Hits and Misses Among Social Media

Social wunderkinds like MySpace and Facebook face a dilemma: advertising in these environments is a decidedly hit-and-miss affair. For all their potential, they’re tough for advertisers to figure out.

The magic of search engines is how accurately they pair expressed user interests with advertisers (think of search as the ultimate matchmaker). On the other side of the coin, content sites offer contextual environments for pairing with brands. Social media sites, however, often do neither.

Instead, a Facebook user looks at a page filled with dozens of links and snippets of information, mostly about friends’ activities. Such environments yield terrible ad-click rates, particularly compared to something like search, according to media buyers. At the same time, the lack of high-quality content makes brands skittish and uncertain of the value of adjacency.

“Advertisers are finding that the inventory being packaged for them and the spend they’re being asked for isn’t justified by the results,” said Ian Schafer, CEO of Deep Focus, a New York digital agency. “The low-hanging fruit of results is click-throughs and it’s frankly minimal, no matter how much targeting is applied.”

Last week, eMarketer lowered its forecast for social-media ad spending by 12 percent. It still expects robust growth, yet it tempered its enthusiasm for meshing ads with social environments. It estimates MySpace will miss its $1 billion U.S. sales goal by 11 percent and Facebook will take in 13 percent less than the $305 million forecast.

Advertisers, of course, cannot throw up their hands and move on. In the words of Forrester Research analyst Charlene Li, social networking, “like air,” will be everywhere online. This month alone saw Google, MySpace and Facebook coming out with differing standards to allow social-profile data to move with users wherever they go. In effect, people will be able to take their networks with them.

So it’s no surprise that social networks and advertisers are plowing ahead with experiments to see what works and what doesn’t in social media. It’s a painstaking process of trial and error, marked frequently by one step back and two steps forward. But successful campaigns typically have something in common: They avoid the tried-and-true approaches of Web advertising in favor of what makes social media unique: the ability for people to share.

While the enormous scale of MySpace and Facebook will continue to attract direct-response advertisers through network buys, the giants are hoping to become mainstream ad buys for brands.

“There are still advertisers that have a social media bucket and an online advertising bucket,” said Jeff Berman, president of sales and marketing for MySpace. “We think those walls should come down.”

The challenge, says Chas Edwards, publisher of FM Publishing, is one already faced by old media, particularly magazines: to create ad formats that fit the environment. In print, this has meant ads in Vogue, for instance, designed like lush photo spreads that match the magazine’s content. Rather than mimic the content, however, social media needs to mimic the connectivity experience.


“When we participate in social media, we’re not there for the content,” he said. “We’re there to interact with our friends.”

FM is representing some Facebook application developers. The landing pages of these applications, unlike cluttered Facebook profiles, tend to look a lot more like media, Edwards said, making them ideal for brand building. FM recently wrapped up a campaign with BMW, which presented a drawing contest on the Graffiti Wall application page. The marketer offered visitors a silhouette of a BMW 1-Series and asked them to create their own artistic renderings. Over 10,000 people created designs and, more importantly, shared them with friends. The contest, which received more than 600,000 votes, was promoted through standard ad placements in Facebook.

“What we saw was each person who spent time making a graffiti wants to share it,” Edwards said.

The success of the graffiti campaign can be tracked to how it tied into the utility of the application. In a way, BMW increased the user experience. This has become a key goal for social media companies large and small.

MySpace is doing much the same thing through the reorganization of it sales department. While ad sales initially were handled out of New York, they’re now based at MySpace headquarters in Los Angeles, a move that enables the department to collaborate more easily. For instance, MySpace engineers originally planned to bump the number of photos users saw on their profile pages from 16 to 200. But when Warner Bros. launched the feature film 300, MySpace, which ran standard ads for the film throughout the site, did a tie-in that increased the photo limit to 300.

Imeem is working on a similar function-based ad model. The music site, which attracts 24 million visitors per month, lets users share music playlists. Because it aims to keep people engaged on its site, advertising that sends people away isn’t ideal, said Steve Jang, CMO of Imeem. So it’s rolling out branded services, starting with an essential feature of the site: the playlist. Marketers including Scion, Acura and Nokia have rolled out custom playlists to express their brands through music. Nokia, which earlier this year promoted the launch of its 5300 XpressMusic multimedia phone with an enhanced music capability that can hold 1,500 songs, created a 1,500-song playlist on iMeem. It also invited users to contribute their own playlists, the most popular of which was featured on the site.

“What’s most valuable and engaging for brand advertisers is to see a user get involved and take his own thoughts and build something with the product,” said Jang. “We’re branding the experience, not the content.”

This tactic is the cornerstone of the ad models for Slide and RockYou, two up-and-coming widget makers. Slide recently closed a $50 million round of funding that valued the company at $500 million. Its lofty valuation is premised on its as-yet-unproven ability to turn its reach into a robust ad business.

Banner ads aren’t where the opportunity lies, according to Sonya Chawla, senior director of advertising at Slide. “We did some initial tests with banner ads,” she said. “We found banner advertising is like having a conversation with a TV running in the background and nobody paying attention.”


Instead, Slide and RockYou are developing a new-era form of product placement that brings brands directly into the application experience, rather than relegate them to a banner on the periphery. One of Slide’s most popular Facebook applications is SuperPoke, which lets users to give each other virtual nudges. Slide has begun working in branded SuperPokes, like spraying a spritz of perfume for Estee Lauder and rolling a set of dice as part of a Vegas-themed Palm campaign. Coke brand VitaminWater ran a SuperPoke campaign in April that resulted in 9.7 million virtual versions of the brand being sent out.

RockYou has seen success matching movies with its applications; Vampire flick 30 Days of Night made a good fit with its Vampire app, resulting in 60,000 registrations for the movie.

“The biggest misconception is people assume the performance of these campaigns is the same as the performance of general social networks,” said Ro Choy, vp of business development at RockYou.

While progress is being made and lessons learned, Schafer believes advertisers need to deal with a more fundamental problem of campaigns in social media: They’re not well-suited as short-term endeavors. His agency helped develop an Entourage community on MySpace that has run for four years, requiring continued tending and activation. Yet for most clients, social media campaigns tend to mean running ads for a set period of time.

“What social networks are more fertile for are initiatives about CRM and changing attitudes, rather than awareness, frequency and reach,” he said.