Web ads and social networking: a perfect marriage
Posted by Johan on September 25th, 2006.
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:  Behavioral Targeting & Social Networking. And some figures (pdf) confirming the rise of social networking services:  Download it  Microsoft (fresh news) seems to started too with integrating advertising in a social networking service of its own : Read all about it  About brands and blogs: Check it out.
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