By Jeremiah Owyang, insight from Charlene Li and Shar VanBoskirk. This is also being cross-posted on the Jeremiah's Web Strategist Blog and the Forrester Marketing Blog.
Executive Summary
Both Facebook and MySpace have launched profile and network
targeted advertising and marketing products. As they both use member
interests and the communities which they are part of, trust continues
to become key in adoption as information is passed along the network.
The sheer size of MySpace’s member base, as well as the thriving local
business membership will lead to success. Facebook, which brings a
unique solution evolves advertisements to endorsements and encourages
members to subscribe to a brand in what we are calling “Fan-Sumers” (an
evolution of the consumer). As consumers share their affinities, brands
can advertise using trusted social relationships.
Data: Highest trust comes from friends or acquaintances
(Left Graph: Consumers trust their friends and acquaintances far more than any other sources –Report: Leveraging User-Generated Content, 2007)
Trust is and will continue to be one of the most important attributes in the decision making process.
Communities form online, trust develops
How we get information continues to evolve as communities form
online organized by individuals with similar interests. Just like in
real life, we identify our interests, and are often influenced by
opinions and experiences of trusted peers in our communities. For many,
social networking sites embody these relationships and influence how
trusted decisions are made.
MySpace: Brands have a home and can hyper-target ads
The already active MySpace platform is leveraging their
already active member profile pages, encouraging the many small and
medium businesses to setup a online storefront and providing tools to
make it easy to self-serve advertisements to their customers. It’s easy
to make the case that demand and inventory are present.
[Brands can now self-serve a targeted marketing and advertising campaign within the already thriving MySpace community]
Webmaster not needed: MySpace profile for businesses
Small businesses can continue to build their online profile on
MySpace (many of them already have), but now, because of their
familiarity with self-marketing (restaurant, nightclub, and other local
businesses and their customers) on Myspace.
Self-service ads remove middle man
When friction is removed, efficiency is created. With
MySpace’s “Self-Service” ad network small businesese can target ads
across a variety of affinities (over 300) and deploy ads on users’
profile pages. These ads, which should (by theory) be relevant and
contextual to a user who has self-populated their profile page will
have these ads displayed.
Advertising balance required in already busy MySpace
With marketers already with a strong presence in MySpace this
could continue to erode away at early adopter “cool kids” from
embracing MySpace. But as cycles have shown, where communities form,
marketers follow.
User experience continues to be free-form
These ads, which will conform to IAB advertising standards
(sizes) will give advertisers the freedom to create the ads in the
style accustomed to the network. Yes, expect more blinking text.
To watch: OpenSocial
As OpenSocial starts to be deployed across MySpace and other
partners, expect profile ads to be tied to widgets and vice versa; a
fabric of links. I’ve already outlined How to explain OpenSocial to your executives.
Inaccurate user profiles could result in mis-targeting of ads
We know that many members do not make their profiles accurate
which could yield inconsistencies in how and where ads are displayed.
While MySpace has assured they’re accounting for rogue outliers, expect
some inefficiencies in advertisements.
Our Call: Sheer mass will yield success
We think
this to be a win for MySpace, given their great reach, there are
millions of users with active profiles, and there’s also plenty of
inventory as many small and local businesses that are present will be
comfortable deploying ads where their community already exists.
Facebook: Rise of the Fan-Sumer
Going beyond just profile matching of advertisements, Facebook
allows consumers to self-identify with brands and becoming fans. In
turn, brands can use these “Fan-Sumers” as endorsers to their own
trusted networks, resulting in trusted word-of-mouth. Brands can also
self-manage their own campaigns, and there’s some unique opportunities
for eCommerce widgets or applications to be part of this formula.
[Using Facebook, consumers will publicly endorse brands, resulting
in the birth of the “Fan-Sumer”, causing efficient word-of-mouth
marketing in their trusted network]
There are three major components to today’s announcement, they include the following:
1) Facebook Pages: Brands get their own profile
For the first time, businesses will legitimately be able to
setup profile pages, much like MySpace’s business profiles feature.
Next, Facebook members will add these brands as ‘fans’ (much like
friends) and this will produce a connection between the parties.
Members will self-identify with brands in what we are calling
“Fan-Sumers”. Furthermore, this service, called “Beacon” gives third
parties the ability to share information on the newsfeed and provides
lots of unique opportunities. Sponsored groups will start to evolve
into this new form brand profile as this system gets adopted.
2) SocialAds: Endorsements at the friend level lead to eCommerce
Once a member has indicated they are a fan of a brand, that
brand can choose to purchase SocialAds (from Facebook Sales or via a
self-service platform). A unique endorsement of a product or brand will
now appear on that individuals news feed or banner or skyscraper ads.
Advertisers can purchase social ads target by profile demographics and
profiles, as well as by activities done in Facebook. Payment is an
auction-based system available to marketers via both CPM and CPC
pricing.
3) Use “Insight” for control and flexibility
This self-service dashboard called Insight gives the marketer
detailed knowledge how their advertising campaign is working on
Facebook. It’s expected that advertisers will have flexibility, control
over the type of ads they deploy, in what quantity, and the
demographics they want to target.
A likely scenario:
Shauna, who enjoys Revlon products, indicates she’s a fan of
the brand and becomes a Fan-Sumer. Marketers at Revlon can then
purchase SocialAds, which will then display on Shauna’s newsfeed or on
ads on her profile. If Shauna purchases Revlon makeup from Amazon, her
newsfeed could indicate an eCommerce links recommending it to her 100
trusted friends, resulting in further sales.
[The traditional marketing funnel as we know it is distorted;
endorsements are now passed from trusted customers to prospects, not
direct from the brands themselves]
Implications for Facebook:
Members have more control over ads
Facebook users can opt to turn off social ads, and friends of
that user can ‘dial down’ endorsements they see using preferences. We
believe that Facebook is attempting to respect the rights of users by
giving control to members to ‘opt-in’ to become a Fan-Sumer.
Quest for Fans will cause brands to beg
Since social ads only work if a member has indicated they are a fan,
brands will be working to earn and buy fans to accept them as members.
Expect a lot of noise to be generated from this activity as brands run
campaigns to encourage members to add them as fans through discussion
boards, banner ads, and special offers.
Hard to qualify a “business”
Facebook is limiting these features to ‘real’ businesses and
organizations. Expect an entire team to be crawling and dealing with
this qualifying the issue. As recent member accounts have been disabled
from Facebook, expect businesses and organizations to encounter same
issues.
Limited ad supply to raise prices
Because Facebook members will see only two social ads per day, we
expect the supply of ads to be in scarce supply and thus raising prices
and not matching the value. This could shift ad buying to large brands
who have experience buying and managing search and direct response ads.
Our Call: Brand affinity leads to community endorsements and more trusted marketing.
We see this as a win for Facebook, this highly targeted system isn’t
just about web advertising but about brand affinity and hooks into
what’s really important, trusted endorsements from people in a network.
This truly is the next generation of advertising. Facebook tells us
that the worst case it will be 2 times click through rate over the
performance of (existing is 4-26%)
Next Steps For Brands
Experiment: Because of the control and
flexibility, we recommend to brands that are currently on either of
these social networks to experiment and test.
Learn how to efficiently manage your campaigns. There’s clearly a trend towards self-service, which provides efficiencies for both businesses and the platforms.
To know: Marketing has changed, advertising is no
longer a sole-solution. Marketers must also learn how to be part of
communities, engage with them, and be part of the conversation.
To know: Marketing is now distributed, brands must
embrace communities where they currently exist, rather than solely
driving them to their corporate website.
[While traditional search advertisers like Google and Yahoo match by keyword, My Space and Facebook match on something far more powerful: people and their relationships]
This digest not only explains what is happening, but why it matters
to you. If this was helpful, please pass it on. Love to hear your
thoughts, please leave a comment, even if you don’t agree.
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The video highlights from our Consumer Forum 2007 are now available. Josh and I were keynotes and we spoke in details about some of the key highlights from our book. Below is a summary of the keynote speakers and speech topics. In particular, I highly recommend the speeches by Christie Hefner and Henry Jenkins.
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