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Paid Brand Conversations to Rise

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More brands will compensate bloggers and social media users in an attempt to generate chatter about their products, a new study found.

PQ Media said such "sponsored conversations" -- which compensate social media users for discussing brands' products -- grew to $46 million in 2009, a 14 percent increase from a year earlier. Even so, that figure represented a tiny chunk (2.7 percent) of the word-of-mouth marketing category, according to PQ.

The firm now forecasts what it terms "social media sponsorship spending" to rise 26 percent this year to $56.8 million.

Brands are still more likely to compensate content creators with free products rather than cash. Non-cash sponsored conversation campaigns accounted for 78 percent of spending, with cash programs making up the rest. PQ found that cash programs rose 37 percent in 2009, which it attributes to brands looking to reach specific influentials rather than large consumer sectors.

Services like Izea and Ad.ly match up social media content creators with brands. Some celebrities have included paid tweets in their sponsorship agreements. Kim Kardashian has reportedly garnered $10,000 to update Twitter on behalf of advertisers. The Hollywood star has over 3.5 million followers.

The question of paid posts in social media has caught the attention of the Federal Trade Commission, which late last year issued guidelines that require content creators to disclose any "material connection" they have with advertisers.

The requirements have not impeded industry growth, according to PQ. In fact, the researcher concluded the FTC spotlight has bolstered it. Consumer package-goods companies are most active in the area, accounting for a quarter of spending, followed by food and beverage, health and beauty, media/entertainment and technology and telecommunications.

PQ concluded the nascent area suffers from a lack of national scale and fragmentation among many providers.