Social networking is hot. As consumers flock in droves to sites such as Facebook, MySpace, Bebo and Piczo, advertisers are trying to get their heads around social networking and work out how best to take advantage of the growing popularity of the phenomenon. MySpace has 100 million members, Piczo has 25 million registered users globally and gets five million unique visitors monthly to its website in the UK, while Bebo has 8.5 million users in the UK alone.
What's more, as Kenneth Lillie, head of corporate development at full-service digital marketing agency TBG, points out: "People are in a very relaxed state when they go on one of these sites because they go there to meet friends, so they are in the mood to do stuff online."
Social networking is often thought of as a young person's thing. Teenagers, after all, have the time to devote to these sites. Increasingly, it's the first port of call in the online universe many regard as home; a place they can meet friends, old and new, check out the latest songs and videos, and express themselves by uploading their own content.
But older people are using social networking sites too. MySpace, for example, has a large contingent of users aged over 30 and it's not the only place online where older people hang out.
"There are lots of networks out there," says Heather Hopkins, vice-president of research at online analyst Hitwise UK. "There's one for everyone, so as a brand you can use them to target a niche audience - 50Connect (www.50connect.co.uk), for example, is aimed purely at the over-50s."
Ad spend on these sites is increasing rapidly. Research company eMarketer estimates such ad spend in the US will rise to $900m this year, compared to $350m in 2006, fuelled by the increasing popularity of MySpace and Facebook, and by additional spending on niche and marketer-sponsored social networks. By 2011, the company says, the figure will rise to $2.5bn (£1.27bn).
So what does it all mean for advertisers? How best to harness the undeniable popularity of these sites? Is it acceptable just to stick up banner ads as you would anywhere else, or does the very nature of a social networking environment demand a more committed, more engaging and less ad-centric approach to branded content?
Integrate advertising
To some extent, it depends on the site. On one, such as Blocksavvy (www.blocksavvy.com), which looks more overly commercial than most, it's probably more acceptable to run with an ad that looks like an ad. On others, says Daniel Todd, co-founder and president of social networking site Zango, the answer may lie in ads that don't look like ads.
"We are exploring opportunities for some advertisers where we integrate sponsorship-type advertising into the content so that the ad content becomes part of the entertainment," he says. "Getting people to upload videos of themselves using the advertiser's product, for example - but then you need some way of branding the content when it's up on the site."
But Julian Smith, insight and research director at digital and direct marketing agency MEC Interaction, says advertisers need to appreciate the difference between traditional online advertising, where an ad is placed alongside contextually relevant content, as in print, and social networking sites where there is little or no contextual relevance.
"If you put a classic ad format on the MySpace homepage, you may reach the target audience you are looking for, but there is little contextual relevance, so you will get a low response rate," he says.
A more successful approach, he contends, is where the brand behaves like a normal member of the site, creates its own profile and becomes part of the conversation. There are several examples of this in action. Topshop, for instance, has it own MySpace page, which, according to Hitwise, generates more traffic to the "official" Topshop website than Yahoo! and MSN Search combined. HMV has enjoyed similar success with its MySpace page, while others have established a base on the virtual world site Second Life, including BMW, IBM and Vodafone.
"All brands should consider social media channels, but not from an advertiser perspective," says Smith. "It should be seen more as an opportunity to build brand reputation by demonstrating openness and honesty and a willingness to join the debate."
As an example, he cites the Dove 北京赛车pk10 for Real Beauty, where the brand created its own platform in order to get a discussion going.
Ziv Navoth, vice-president of marketing at Bebo, has witnessed this first hand. The first wave of advertisers were drawn to Bebo, he says, because of the sheer number of site users, but now they are beginning to appreciate their potential to build a conversation with the audience, or what Navoth calls "the people formerly known as the audience".
"The future of advertising is in having a long-term conversation with customers, potential customers and former customers because people are having these conversations anyway, when they have had a good or bad experience with a brand," he says. "Advertisers are interested not only in how many eyeballs they can be in front of, but also in what share of the conversations about them they can get involved with."
No matter how subtle the advertising, it's still advertising at the end of the day, so how do the users of these sites feel about being aggregated in one place for the purposes of making money for the website operator?
Brand voice
Chris Seth, European managing director for Piczo, says its users realise Piczo is offered for free and that the value exchange is the advertising on the site. "If it is a brand and message that resonates in their world and they feel they have, or might have, a relationship with it in the future, it is generally welcomed," he says, though he adds that advertisers should avoid interrupting the user's experience, saying: "It's better to give the brand a voice and create a conversation with the member base."
There's more than one way to get this conversation going. While the Piczos, MySpaces and Facebooks of this world attract millions of users, one alternative open to advertisers is to create smaller online communities of their own and then drive traffic to them.
There are several examples of this. Philips has a Live Simplicity community site (www.livesimplicity.net), which offers consumers a platform to discuss the concept of "simplicity". In the US, Infield Parking (www.infieldparking.com) is a social networking site devoted to Nascar racing. And this month, Sony launched Vaio Nation (www.vaionation.co.uk), an online community showcasing "the brightest talent in film and music" and a subtle way of showcasing the things you can do with its Vaio computers. The community has celebrity endorsement from DJ Norman Jay, writer/director Daniel Mulloy and Leeds-band Stateless, all of whom have contributed something using Sony Vaio hardware and/or software.
"Vaio Nation is a bold and exciting move for Sony," says the company's UK general manager of central marketing for consumer electronics, Mikah Martin-Cruz. "We now have an excellent product that rivals our competitors and Vaio Nation is about demonstrating this to consumers, building the link between them and the brand. It's a community where both consumers and established artistes can find shared interest and test their ideas."
One issue that these and the public social networking sites have to contend with is moderation. Comments, images and videos have to be moderated, otherwise it becomes a free-for-all. Even so, Tamara Littleton, chief executive of online moderating firm eModeration, says client companies are taking a lighter touch towards moderation, in the interests of winning users' trust.
"If you make it obvious it is a social network sponsored by this brand and that we (the brand) are trusting you to engage with us, then self moderation, which is one of our key objectives, is achievable," she says.
MTV - perhaps an obvious candidate for a home-grown online community, given its target audience - launched MTV Flux in September 2006. Like the established social networking sites, it enables members to upload photos, videos, blogs and other content. Sean Worrell, head of digital at MTV's TV sales arm Viacom Brand Solutions, says the response from advertisers has been fantastic.
"With MTV, you are advertising to an audience. With MTV Flux, you have a database of fields on the user, so you can mine the data and target the advertising more closely. For example, a group of people who are into the Arctic Monkeys and live in Scotland," he says.
Mobile functionality
Mobile forms an important part of the set-up. Having researched the way kids use them, Worrell says MTV felt it was vital to offer mobile functionality. And, unsurprisingly, the mobile networks seem to agree. O2 customers can get Bebo on their handsets, while Vodafone has deals in place with both MySpace and Second Life.
But not everyone is convinced mobiles are ready for social networking yet. Dan Rosen, head of AKQA Mobile, says: "I can't take it seriously until there is a flat rate data tariff. If you have that, a tie-up between Vodafone and YouTube is interesting, but without it, it's scary because of the amount of data used when you're doing this sort of stuff."
John Delaney, principal analyst at Ovum, agrees data charges are a potential obstacle, but suggests moves such as Orange's planned "Bebo Bundle" tariff, offering unlimited uploads and downloads to Bebo for a monthly fee, could be a way around the problem.
The other issue though, according to Delaney, is the phone itself. "Even the most sophisticated handsets are not as clever and as easy to use as a PC," he says. "The WAP browser is clunky as a way of accessing applications. The business model for social networking on the web is advertising, but no one knows yet whether ads can be made to work on mobile, so it may need a different model."
There's no doubt that the UK has some catching up to do in terms of how advertisers use social networks. Many are cautious not to jump in feet first and damage the brand's reputation among the notoriously fickle demographic they wish to target. But social networks have been around too long to be considered a passing fad. Advertisers want a little time to get up to speed, but they shouldn't wait too long THE BIG HITTERS
There are lots of social networks out there. These are some of the biggest and best-known ...
- MYSPACE (www.myspace.com)
Bought by News Corporation for $580m in 2005, at which point it had 16 million monthly users, MySpace now has more than 100 million users. In addition to individual user profiles, the site is home to thousands of bands, artistes and three million groups, covering just about every walk of life imaginable.
- FACEBOOK (www.facebook.com)
Facebook, founded in February 2004, was initially designed for college and university students, but has since expanded. The site has almost 19 million active users in over 47,000 geographic, work-related, university, and school networks and, according to comScore's Media Metrix report, it ranks as the sixth most-trafficked site in the US. More than six million photos are uploaded every day.
- BEBO (www.bebo.com)
Bebo was founded in January 2005 and has over 31 million users worldwide, with 8.5 million of those in the UK. The site has a heavy emphasis on entertainment, with sections on bands, TV and authors. Users can post blog entries and photos. According to Hitwise, Bebo was the fastest-growing social networking site in June 2006 and is the UK's eighth most-visited website.
- PICZO (www.piczo.com)
Piczo, launched in 2004, has 25 million global users, with five million unique visitors monthly in the UK. Aimed at young teenagers, it enables them to create their own websites without any knowledge of html code. Users share life stories by designing sites with multiple pages featuring photos, graphics, guest books, comment boards, music and more. They can link to friends on an invitation-only basis, but it operates a "walled-garden" approach with no searching for users.
- TWITTER (www.twitter.com)
Twitter may not have the reach of some of the more established social networks, but it is growing in popularity by the day. Founded in October 2006 by San Francisco start-up company Obvious Corp, it enables users to send 140-character (or less) posts via SMS or instant messaging, or via the Twitter website. Entries are displayed on the user's profile page and also delivered to other users who have signed up to receive them. The sender can choose who to restrict delivery to. Users can receive updates via the website, instant messaging, SMS, RSS, or through a dedicated application.