The Social Networking Advertising Play……..Data!

Getting display advertising to perform on social networking sites has always been challenging. There are inherent hurdles of the media including:

1. User-to-User Communication Experience lends itself for users to zone out ads
The next time you see two people having a conversation, try passing them an advertising flyer. They are far from being in a mode that is receptive to marketing communications. Social networking traffic is made up of primarily this type of communication whether it is exchanging messages, reading your friends status or leaving comments for a friend.

2. Not Aggregated around a Purchase Intent
Sites like TheKnot.com or TripAdvisor.com aggregate users around a purchase intent. TheKnot.com‘s audience is in the process of putting together their wedding and are in the market for services like photographers, caterers and florists. And TripAdvisor aggregates travelers who are in the market for flights, hotel rooms and travel insurance. Well, the issue with most social networking sites is that they are not aggregating users around a purchase intent and are not on the site in purchase mode or even research mode. Therefore, social networking sites are not as effective in terms of bringing consumers to advertisers at the right time to effectively market to them.

So the fundamentals of advertising – reaching the right consumer at the right time and at the right place implies that social networking sites are inherently not ad friendly because they are delivering consumers to advertiser at the wrong time and place. However, what social networking sites may have that is unmatched by any other site is the information so marketers can identify the right consumers to target. Social networking sites collect more self identified data than any other type of sites. Think about the data that you provide…..age, gender, location, marital status, occupation, favorite books, music and movies. And then additional data that you provide as you spend time on the site. When you download the Texas Hold’Em app, they know you like poker, when you become a Fan of the Yankees page they know you are a Yankee fan. So with all this data, how do marketers leverage it?

Well, the best advertising play for display may be taking that data and applying it when a user is on another site. Therefore combining the ability to target the right customer at the right place and time. Sound like something that is far away….think again. Look at what is happening:

LinkedIn.com recently created audience extension targeting by using Collective Media’s Amp platform. LinkedIn allows advertisers to target based on LinkedIn profile information such as Online Marketing professionals on other sites within the Collective Media network which includes most of the Comscore 250 sites.

Facebook is currently working on an ad network play by using Facebook Connect.  Facebook Connect is already getting traction by allowing publishers to grow registrations by using Facebook Connect.  Now they are testing an ad network solution which they will be able to sell ads on Facebook Connect sites by leveraging their user data.

BlueKai has created a data exchange that allow partners to buy and own intent data across any media.  Social Networking sites may be the largest data provider on intent data in this type of exchange.

At the end of the day, data may end up really being the fuel that online display advertising needs to grow more explosively.  The dirty secret about display advertising is that is for the most part a very poorly optimized and inefficient advertising vehicle.  The promise of the online advertising was the ability to deliver the right message via a 1-to-1 basis.  However, the lack of the portability of data has been a major roadblock.  Looks like those days may be over.  Now the next roadblock may be the proper technology to really optimize campaigns using that data.  We will save that for another conversation…..

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