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October 04, 2007

Correction to Forrester report on social networking site marketing

By Charlene Li


In early July, I published a report entitled “Marketing On Social Networking Sites” which provided details on what types of marketing and advertising work on social networking sites (SNSs) like MySpace and Facebook.


One of the main points I was trying to make was that marketers needed to go beyond simply running ads on SNS and actively engage users. One of the resources I used was a study that MySpace conducted called “Never Ending Friending” (NEF), one of the first studies to look at advertising impact on SNSs.


However, in an effort to simplify a complex study, I inadvertently incorrectly cited the report, creating the possible impression that traditional advertising on SNS doesn’t work. That’s not what I meant, and it’s not what NEF said. I’ve corrected the report, and to clarify, here’s what I should have said.


The study, available here in its entirety, looked at the brand impact of campaigns by adidas and Electronic Arts. When metrics such as intent to purchase and intent to recommend are used, 30% of the value created came from SNS members being reached by traditional display ads and profile views. These SNS ads outperformed results from traditional online ads and were on par with television ads.


One of the key points of the MySpace study – and a thesis for Forrester’s report – is that it’s not enough to look only at the impact of traditional online display advertising, or even simply to look at the number of people reached by a social networking site profile. Instead, there’s the “momentum effect” where SNS members pass along the brand to each other through widgets that they place on their own profiles. According to the MySpace study, that consumer-to-consumer involvement accounts for 70% of the value creation.


I think this is where some of the confusion and my mis-representation of the results came from – that traditional advertising does work but doesn’t create as much value as the “momentum effect” of consumer-to-consumer pass along.


In the end, it’s the combination of the C2C pass along with display advertising that drives the value of marketing on social networking sites. It’s not enough just to look at how many people you reach with a campaign – it’s important to look at the actual brand impact from that initial reach along with the impact of viral pass along. In fact, display advertising helps drive users to company profiles in the first place, helping to kick-start the momentum effect.


As MySpace freely admits, they are still at the beginning of trying to understand, along with the rest of us, the value of SNS marketing – which is why they and other players like Facebook continue to invest in studies that are trying to tease out where value is created. I’ll be following up shortly with new data and research that will hopefully shed more light on this issue.


So I stand by the top line conclusions of the report – that marketers need to get more actively engaged in social networking sites because C2C pass along creates most of the value in SNS marketing. But that doesn’t mean that traditional display advertising doesn’t work – according to the NEF study, it increases key brand metrics and also plays a significant role in driving awareness of company profiles in the SNS.

Tags: MySpace, social networking, online advertising, charleneli, ,

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Dan Schawbel

Charlene. Great insight and I do believe that if you advertise on social networks, that it will be given by communities.

Adam Broitman

Great talk Charlene! Let me know if my notes do it justice

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