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Social Network Ad Targeting: The Local Angle

By: 7 November 2007

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.
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More background and detail about the nuts and bolts of these ad products are available from CNET and Techcrunch.



One Comment

One Comment »

  • Brian said:

    Could VOIS.com become another Facebook?

    Since the advent of social networking sites in 1997, the phenomenon has taken the world by storm. Once called a passing fad social networking is now a thriving business, in 2006, alone it garnered over $6.5 billion in revenue, while the three biggest players, connected over 280 million subscribers in a way never known before to society. This form of connection has drawn the globe closer together than anyone ever predicted.

    Just a few years ago, MySpace.com, solely dominated the social networking site market with almost 80% of the social networking site market but now websites like Facebook entered the social networking site race becoming the 8th most viewed website in the U.S. according to web measuring traffic site Alexa.com. Facebook.com which originally started at Harvard University , later extended to Boston area schools and beyond has mystified many naysayer’s with its explosive growth over the last three years and an astounding asking price of $10-$15 billion dollars for the company. But who will be next?

    Who will carry the torch into the future?

    With the rapid growth of the likes of MySpace and Facebook the burning question on everyone’s tongue is who is next? As with any burgeoning field many newcomers will and go but only the strong and unique will survive. Already many in the field have stumbled, as indicated by their traffic rankings, including heavily funded Eons.com with its former Monster.com founder at the helm, Hooverspot.com and Boomj.com with its ridiculous Web 3.0 slogan. There are many possibilities but it is a dark horse coming fast into view and taking hold in the social networking site market at the global level that has us interested the website – Vois.com. Less than a year ago, this newest contender directed at 25 to 50 years olds graced the absolute bottom of the list with its website ranked at a dismal 5,000,000. With not so much as a squeak this rising star has come from the depths of anonymity growing an eye-popping 10,000% in less than one year to make itself known worldwide now sporting a recent web traffic ranking in the 5,000 range.

    Understanding the Market

    When people in the United States hear about Facebook and other services such as MySpace the widely held belief is that these websites are globally used and are as synonymous as Google or Yahoo in regards to having a global market presence. This idea is completely misguided. Now it is true that both of these social networking giants are geared to service the western industrialized cultures but when it comes to the markets of the future, the emerging markets, they have virtually no presence. The sites themselves are heavily Anglicized, and Facebook in particular has an extremely complicated web interface that eludes even those familiar with the language, making them virtually inaccessible in other parts of the world even where English is the main language.

    Our interest in Vois is global and geopolitical. Simply, Vois understands this lack of market service and is building its provision model on a global research concept developed by Goldman Sachs a few years ago. The concept is basically predicated on the belief that beginning now using current economic models and continuing those models over the next few decades will lead to a major paradigm shift in the world regarding nations who are current economic leaders like those being the USA and the other members of the G-7 and those who will become dominant in the world economy mainly the BRICs. In the Goldman research report Goldman highlights the fastest growing nations and has dubbed them with the two acronyms BRIC’s and N-11. BRIC standing for ( Brazil, R ussia, India and China) representing the fastest growing economies and N-11 or what are being called the Next-11 representing the next 11 countries to emerge as future important economies such as Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam. This approach has already been implemented with some success with companies like Orkut, who has over 80% of the market share in Brazil and large holdings in India and Eastern Europe . Other providers such as Hi5 have the world as their focus and are making great strides in global market share while Facebook builds itself into a niche provider wholly unready to take on the world.

    A Growing Presence

    As Vois breaks new ground in the world market pursuing previously ignored demographics, they afford themselves the opportunity of tremendous growth unfettered by the giants such as Facebook and MySpace. While cultivating this new user base, Vois will also be able to monopolize on their business revenue strategies, creating an area of commerce that will make their site increasingly attractive to business and users the world over. This concept, dubbed sCommerce, allows the subscriber to promote themselves in both personal and a professional fashion while giving them the option of setting up shop on the site. This approach will allow business owners to target their market in a way never before allowing them to focus on interested groups of individuals while providing follow-up without having to commit to wasteful blanket campaigns that are typically the order of the day. This newfound border will allow Vois to explore new revenue models while provide a tremendous service for both their regular subscribers and business subscribers alike. With all this going on, rapid traffic growth to the site, we pose the question – is Vois the next Facebook, it sure looks like it but only time will tell….

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