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Web ads and social networking: a perfect marriage

Posted by Johan on September 25th, 2006.


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Websites like Yahoo got their profit from online advertising right from their portals for years. But now this has all changed. Social networking sites have steadily grown of importance when it comes down to earning money from online advertising. The formula is simple, for example gaming sites were actually on the forefront of this type of web advertising. The user base spreads the word about the games, and the gaming industry benefits from the social network spreading the news and creating intrest in new games. The car industry, and many other industries shifted also their marketing approach: that is to pump advertising money into social networking sites. Yahoo and especially Google have jumped on the train. Is this the future of online advertising? Ads like Google does: click through text ads?

There is a rumour that Yahoo keeps his eye on Facebook, one of the upcoming and seemingly very popular social networking sites. But no actual deal has been made yet, it are all talks for now.

The Web portal (Yahoo) initially offered Facebook $1.4 billion, according to people familiar with the deal. Talks broke down in July, about the time Yahoo shares lost 20% of their value on news that its new targeted advertising technology would be delayed.”
(Catherine Holahan, Business week)

Yahoo has always gained its advertising income from the large amount of visitors it had and still has. But this is not enough anymore since Google thinks to achieve a huge success with investing a large sum in myspace.com with an estimate of 45.8 million unique visitors. Google will become the search engine for the social networking site and others after paying News Corp. (owner of myspace.com) $900 million for the privilege. Google has been investing a lot in new technologies the last years and are definitely gaining an even larger market share. Google says it believes in myspace.com:

“MySpace.com is a widely acknowledged leader in user-generated content and incorporating search and advertising furthers our mission of making the world’s information universally accessible and useful.” (Google)

An example of advertising on myspace: Read about how Lynx forms brand community on MySpace

Of course says Google that it wants to assist myspace.com with its technologies to spread information but its ultimate goal is to win a large marketshare of online advertising of course. If Yahoo wants to keep up with Google it needs to attack Google’s ever increasing marketshare of online advertising.

“Yahoo’s 360 network, where they were trying to do video blogs and other things, never really gained a penetration,” says Brian Bolan, an analyst with Jackson Securities. “Facebook really comes in with a standard audience.” ( Business week).

If Yahoo acquires FaceBook, it might be a start for Yahoo to get a larger grip on web advertising.

Our generation of youngsters have blogs, and they happen to like myspace.com and facebook a lot. The youngsters are very easily influenced by these online advertisments since Facebook and myspace.com have become part of their lifestyle and culture with regard to the Internet. Advertisers see that their advertising money is much better spent on social networking sites than on the classic portal sites. Even the smallest blog like Fadtastic also does advertising. Once you can reach the demographic you are targeting for, it is well worth the investment.

Just to let you know what happens in web town … Thanks for reading. And don’t forget to read the comments too.

UPDATE: I found some good reading stuff regarding ads and social networking: [1] Behavioral Targeting & Social Networking. And some figures (pdf) confirming the rise of social networking services: [2] Download it [3] Microsoft (fresh news) seems to started too with integrating advertising in a social networking service of its own : Read all about it [4] About brands and blogs: Check it out.

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I never really liked these social networking site… I really hate the layout of myspace…but I guess everyone is on…. I don’t think its good that these sites are dominating the market share…. how can the smaller joes compete…. the best thing about the internet was that anyone can start a site and try to make money and/or support their business by being online….

businesses that target younger people.. between 16-22 would be forced to have a myspace account and maybe even advertize via google adwords.. blah blah blah sorry to go on and on

nolawi
September 25th, 2006
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I really hate the layout of myspace

Thanks for confirming this, you are not alone in this. I know it looks like ugly 90s design. But the point is people can add their avatars easily and link like crazy. It is like the poor men Word Press. People use myspace because it is easy to add copy, media and so on BUT they dont care abou the design but that it works to get visitors. Each account has many myspace buddies. They spread the word easily to their peers.

Have you check Facebook yet? That is growing like seeds as well. If millions use it to spread the word, online advertisers know for sure millions of visitors are to be found there. This makes Google ads and any other ads boom like never before. These ads suffer from click fraud a lot but you cannot stop all SPAM either. Social networking sites offer new possibilities for advertisers as never before. In the past, advertisors used the well visited giant portals but now all eyes are on social networking sites.

I don’t think its good that these sites are dominating the market share

Dont forget that Google now owns a large share of myspace and Yahoo could probably acquire Facebook as well if the talks turn into a deal. The market share of Google and Yahoo, Both are one of the largest search engines on the planet!

J.
September 25th, 2006
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I think ads on social networks are golden. Take this for example:

On a normal website , you may not know as an advertiser what audience you’re dealing with. With a social networking site you have more power to deliver relevant ads to users as you can access people’s hobbies/tastes/personalities etc and serve up a powerful ad campaign.

Andrew Faulkner
September 25th, 2006
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Google and Yahoo are not traditional search engines and/or portals anymore. They have become real ad networking services as well.

The idea of social networking sites is to gain a lot of subscribers no matter how ugly designed the applications are. It is viral and booming inmensely. Very interesting for advertisers that they can estimate the number of visitors, which was really hard before when doing only TV ads or radio ads for that matter. You are right though, information about the visitors is also vital for any ad campaign.

With click ads you gain more exposure and become more visible on search engine results. You also have the use of referrals and so on; it is all about connecting the goods and services with the customers.

J.
September 25th, 2006
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I agree to the post. Social networking is so essential today that many online small businesses started promoting their products through this technique. But I also would want to stress out that social networking is only effective once you have known what people really like. I guess that you have to also base your product or service on “pop culture” or “internet culture” if you would resort to social networking tactic.

Mary
October 17th, 2006
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March 8th, 2009
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