Fracas over Facebook and Trepidation with Twitter
By: Alexandra Wharton
Social media platforms are booming, but online marketers should tread carefully.
Since Facebook was featured on the cover of Newsweek magazine less than a year ago, it's been called everything from the social platform that would revolutionize marketing forever, to an overblown and overhyped experiment.
Industry watchers say the truth lies somewhere in the middle. Although Facebook certainly offers marketers global reach, desirable demographics and powerful "endorsed by your social graph" capabilities, its recent attempts to transform online advertising have either fallen flat or failed completely.
Facebook's increasingly worldwide audience is one of its most valuable assets. Its rapid international growth is especially remarkable because the majority of countries – including Turkey and Israel – experiencing speedy expansion do not speak English as their primary language.
More than half of Facebook users are not enrolled in college. The fastest-growing demographic is the over- 25-years-old group. In fact, comScore Media Metrix found that more than 41 percent of all Facebook visitors are 35 years or older.
Facebook has long been considered the social network of choice over MySpace.com for those with higher educations, but recently it overtook MySpace in terms of daily page views and reach, according to Alexa. The boost has been enough to make Facebook the sixth-most-viewed website in the world. Hitwise finds that U.S. traffic to Facebook increased 80 percent from November 2006 to November 2007. However, traffic to MySpace was almost five times greater than to Facebook in November.
Speculating on the valuation of Facebook was an industry pastime this summer until Microsoft bought a 1.6 percent stake in it for $240 million in October, giving Facebook an estimated value of $15 billion.
Critics wonder if Facebook is worth what Microsoft paid for it. Many say there is no way to justify the value unless Facebook can grow into something much more than its current iteration.
But with estimates that spending by advertisers on social networking could almost triple to more than $3.5 billion globally by 2011, it's not surprising that companies like Microsoft don't want to miss out on the marketing opportunities.
Many Marketing Methods
Advertisers and marketers have plenty of options when it comes to Facebook. One is "Insight," which is collected marketing data of social demographics and psychographics that Facebook provides to advertisers in an aggregated, anonymous way.
Another feature is "Pages," which is the capability of businesses to host pages on Facebook for various brands, products and services. Brands have long attempted to build their own profile pages, with little success of getting past Facebook's identity moderators.
Advertisers can buy "Ads" that can be targeted based on member profile data such as location, interests and activity. They simply write an ad, decide where they want to drive traffic, choose a target audience and purchase them on a CPC or CPM basis.
"Social Ads" are another option; they pair targeted ads with related actions from a user's friends – allowing Facebook members to sign up as "fans" of an advertiser and then have their names and profile photos displayed alongside the marketer's ads on their friends' Facebook pages.
Online marketing consultant Sam Harrelson says he ran two Social Ad campaigns and spent approximately $500 in all. The return was about $15. He's disappointed and doesn't think what Facebook has rolled out so far will ever work or sustain any sort of revenue for advertisers or marketers.
Scott Aikin, president of shopping site Mallicious.com, says that Social Ads are very similar to "Flyers," Facebook's original form of ads, which was discontinued in December. The biggest change is that ads now show up in the news feed when attached to a relevant social story, as opposed to only in the left-hand ad space. The news feed, which lets people know what their friends are doing on Facebook and in the real world, is the first page Facebook users see when they log on to the site – making it a key place for ads.
Affiliate Scott Jangro used Flyers to target college-aged women for his Virtual Costume Party app, and says that although the application got tons of page views, they were not highly converting. He thinks it's possible that Facebook did some analysis on Flyers and slowed down the ones that didn't have a high CTR, but that's "just a theory based on that one data point."
But Aikin says he managed a substantial amount of traffic to his Social Shopping Mall application through Flyers and by advertising on third-party apps. He says that the prices are a little high for the value, but thinks this may change as Facebook brings in more adults.
Accurate Audience
Some think that Facebook's advertising opportunities are revolutionary. Adware, malware expert and longtime affiliate marketing pundit Wayne Porter wrote a blog on Revenews.com saying that for the first time, advertisers are able to see the interests listed on 50 million Facebook user profiles. "This is groundbreaking if you are a beer marketer, because there are not many places besides Facebook where the average young man writes 'I like to drink beer' next to his name."
Affiliate marketer Carsten Cumbrowski says he believes ad campaigns could be effective for smaller-budget items like ringtones and cell phones because the Facebook crowd skews younger. In general, Cumbrowski thinks Facebook, like most other social networks, "is very limited in terms of the type of ads that work well."
Others doubt that Facebook is the next advertising gold mine because users don't have their wallets out on social networks. They are there to socialize. And some think advertisers would have better luck targeting users when they are searching on news or search sites – because it shows intention.
Beaten-Down Beacon
Causing much of a hullabaloo in the news is "Beacon." It enables the tracking of user activity across a network of external participating sites and then reports that back to Facebook. Activities could appear in the form of "endorsements" (e.g., Harry just bought a book on Amazon), that appear in a Facebook RSS feed area. Facebook said the model was intended to turn millions of Facebook users into a "word-of-mouth promotion" service.
However, in late November, Facebook decided to alter its Beacon feature after attacks from privacy groups and MoveOn.org demanded Facebook stop broadcasting users' purchases without their consent. The Beacon feature is no longer active for any transaction unless the user clicks "OK" – making it an opt-in, not an opt-out, system.
Consultant Harrelson says Beacon was a horrible idea. "It reminds me of the toolbar apps from 2002." He believes there were too many concerns over privacy, data ownership and Facebook's long-term sustainability as a platform "to cause much skirt hiking."
Another Facebook feature, "Groups," allows users to organize around a cause or common interest. Continued on Page 2...
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