Brand advertising programs at Facebook and Myspace working

Because CPMs are so low in the social networking business, companies like Facebook and MySpace are hoping to garner premium advertising dollars by enabling promotions that create brand-centered community among members. For example, 100,000 MySpace members recently became friends with the Wendy’s Square. Brand Managers love opportunities like this because it’s so hard to create “authentic” community around a product–many will pay out the nose to try something new they can tell their bosses about.

The sponsored group program at Facebook lets companies buy a link from the Facebook sign-in landing page to a “group page” that contains ad copy and a message board. Here is a complete list of all sponsored groups that have been purchased on Facebook. (Thanks Avery!) In summary, the following companies have Facebook sponsored groups:

I predict that brand advertising products (like sponsored groups) will become a significant component of social networking revenue. While Facebook and MySpace will always have trouble getting a high click-through rate on standard ads (because kids come to hang out, not to buy), what they can offer Madison Avenue is the opportunity to have a presence where all the kids are — A, in a way that looks at least somewhat cool, and B, in a way that allows and measures various ways of interacting with the brand.

As always the tension for Facebook will be not to oversell these high-dollar placements and devalue them in the eyes of its members…