Advertising and Brand Building with Social Networks – Page 2

Second page of Advertising and Brand Building with Social Networks

Note: this page contains an excerpt from the book, Advertising 2.0: Social Media Marketing in a Web 2.0 World, which was published in 2008.

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Social-Networking Sites and Categories

Social-networking sites can be classified into four primary categories. General social-networking sites, like MySpace, have social networking among friends as the primary focus. There are also several social-network sites that are affiliated with major portals (like Yahoo! 360). Because of their portal affiliation, they are typically separated from general sites for classification purposes. Lastly, there are vertical social networks. Vertical social networks differentiate themselves by emphasizing some common hobby, interest, or characteristic that draws members to the site. These vertical networks do not attract the same traffic typical of general sites, but one might argue that the members are more involved because of the common interest that initially brought them to the site. Within this realm of vertical networks, sites exist for pet lovers (e.g., Catster), photography (e.g., Flickr), soccer fans (e.g., Joga), gays and lesbians (e.g., Glee), and more. Examples of each type of social-networking site are provided in Table 3.1.

Some social-networking sites are generating advertising revenue on a larger scale than others; eMarketer predicts that MySpace will capture a full 60% of the market for ad spending. Other major players for advertisers including smaller sites like sites like Facebook, Bebo, and Piczo, which expected to earn about 23% of ad spending on the social-networking realm. Portal-affiliated sites will garner about 11% of ad spending and vertical sites about 5%. It probably comes as no surprise that Myspace earns the lion’s share of ad spending, at more than $510 million for 2007 alone!

The landscape of social-networking sites changes daily as new entrants seek to enter a growing market. The number of sites with reasonably large name recognition is fairly small, but the Mashable lists entries for 350 social-networking sites! A few examples are highlighted below.

MySpace.com: A Place for Friends

Myspace is a general social-networking site with more than 100 million registered profiles and unique visitors exceeding 64 million per month. It is the mass market of social networking, akin to the Super Bowl for television advertising. In fact, the most recent Super Bowl broadcast partnered with MySpace to deliver additional advertising impressions for Super Bowl commercials by offering a MySpace community site dedicated to the ads. MySpace was initially intended for an audience of teens and young adults, but an analysis of MySpace user demographics from comScore corrects that perception. MySpace’s age demographic is distributed over a range of ages with its largest category being the 35-45 age group (making up 40% of MySpace’s user base). A strength of MySpace is its broad appeal, developing at least in part from its vast array of features, including individual profiles, music, video, instant messaging capabilities, blogs, groups and communities, and a host of others. Given that social-networking sites exist (at least from the user perspective) to create and maintain personal relationships, using the largest network increases the likelihood of an existing friend base. Niche networks, in contrast, must rely on invitations from users to build membership and expand network. MySpace is the most successful network in leveraging what is known as the network effect. The network effect explains that a network gains value as more people join the network.

MySpace recently announced one of the most advanced developments in social-network advertising. It now offers an advertising solution for businesses that claims to microtarget ads to members. Because the ads are highly targeted based on the data in user profiles, the ads should have more relevance to and meaning for the target audience, resulting in a higher rate of response. This system promises to improve online advertising, especially for local advertisers, but its accuracy depends upon the accuracy of the data in user profiles and the quality of the data-mining function used to extract the segments for targeting. In addition to targeted display ads, brands can create brand profiles and communities.

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