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Social Network Advertising

Social network advertising is the placement of ads on social networks such as Facebook, MySpace, and YouTube. As opposed to traditional media, advertising through social media can take advantage of detailed consumer demographic information, including geography, professional and personal affiliations, leisure activities, political views, etc. Because social networks contain very detailed information about their members, ads that take advantage of available consumer information and correctly target given member groups have a good chance at generating consumer interest and response. This can lead to increased brand involvement, ad clicks, landing page and/or web site views, and sales. In essence, social network advertising can result in a better return on investment (ROI).

Types of Social Network Advertising

Direct display advertising
There are several types of social networking ads. Companies with large budgets may create horizontal banner ads that are displayed across the top of the page. Full banner ads can span 468 x 60 pixels, or they can be 728 x 90 leader boards. Alternately, the ads may be formatted to square, button, or skyscraper measurements, and appear in static or pop-up format.

Some large-budget companies may forgo banner ads in lieu of advertising that includes graphics, audio/visual displays, and even user polls, surveys, and games. Termed rich-media, such advertising attempts to engage the user and gain consumer information from ad clicks and responses. In exchange, the ad may offer a promotional code, coupon, or application.

Big budget ads typically get preferred placement on the host social network. For example, through Facebook's Microsoft partnership, advertisers can place ads on the site's main page, on group sites or user profiles, or on network applications. LinkedIn, a social network for business professionals, offers premium placement of ads via the DirectAds program. This program also enables the ads to be targeted by audience seniority, industry, company size, job function, and geography.
Self-serve advertising
Self-serve ads are generated and used by smaller budget companies. Self-serve ads are smaller than those of big budget companies and usually include a brief display followed by text. Facebook DirectAds, for example, offers advertisers the option of downloading a small 10 x 80 pixel image followed by 135 characters of text and a 25 character title. These ads are shown in the right-hand side column of user profiles, group sites, and applications. The MySpace myAds program also allows the upload of image files and addition of text for the generation of ads. In contrast to Facebook's DirectAds, however, MySpace's myAds also allows display ads that are 728 x 90 or 300 x 250 pixels in size.

Self-serve ads, although used by the advertiser with a smaller budget, are by no means inferior to banner ads. For example, Facebook enables self-serve ads to be targeted to specific audiences based on the keywords chosen. Viewer numbers and statistics are also provided. Furthermore, both Facebook and MySpace provide analytics programs that track ad impressions and clicks, click-through rate (CTR), amount spent, and cost per impression (CPM).

Additionally, self-serve ads can be linked to the advertiser's social media group or profile page. This technique is a low-cost method for companies to obtain an entire advertising page for the price of placing a small display or text ad. When users click on the ad, they are directed to the group/profile page, where a new product or service is being advertised. Advertisers can also provide an incentive for subscribing to their social media page by awarding free product, providing a coupon or other promotion, or marketing a contest. In many cases, the incentive can be listed directly on the ad.
Network application advertising
Social network application ads may also be used when an advertiser wishes to target a specific consumer demographic and elicit its response. The ads are shown on application pages and may take the form of large banners, videos, and rich media ads, or small display and text ads. The applications are often in the form of an online game. Advertisers may show their ads on select areas of the game site or may even integrate into the game itself. If advertisers integrate into the game, they will typically offer game points, virtual currency, or game advances in exchange for user actions such as filling out a survey or signing up for a free product trial.

Advertisers may also design and launch their own social network applications. While this approach requires a bigger time commitment, it is rather inexpensive, since advertisers simply take advantage of the existing social media technology and infrastructure. For example, The Gap advertises its jeans via a "Born to Fit" company profile page on Facebook. In this application, specific products are shown in both displays and interactive videos. Users may click and view these products and post them on their own profile pages. They may also post a link to the application, thus enabling viral marketing of the company and its products.
Indirect advertising
Finally, advertisers can choose to place social media ads indirectly. This is often the case when social networks do not permit open ad displays on their pages. For example, Twitter is notoriously free of ad displays. However, by using Twittad, specific Twitter users can insert advertiser links into their posts, which may then be carried over the Twitter web site, on applications, and even mobile devices. Digg Ads offers a method for advertisers to portray their ads as bookmarked content, with the ads' display frequency based on the number of times that users click on or "Digg" the content.

Advertising Pricing Structure

Direct display and custom advertising on social network sites such as Facebook and MySpace can easily start in the range of $50,000/campaign and above. Depending on the number and types of ads launched, the frequency of ad display, and what keywords are associated with given ads, custom ad campaigns can easily reach into the hundreds of thousands of dollars. Generally, the advertisers who launch such ads are attempting to reach users who will establish long-term accounts with high profit margins (e.g., mortgage loans, insurance policies, debt consolidations).

Medium and small budget ads, on the other hand, can prove much more affordable. Facebook and MySpace display and text ads can be launched for as little as $25/day, while Twitter ad campaigns start at just $1/CPM. These ads typically operate on a cost-per-click (CPC) or CPM platform. Advertisers use a live-auction model to establish frequency of ad display; the higher the advertiser bids on an ad's CPC or CPM, the more often the ad is shown on the social network.

For advertisers who are testing the market landscape and wish to maintain an affordable yet effective ad campaign, a medium sized advertising budget ($1000-$10,000/campaign) may also be launched. This ad campaign may consist of several PPC-type ads and several custom button or box ads. The ads can direct users to advertiser group or profile pages where a social network-specific incentive may be located. In this way, advertisers can gauge the effectiveness of the social network campaign while increasing brand awareness and market share.

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