Advertising on Social Network - Pay It?

A report by eMarketer expects advertising revenues increasingly from social networking websites like MySpace and Facebook. MySpace recorded an annual profit of $ 440 million for the year end June 30, 2007. The factors that contribute to the continued increase in online advertising for MySpace is the progress in the ability of advertising, partnerships with major search engines (eg Google and MySpace, Facebook and Microsoft) and the increasing use of social networking sites at Global.

An example of this partnership is the trend of Microsoft and Facebook. Microsoft has agreed to pay U.S. $ 240 million for a stake in Facebook. The agreement gives Microsoft exclusive rights of third parties for advertising and social networking site and advertising will be extended internationally.

There are two trends at play here. First, advertisers are seeking alternatives to the rising cost of advertising on major search engines. There's only so much real estate on the search engines to meet the growing demand and advertisers are outbidding for maintaining the positions. The second is the loyalty of users of social networking and rich sources of information available to advertising agencies. At the intersection of these trends are new billboards for advertisers to reach their target markets.

Another interesting trend is the growing number of social networking sites. How many social networks a person belongs? At some point, the administrative cost of maintaining the content on a website will preclude entering into another. For me, 3 belong to social networking sites for different purposes and are unlikely to join another - unless there is a compelling reason to do so. However, if new social networks able to attract members then they will become more attractive to advertisers and, as you can see from the above data, this can be very profitable.

Some of the latest social networking sites are taking a different approach to the majors. For example, a recent search engine in Australia, called LinkAU, has developed community portals. So, rather than belonging to a global network, members can choose to join a local portal and connect with other people in their local areas.

This is an interesting idea from an advertising perspective as it opens the door for local advertisers to reach their local markets at a lower cost of advertising (or at least that seems to be the intention). Although the major search engines offer improved capabilities for geographic targeting, local advertisers still compete with big companies with big advertising budgets for key positions. This just might be interesting for small businesses seeking to attract business from their local areas.

There is much discussion about the fact that advertising on social networking Web sites is useful for advertisers. Given the level of investment we're seeing from search engines and other social networks in s, they must see the possibility of generating revenue. To achieve this goal, however, must be able to help advertisers measure the return on their advertising spending, as well as the major search engines have done and then they must be able to be able to provide a value.

It 's still early and we are forced to see new money reinvested in innovation. It will be interesting to see if it provides new posters that I believe are necessary or if the smaller players in niche areas will dominate the market.

So stay tuned! There will be some interesting activity in this area in future years .......