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Social Ad Lessons

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NEW YORK 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.

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