seeing record attendance at meetings led by social media experts.
“It’s encouraging to see MENG members collaborating and participating in hands-on sessions that advance their knowledge of social media,” Guha said. “It’s this collaboration and sharing of best practices and campaigns that will show some members how to get started or take the next step and help us all to gain a better understanding of how to leverage the techniques and determine the results.”
Online Research Drives Offline Sales November 20, 2008
Any retailer who isn’t using the online channel to promote offline sales—as well as online sales—is missing a sizable opportunity.
”Today, online consumers think nothing of shopping across a retailer’s stores, Web site and catalog,” says Jeffrey Grau, eMarketer Senior Analyst and author of the new report, Multi-Channel Retailing, “As a consequence, online product research is driving more in-store sales than online sales.”
Last year, eMarketer estimated that store sales influenced by online research totaled $471 billion. Comparatively, retail e-commerce sales were only $136 billion.
Looked at another way, for every $1 in online sales, the Internet influenced $3.45 of store sales.
”Online consumers are becoming precision shoppers,” says Mr. Grau. “They are availing themselves of the wealth of information resources online to discover and evaluate products, compare them and find where they can be purchased.”
Mounting research shows that a significant percentage of store purchases are influenced by online product research.
In addition, the “eHoliday Mood Study,” conducted during last year’s holiday shopping season by Shop.org, showed that 63% of US online buyers made their holiday purchases in two or even three retail channels.
The percent of respondents who used more than one channel would have been even higher if consumers who researched products in one channel then bought them in another were included.
According to eMarketer estimates, combined Web-influenced store sales and retail e-commerce sales accounted for 15% of retail sales in 2007. By 2012, the percentage will nearly double to 28%.
Forrester Research, in contrast, reported that Web-influenced store sales plus e-commerce sales accounted for 27% of retail sales in 2007—almost twice eMarketer’s estimate.
”As much as online shopping is a convenience and the online shopping experience continuously improves, people are not about to abandon stores anytime soon,” says Mr. Grau.
So if your cross-channel marketing capabilities are still in the early stages of development, don’t despair. As Mr. Grau says, “The majority of multi-channel retailers still have work to do to resolve organizational and IT issues that stand in their path.”
Find out more about how online is influencing offline sales, download the new eMarketer report, Multi-Channel Retailing, today.
Cake Financial Now Lets You Track Your Friends’ Stock Portfolios on Facebook
Posted: 25 Feb 2008 06:01 PM CST
Of all the apps on Facebook, here is one that might actually make you money—depending on how smart your friends are. Cake Financial, a social finance site that lets you track and share the performance of your actual brokerage accounts, just launched its Facebook app. The app lets you compare your real stock-picking prowess to that of other Facebook members who install it on their profile pages. These are not fantasy portfolios. They show your actual returns in percentage terms (no dollar amounts are revealed), and let you compare your returns with that of your friends across brokerage accounts. Every time you or a friend makes a trade, it shows up in your feed. Talk about timely information.
Cake Financial launched at the TechCrunch40 conference last year. Since then, nearly 10,000 members have signed up who track portfolios collectively worth about $1 billion. CEO Steve Carpenter hopes that Facebook will help Cake Financial grow faster.
The potential power behind Cake—as with other social finance sites like Covester, SocialPicks, and Motley Fool CAPS—is the ability to follow the best stock pickers no matter who they are (amateur or pro). Carpenter has plans to create exchange-traded funds (ETFs) that mimic the portfolios of each of the top five percent members on Cake. It would be a personal ETF. He is still working through the details. But imagine if one of your friends on Facebook was in that elite group and you could automatically start trading alongside him. Would you do it?
CrunchBase Information
Cake Financial
Covestor
SocialPicks
Information provided by CrunchBase
Online advertising executives love talking about “engagement”: It is not the impressions or clicks that count, it is how many people who saw your ad and actually ended up doing something about it. In a speech today Brian McAndrews, Microsoft’s senior vice president of Advertiser & Publisher Solutions, announced the beta of a new way to measure the effectiveness of ad campaigns that Microsoft is calling “Engagement Mapping.” Instead of measuring clicks or impressions, engagement mapping aims to track how many times a person comes across an ad on the Web, and correlate that to actions taken down the line. So if you see an ad on Facebook for a Visa card, and then on three other sites before you click through to sign up, Microsoft will give Facebook some credit for that eventual customer engagement.
In theory, it sounds good. We all know that clicks can be gamed. But at least clicks are a straightforward measure. Microsoft is vague about what exactly its unit of engagement will be—some combination of “the impact that recency, frequency, size and ad format (such as rich media and video) have on a consumer’s online path to action.”
It sounds complicated. Why not just measure the action you want the ad to trigger? Charging advertisers for engagement is certainly the right direction, but advertisers need to know what they are buying. In practice, measuring “engagement” may be nothing more than a way to justify the value of under-performing ads. “See, that Facebook ad actually worked—three weeks later.”
In the end, it doesn’t really matter what tortuous path a customer takes before deciding to buy something. Either Microsoft’s advertising platform will produce a better return on investment than the competition (Google) or it won’t. Advertisers won’t care how it does it. They will just care whether Microsoft’s ads measure up to Google’s.
Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.
Glam Media gathers $84.6M for women’s portal and ad network
Posted: 25 Feb 2008 03:44 PM CST
Online media startup Glam Media Inc. raised $84.6 million in a Series D funding round to help it roll up additional content sites and expand an ambitious publishing model that combines elements of a portal and advertising network.
The Brisbane, Calif., company, which said its expects this round to be its final, turned to German publishing giant Hubert Burda Media Holding GmbH & Co. as lead investor in the deal, joining London-based hedge fund GLG Partners LP and previous investor Duff Ackerman & Goodrich LLC of San Francisco. Other previous investors include Accel Partners of Palo Alto, Calif., Draper Fisher Jurvetson of Menlo Park, Calif., and Walden Ventures Capital of San Francisco also participated, bringing the total equity investment in the round to $64.6 million.
Hercules Technology Growth Capital Inc. of Palo Alto put up an additional $20 million in debt financing.
Glam founder and CEO Samir Arora said the company targeted the round at about $50 million in equity and $10 million in debt; it raised the ceiling based on investors’ appetites. Arora confirmed that its bankers had circulated documents informally last summer for a round of as much as $200 million, but Accel Partners’ general partner, Theresia Ranzetta, said that Glam’s board never approved a sum of that size, and the company began official fundraising in September for the more modest amount.
Although Glam would not disclose pricing on the new investment, a source close to deal put the post-money valuation at close to $500 million, and Arora said the round was sized based on the company’s needs.
“We had announced earlier that we would be very close to Ebitda profits this quarter, and we don’t need a lot of working capital for the core business, but we felt that we should use the fact that we are No. 1 in global reach to women to grow the company globally and to add technology in display advertising and ad serving,” Arora said. “Those two will be the priorities, but we also may do some M&A of core content companies and advertising networks.”
Glam claims to be the leading online publisher of content for women, with 44 million global unique monthly visitors according to comScore MediaMetrix, but some commentators have criticized the claim because unlike the other leading women’s content publisher, iVillage, a subsidiary of New York-based NBC Universal Inc., it claims the traffic of participants in its advertising network.
The company operates an ad network that syndicates content and resells ads for independent women’s blogs that agree to share revenue and sign over their comScore traffic to Glam Media, which some have criticized as merely a search engine optimization (SEO) gimmick to trick advertisers.
The distinction is increasingly irrelevant, however, as models for online publishing evolve, and Glam investors believe the company has hit on a particularly attractive model that has fueled rapid growth.
“Samir is a genius, and Glam is redefining media,” said Tim Draper, managing partner of Draper Fisher Jurvetson, in an e-mail interview. “The idea of consolidating all the media sources around women is brilliant.”
Draper said Glam’s combination of allowing bloggers to monetize content and offering advertisers a dominant avenue to high-end women consumers provides it a unique position in the industry, and that Burda’s investment is a validation of the model.
Arora said the company was looking to add a strategic investor in the deal, and that as a $2.4 billion international media group and leader among traditional women’s content publishers in Germany and other European markets, Burda will provide key strategic contacts as well as content.
Arora said the company’s business model aims for a balance of internal content and content from partners similar to Mountain View, Calif.-based Google Inc.’s 35%-65% split. The company will work to maintain this “steady state” balance as it grows, he added, and that may require aggressive acquisitions of current partners as traffic with new partners increases.
“I don’t believe we need to be a content company to be a media company, and I don’t want to get into bad habits,” Arora said. “But I believe you should fund companies in high-growth mode, and there are two types of deals; fear of competition deals, and revenue and Ebitda deals–and I am a firm believer in both.”
Arora said Glam is unlikely to raise additional private equity, but it expects to expand its debt facility to $50 million or more to finance additional growth as revenues grow. He said the company is not seeking a quick exit in the public markets, adding that he did not anticipate taking the company public at least until it reaches a critical mass in two or three years.
In putting the investment round together, Glam worked with bankers Jim McVeigh and Ed Chiang of Banc of America Securities LLC and John Griffen of Allen & Co., all of New York, and with Emmanuel DeSousa of Deutsche Bank Securites Inc. in Menlo Park. For legal work, Glam hired deal from Alan Kalin of Bingham McCutchen LLP in Palo Alto. — Clifford Carlsen
Facebook and The Myth Of Contextual Advertising November 20, 2008
There is a myth floating around that contextual advertising is going to help Facebook justify its $15 billion valuation. The myth goes something like this: because Facebook knows everything about us, it will always be able to serve perfect ads. However, the reality is more like the following:
· Facebook does not know much about us
· The data that Facebook has is not structured
· People are not coming to Facebook to click ads
And even if all of the above were reversed, building a contextual advertising engine is far from simple – anyone who tries faces the same problem as building a personalized recommendation engine. In an earlier post on this blog, we discussed various ways that such systems work. The best example is Amazon, which uses a mix of many techniques to deliver recommendations, and took a decade to build and fine tune it to the point it is at today. So what basis is there to think that Facebook can do the same? Let’s take a more in depth look at Facebook’s advertising play.
How much does Facebook really know about you?
A typical Facebook profile contains basic personal information – name, home town, date of birth and relationship status. Another section shows education and job history, and the rest of the profile is generally applications ranging from photos, to movies, to games, and other random stuff that people find interesting. So how much information is there for Facebook to use?
Very little actually. The site does not really know what I like. It does not know my book tastes, does not know that I am running a startup, does not know that I like Cabs and Pinots. It does not know that I am a Netflix user, that I am increasingly less tolerant of cold weather, or that I have 3 beautiful little daughters.
So Facebook does not really know sophisticated things about me. But even basic information that it ought to know is beyond its grasp. For example, if I add the Flixtster application and start displaying movies that I’ve rated on my profile you’d think that Facebook would learn that I like movies. But it wouldn’t. Facebook’s system has no idea that the Flixster application is about movies and has no idea what kind of movies are being displayed.
The Facebook platform is designed to be flexible and pluggable, but it lacks meta data about the content of the applications. So all the information that is being displayed on our profiles can not become an input into a contextual advertising engine. At least not easily. Of course Facebook can design an algorithm that runs and analyzes text in the profile pages, but such system would not be very good because a lot of guessing would have to happen. What would work, is to let each application deliver ads. Since applications know their own content, app developers know which ads are relevant. But it is unlikely that Facebook would ever go for that, since their whole play is to control the ads.
What ads are we getting today?
The ads that we get served on Facebook today are the direct result of the lack of understanding of its users. Not surprisingly, most ads are about dating. After all, if this works web wide, why not do it on Facebook? But most of the ads that I have seen are either laughable or down right offensive. Consider the one below:
Um… Didn’t I say on my profile that I am married? Okay fine, but even if I was looking, I would not want my THE ONE to look like this. Would you? Jokes aside, the advertisement below, which was displayed on my company AdaptiveBlue’s user group, is just completely inappropriate:
This sort of thing can cost us users, some of whom may not even realize that this is an advertisement. All they know is that they are looking at AdaptiveBlue’s Facebook group and could draw misinformed conclusions.
In addition to the ads in the sidebar, Facebook is now showing advertising in the newsfeed. I understand that they want to monetize the site, but this is just really confusing. We have been trained that the news feed shows updates from our friends. This is the place that we are directed to first each time we log in to the site, and having ads there simply creates a bad user experience. Not to mention that I am a happy Netflix customer so the Blockbuster ad that I was shown did not entice me — again, Facebook doesn’t know as much about me as you might believe.
How effective are the ads on social networks?
So at least today the ads are not relevant and we are yet to see how exactly Facebook is going to learn about us. But there is also another problem, a bigger problem which is broader than just Facebook. The question is how effective will the ads be on social networks? On the surface, it’s a no-brainer: every site that has traffic makes money on ads, right? But there’s more to the story than just the surface.
The most effective ad play online is, of course, Google. Its big because its model is pay-per-click (CPC). That is, advertisers only pay if users actually click through to the site. Of all Google’s offerings the most successful one is Google AdWords, in which contextually relevant ads are displayed on top of search results. It is so successful because a search represents intent, so users are more likely to click on ads that advertise things they are clearly actively looking for.
Most portals, media sites and social networks use a different model, based on impressions (CPM). That is they charge advertisers for each time an ad is shown, regardless of whether the user clicks. Naturally, these ads are much cheaper. And herein lies the big issue: If on social networks people do not click on ads, then the only type of ad they can possibly sell are impression based.
Right now, people are using social networks to socialize and browse, they are not actively searching for products and deals and likely, CPC would not be effective. It is still too early to tell, of course, but Fred Wilson, who writes the popular ‘AVC’ blog, created an ad for his firm, Union Square Ventures that illustrates, anecdotally, that users on Facebook are not interested in ads. The ad got practically no clicks, which is curious, because Fred Wilson and his firm are quite famous in tech circles and the ads were targeted at 32,000 Facebook users who declared an interest in technology.
Conclusion
As it stands, Facebook does not know all that much about us, and the ads that we are shown are not relevant as a result. The jury is still out on whether social networks can get big via highly targeted advertising. Early trials have shown that CPC is not a likely route and CPM plays are just not as interesting. Yet, Facebook is certainly very aggressively pushing for monetization, likely in preparation for a future IPO. Will they be able to turn it all around and re-invent contextual advertising? The company is full of brilliant people so it’s certainly possible, but so far it does not look impressive.
What do you think about advertising opportunities on social networks? What kind of plays do you see possible and what do you think about current Facebook ads?
Word-of-Mouth, the Most Important Brand Communication Vehicle November 20, 2008
It’s All About W-O-M
According to the study State of the Brand Report by the American Marketing Association and Luth Research and MiresBall, Word-of-Mouth is the most important marketing tactic for brand communication. In Brand Week’s January 22, 2007 issue, Kenneth Hein’s article “Study: Freshen It Up To Keep Sales Hot” reports:
As for marketing tactics, Web and interactive initiatives were deemed the most valuable for brand communication behind only word-of-mouth. Still, despite ranking 13th in terms of importance, broadcast advertising ranked No. 1 in terms of spend, largely because it’s considered one of the best media for driving awareness.
The Most Important Brand Communication Vehicles
Below is the list of most important brand communication vehicles, ranked in order (Source: State of the Brand Report)
- Word-of-mouth
- Web and interactive
- Customer service
- Public relations
- Print advertising
- Internal communications
- Corporate communications
- Promotional events
- Co-marketing
- Community and affinity groups
- Direct mail
- Sponsorships
- Broadcast advertising
- Packaging and POP
- Outdoor advertising
Recommended W-O-M Business Books
I guess it’s time for all front line marketing knowledge workers, middle managers, and C-Levels to take a deep dive into word-of-mouth so you can add this to your marketing tactics toolkit. Entrepreneurs should also take W-O-M to heart.
Useful business books for your deep dive are: Word of Mouth Marketing: How Smart Companies Get People Talking by Andy Sernovitz, Buzzmarketing: Get People to Talk About Your Stuff by Mark Hughes, or The Anatomy of Buzz: How to Create Word of Mouth Marketing by Emanuel Rosen.
P.S. Check out the Brand Week article. The main focus is on “brand revitalization,” which was very interesting. Apparently, brand revitalization should be done every three to five years, according the State of the Brand report.
