The Digital Lookout

The launch of Myspace’s new ad scheme myAds into Beta last week opened up the social network as an advertising option for businesses of all sizes.  With a 4 step, simple campaign set up there is no doubt this is aimed at small businesses with little or no experience of online advertising.  And with the super low minimum commitment of £25 they have reduced all barriers to entry for small businesses.  No doubting that this is an attempt to follow in Facebook’s footsteps in attracting direct advertisers and allowing self service and flexibility on ad campaigns (its the future, remember?) but is Myspace in a position to make a go of it in the same way Facebook has?

It certainly has the audience for it, with nearly double the unique user figures of Facebook there is an audience there to be tapped into, but impressions are what the modern day advertiser is after.  It is also most certainly not what the small business advertiser is after, I know from experience that if a small business is investing £100, then they sure as hell want £200 back.  They do not have large marketing budgets and they don’t give a hoot about brand building, they want a return on investment.  And I’m not convinced Myspace can give it.

For a start on Myspace there is less browsing involved.  On Facebook you are looking at news feeds, checking out updated status’ and searching for groups, and this is the time when you are most likely to be tempted to click and ad.  With Myspace there is less of these type of actions involved, at least there is how I use it.  And you are generally there to view a particular persons profile or catch up with a contact, and when you have a purpose, you are less likely to be tempted to click an ad, no matter how well targeted.

Also, the garish nature of Myspace profiles means that it will take something special for an ad to look right on the page, this will make users opposed to the ads and less likely to accept them as useful.

I suppose the idea of the ads, much like Facebook’s similar programme, is to utilise the profile information to target your audience effectively and I buy into this, use all the information you can to show the right ad, to the right person, at the right time.  I’m just not sure Myspace has the layout and the typical user actions to support such a programme.  And certainly my experiences with Google Placement ads on Myspace haven’t shown me anything to suggest otherwise.

An application has been developed which allows you to view your Myspace page through Facebook.  The application, developed by Fuser, allows you to check your messages, bulletins and comments without ever leaving the Facebook site.  for the social hardcore this could be a god send and could also be a big dent to Myspace as it will enable users of both to monitor them through one single website, hence less visitors going to the Myspace site.  If users are beginning to migrate from Myspace to Facebook then this could be the final act which prompts a complete switch as they will be able to keep an eye on their lesser used Myspace page without having to visit it.

Additional information

I anyone needed convincing of the rise in popularity of social media and the impact it has has on the web then the recent Hitwise news letter should provide it. Bebo has just overtaken ebay in the search term share rankings and the top 10 search terms contain 5 terms relating to social media sites, with two of them being youtube. This just goes to show the prominence this sector now has in the market and the opportunity it holds for those who can adopt it to suit their objectives, whether that be through advertising or participation.

The top ten search terms (as tracked by hitwise) for the 4 weeks ending 9/6/2007 are:

1. bebo 1.14% share
2. ebay 1.11% share
3. youtube 0.52% share
4. myspace 0.37% share
5. argos 0.24% share
6. facebook 0.23% share
7. amazon 0.22% share
8. bbc 0.17% share
9. you tube 0.16% share
10. bbc weather 0.15% share

I have written previously about finding the best way to monetise social networking sites without annoying the users and intruding on the social elements.

Myspace founder Chris DeWolfe today hinted (below) at a possible partnerhsip with Ebay as a way to allow its users to trade between themselves. This ties in with the reason social networking is such a growing phenomenon, user interaction. As I have mentioned in the past the key to monetising social networking is to not encroach on the basic model. through genrating a marketplace between users, through ebay or otherwise, and taking a percentage for transactions myspace will be able to earn a large chunk of cash without devalueing their offering. Expect to see other schemes like this appearing soon!

MySpace founder hints at future eBay partnershipby
Charlie McCathie Brand Republic 18-Jun-07, 14:10 LONDON -

Chris DeWolfe, founder of MySpace, has revealed that the site will soon offer user-generated e-commerce transactions through partnerships with online retailers, possibly including the internet auction site eBay. The move comes after several other commercial developments, such as the addition of a classifieds section and the option to buy and sell music via the site. MySpace uses banner advertising and click-throughs to brand profiles to generate revenue, amassing £12.6m each year, and the introduction of e-commerce is likely to generate even more profit. The social networking site is trying fend off the competition from Facebook, which had its traffic grow by 89% last year, compared with 34% growth at MySpace.DeWolfe said: “We will at some point offer user generated e-commerce transactions. So if you’re on your site and you have a line of T-shirts you have designed and you want to sell them to your friends, we want to be able to provide you with the tools you need to do that.”So we could partner certainly with someone like eBay to do that. We haven’t decided yet but it would be probably a good bet that someone like eBay could be a good partner.”DeWolfe also said that another burgeoning market being considered is online video advertising. He suggested that MySpace is currently muting the idea of introducing this element to the site, as it would “definitely be a huge revenue stream”.

So how do you monetise the social media trend? a questions which people will be asking themselves in light of the growing phenomenon and the convergence to web 2.0 technology. In my eyes the real question is “how do you monetise social media without putting users off?!” If people start to see social networking sites becoming more and more commercial they will very quickly jump ship. people use these sites to interact, not to be sold to and if pages begin to become plastered with ads this will make users move on to the next site which has become flavour of the week.

there is undoubted potential held in the targetting options availale through social networking sites and I believe this is the tool which will bring success if used correctly. Noone minds seeing ads if they are relating to something they are looking for at that point in time. Think about it, the ability to show and ad for gifts when you konw it is someones partners brithday in the coming weeks, or an ad for a dating site around valentines day only shown to single people who arent in a relationship. This is where the real strength lies in my eyes and if it can be harnest then the money will follow.

Social Network Ad Scramble
APRIL 19, 2007

With fierce competition, sites explore new ad models
Social networking buzz belies an impending sector shakeout, according to In-Stat’s “Social Networking: Finding Friends Online” report.

“In order for a social networking site to be successful, it must attain a critical mass, and competition is fierce to attract new members,” says Jill Meyers of In-Stat. “So far, sites have focused their attention on a younger demographic, which is finite, fickle and limited in expendable income.” Ms. Meyers says Baby Boomers are frequently overlooked when it comes to social networks.

MySpace’s demographics include plenty of wage earners at this point, and Boomers have social networks like Eons.com, but the In-Stat report raises an important question: How can social networks best monetize their memberships? eMarketer estimates that 2007 ad spending on MySpace will outstrip spending on all other social networks combined, so competition will be fierce.

One possibility is selling user data, according to In-Stat.

“Each social networking site collects a plethora of personal and demographic data on each member,” said Ms. Meyers, “and while selling these data to target marketing groups may be unappealing to site members, it may be the best route to profitability for site operators.”

Some social networks are still having trouble just getting their sites to grow. comScore Media Metrix data reveals a range of visitor growth of anywhere from 1177% (Sconex.com) to -40% (LiveJournal.com).

Even Microsoft is offering advice on how to increase social networking ad revenue. The Microsoft Digital Advertising Solutions Group commissioned a Metrix Lab study of how social networkers use the sites. The study concluded that creating brand profiles (spaces) that can be forwarded to friends is effective, with a quarter of social networkers posting views on specific ads and a third forwarding spaces, ads or links.

eMarketer senior analyst Debra Aho Williamson says that the time for branded profiles is probably coming to a close.

“The notion of creating a MySpace ad profile page and collecting friends was popular in 2006 but will likely give way this year, as users tire of collecting ‘friends,’” says Ms. Williamson.

Third-party companies are also developing sophisticated modeling software to parse the things people write on their profiles and match ads accordingly.

However, there is a risk that innovative ad models like these will get shelved in order to give advertisers something they’re already comfortable with. MySpace sells “roadblocks” on its home page and even uses old-media speak to explain why advertisers like being there: “Marketers are really interested in the one-day cume they can get from the home page of MySpace,” Fox Interactive Media told eMarketer last year.

While such things will generate revenue, they fall short of the promise of the “one-to-one-to-many” nature of social networking.

For an in-depth look at social network ad spending, eMarketer Total Access subscribers can read the Social Network Marketing: Ad Spending Update report. If you would like information on subscribing, click here.