Both MySpace and Facebook announced new ad platforms yesterday, signaling an increased interest in the ad targeting abilities of social networking.
Though there are some privacy concerns with this type of targeting, both platforms will seek to utilize users’ level of engagement in the social networks, combined with the amount of information they make known about themselves through their profiles, interaction with friends and behavior.
The behavioral factor is increasingly relevant with Facebook, given the growing numbers of applications that are developed for the network. In other words, users’ interest in books, music, tech products and all kinds of things can be gleaned from the myriad applications that have been developed for them to plant on their profiles.
MySpace will meanwhile allow advertisers to target display ads to individual profile pages, based on nearly 1,000 categories and subcategories specific to tastes that are both explicit and implicit in users’ site behavior and profile content. Neither deal affects the advertising relationships (MySpace /Google, Facebook/MSFT) already in place.
Location, Location, Location
A key part of both ad platforms will allow advertisers to target users by location (in addition to demography and other factors). This will mostly be utilized by national advertisers that want to target users in certain geographies, but it could also have implications for small-business advertisers. This could be truer with Facebook where the possibilities afforded by its open application development make the possibilities more, well, open (though MySpace joining Google’s OpenSocial initiative could bring it similar advantages).
Some of these local advertising possibilities for Facebook have already been developed around classifieds, while MySpace has seen some activity around SMBs creating profiles to gain exposure through viral marketing. The new ad platform could create a channel for these businesses to more meaningfully market themselves on MySpace, similar to the way artists and bands have historically done.
As part of this announcement, MySpace underscored that only 1 million of the 23 million SMBs in the U.S. advertise online, and most of that is search based advertising. Meanwhile MySpace has about 10 million companies of all sizes that have developed profiles on the network. The company is hoping the location-based targeting and other viral marketing capabilities baked into this new platform will close the gap on the untapped SMB segment.
Nearly every online entity out there with any meaningful traffic is trying to make a play at this massive segment. And MySpace will run into the same challenge they all face: The majority of SMBs won’t self provision. It’s clear high-touch sales provide considerable advantage in selling and managing SMB online advertising to any meaningful scale.
We’ll see if this challenge — made apparent through search engine marketing and other forms of online advertising — applies to social networking and viral marketing as well. My guess is that it will.