Press For the Agency

Social Networks: Where Advertisers Fear to Tread

This article is courtesy of Communication Arts (download the original).

 

Advertisers who target young people ought to be burning scented candles on altars dedicated to social net-working sites. For years, they've had to chase kids around hundreds of cable channels, but they now know exactly where they are. According to a recent study by The Conference Board, 57 percent of all U.S. teens visit sites like MySpace at least once a day.

"A couple of things have happened online in the last few years," says Todd Purgason, creative director of Juxt Interactive. "Kids are surfing less and congregating in places more. Nowadays, their primary activity is to go onto MySpace."

 

But something is very wrong. The eyeballs are there, but the ads aren't working. Social networks have struggled to grow revenue. Their click-through rates are anemic even by the Web's remarkably anemic standards. It's gotten so bad that a Wall Street Journal blogger recently concluded that no one has figured out how to advertise effectively on social networks.

 

The sites can partly blame themselves for doing such a good job. Kids love connecting with their pals so much that they ignore the blandishments of new breakfast cereals waving at them from the margins of a page. Compounding the problem, many companies are reluctant to join this chaotic world. Sites like MySpace and Facebook rely on users to generate pages, most of which display all the artistry of a well-inked Pee-Chee folder. Brands that advertise on these sites run the risk of having their beloved logos turn up on a page made by a twenty year old named The Jakenator, who posts in-depth reviews of every underage keg party in the Des Moines metro area.

 

"Essentially [user pages] are big, long scrolling lists of text, and whenever you've got that, advertisers question if that's where they should be," says Conor Brady, executive creative director of Organic. "But it's also where their customers are."

 

The lay of the land

Cracking the riddle of social networks probably begins with understanding how simple they are. The sites don't do much except provide a suite of communication tools, such as chat, messaging, e-mail, blogging and image posting. Usually they require a user to create a profile. They then allow that user to connect with existing friends and meet new ones with similar interests.

"You have to look at social networks as a kind of plumbing," says Eric Karjaluoto of Smashlab, which has created the social network MakeFive. "It's not rocket science."

 

Some of the networks, like Bebo, MySpace and Facebook, provide a general environment for keeping in touch with friends. Others cater to specific interests. Shutterbugs can log on to Flickr, while budding filmmakers can post their latest oeuvres to YouTube. Career builders have LinkedIn and travelers can post blogs on WAY N (Where Are You Now). If you have an extraordinarily elevated sense of self-importance, you can even use Twitter to post minute-by-minute updates of everything you do all day long. (Just ate a bag of Cape Cod Potato Chips, now I'm watching SpongeBob. What's up, people?)

 

Unfortunately, providing these services costs money, and the people who invest in the networks and those who advertise on them are seeing very meager returns. (Or, in Twitter-speak: Just checked our revenue numbers, now I'm drinking a double martini. What's up, people?)

 

Home pages and applications

So what can you do to gather those elusive eyeballs? Social networks provide several options. The cheapest one is to create your own brand home page. Such a strategy works well for companies or ventures that have a built-in fan base, including bands, restaurants, movie companies and well-loved consumer products. Unfortunately, if you don't have that kind of pull, your home page won't generate much interest. Worse still, it can turn into a disaster if a disgruntled customer logs on and plasters "You Suck" messages all over it.

 

As a result, many interactive agencies are careful about which clients they introduce to a network. "Consumer brands are completely embracing what customers are saying about them," says Brady. But those types of brands skew younger. Beyond that, I don't think other brands are getting into this kind of experience."

 

Of course, many social networks allow banner and Google AdWord placements, though the click-through rates from individual pages are dreadful. A more interesting possibility is offered by both MySpace and Facebook: application development. In this scenario, third-party developers create small, branded widgets that users can add to their pages if they like.

 

With online advertising, it's all volunteer-based," says Purgason. In our space, [consumers] do participate if you provide them something valuable, whether that's information or engage-ment. With social marketing, it's the same thing."

 

Overall, these applications have proved a mixed bag. When done well, they can create traction—a good game is always a good game, whether on a social network or not. For every success story, however, there are plenty of failures. On Facebook alone there are tens of thousands of applica-tions. Even good ones only garner a small number of users, and some fall amazingly flat. The Diet Pepsi Forever Young Trivia application on Facebook has six active users, and it's reasonably fun. Coke Malaysia's Euro 2008 application offers good functionality, but it had only eight users at the height of the tournament.

 

The hybrid strategy

Faced with those odds, some advertisers in the space are turning to hybrid campaigns that combine traditional Web advertising with social-network functionality. "Social media ties into traditional strategies and doesn't replace them," says Karjaluoto. "It's just another layer that we're introducing."

 

A good example of this approach is Organic's comprehensive social networking campaign for Jeep. It combined a traditional minisite, a Facebook game and a Flickr page for users to post pictures of themselves and their vehicles. The strategy was low cost and well subscribed. Users found it fun to post photos of themselves and their Jeeps on the top of suicidally-steep mountains.

 

Another—and perhaps more expensive—option is to partner directly with a social network. Juxt Interactive, for example, launched a successful Cherry Coke campaign in conjunction with MySpace. It provided users with a sophisticated design tool that produced cherry-flavored pages. Users could vote on which one they liked best, and the winner took over the MySpace home page for a day. From a brand standpoint, the concept allowed Coke to retain reasonable control over look and feel of the pages, while embracing the chaos of a social network. At the same time, users got a chance to make themselves famous, at least for a day.

 

The future

What does it all add up to? Social networking sites remain a tough place to do business, but they aren't going away. Their traffic numbers—especially among older users—are only rising. Many of them are also testing or refining behavioral targeting systems that supposedly place ads that are relevant to the user seeing them. Sooner or later, something has to give.

 

Until then, ad agencies and their clients can comfort them-selves by remembering the dreadful returns they saw in the early days of the Web. That eventually worked out, and this probably will too. Luckily, optimism has never been in short supply on the Net.