Brand Building in Social Media

This is a guest post by Seth Goldstein, CEO of SocialMedia Networks. SocialMedia is an advertising network for social media platforms like Facebook and OpenSocial.

Sunday’s NY Times article by Randall Stross about how Advertisers Face Hurdles on Social Networking Sites set off another wave of finger pointing in the online advertising community.

Stross staged the promise of social media advertising as an awkward dance between Facebook and Procter & Gamble. Although many were quick to see this as an indictment of brand advertising on social networks, I believe that this misses the point.

Advertisers and Social Media are stepping on each other’s toes. That is ok. It is a time of experimentation where social platforms such as Facebook are looking beyond CPM and CTR metrics to embrace new factors such as engagement and amplification. It is also a time where large brand advertisers such as P&G are willing to consider social influence as a key media metric.

Until recently, consumer brands have relied upon mass media to stimulate positive word of mouth, generate peer pressure, and modify behavior. I will never forget a meeting with one of the first Interactive Brand Managers at P&G in 1996. I recall her saying that they would not commit significant dollars online until the medium was able to demonstrate its ability to persuade people to change their behavior. Neither display ads nor search ads were able to do this, which is why the CPG category has consistenly underweighted online media relative to their overall media mix despite the growing online audience.

As smart Facebook exec, Chamath Palihapitaya, pointed out last year, Google does a great job with demand fulfillment, once the user knows what he is searching for. Chamath believes that Facebook can function in a different capacity: demand generation: “So what we’re thinking about is, how do you create a system that will algorithmically give advertisers the ability to generate demand in a powerful way — but also in a very subtle way.”

Facebook’s recently-introduced engagement ads are beginning to deliver on this promise. They provide an integrated (content+ advertising) social experience that stimulates demand. Tim Kendall, Chris Pan and the rest of the team have done a great job establishing core interactions (gifting, commenting, fanning, rsvp-ing) that users engage with, which then get amplified through the social graph via the newsfeed.

A number of other companies, large and small, are similarly attempting to innovate around the engagement and amplification of social ads: MySpace has done solid work of late, both exposing their self-service hyper-targeting to direct advertisers as well as providing value added solutions to large brands such as Walmart, McDonalds and Toyota. Other startups such as Meebo, Flixster, BuddyMedia and SocialVibe, not to mention my own, are also developing next generation social advertising solutions.

The advertisers who stand to benefit the most from social advertising are consumer brands at the top of the purchase funnel. Think candy, snacks, cereal, deodorant, toothpaste, virtually any brand you would see at a local Rite Aid. The equity of these brands has historically been shaped and reshaped by conversations at the proverbial watercooler; whether after a great Superbowl ad or following a genius integrated sponsorship that convinces one friend to share his brand affinity with another.

The exciting thing about social advertising is not so much that it is new (since word of mouth marketing has been around a lot longer than the Internet, the printing press, and maybe even the wheel); but rather that it introduces a level of scientific accountability to a practice that has been anything but. Now, for the first time, the delivery of word of mouth marketing can be metered and therefore guaranteed, based on the number of authentic messages exchanged between friends.