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We need a standard for social network advertising April 25, 2007

Posted by jeremyliew in advertising, business models, Consumer internet, Internet, social media, social networks, start-up, startups, user generated content, viral marketing, web 2.0, widgets.
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On Monday Myspace announced the results of a research study that they commissioned, showing the effectiveness of marketing campaigns within social networks. It was widely covered. The key results were that:

– More than 40 percent of all social networkers said they use social networking sites to learn more about brands or products that they like, and 28 percent said at some point a friend has recommended a brand or product to them.
– Brands such as Adidas and Electronic Arts attributed more than 70 percent of their marketing return on investment to the “Momentum Effect,” which the researchers define as the quantifiable impact of a brand within a social network.
– Of those polled, 69 percent said they use social nets to connect with existing friends and 41 percent said they use the sites connect with family members.
– On average, social networkers spend more than seven hours per week on social networking sites, and that those hours are driving the growth of overall time spent online. More than 31 percent of online social networkers claim they spend more time on the web in general, after starting to use a social network.

The broader theme here, IMO, is that of users voluntarily affiliating themselves with brands.

Online, this is a relatively new forms of advertising. It gets instantiated in various ways – from “friending” Scion on Myspace to choosing an “American Idol” theme for your Rockyou slideshow to Photobucket‘s Spiderman skin that got them briefly blocked on Myspace. (NB Rockyou is a Lightspeed portfolio company)

Offline it’s the Nascar jacket or the Firefox T-shirt – not only does it advertise a brand, but users PAY for the privilege of doing so.

As always, when you see offline analogues to online behavior, it’s a good sign. But as I have blogged in the past, new forms of advertising are hard until standards emerge.

What the industry really needs is for the social media players to get together with the IAB and create some standards for “user affiliation” ad units. The widget makers (Youtube, Rockyou, Photobucket, Slide, Clearspring, Widgetbox etc) and the smaller social networks (led by Freewebs as this Washington Post story notes) are already trying to do this, but until Bebo, Myspace, Facebook and the big portals (AIM Pages, Microsoft’s Live Spaces, Yahoo 360, Orkut etc) get on board, it will be hard to get enough attention from the marketers who must also agree to the standard setting process. These big players, who already have relationships with advertisers, must start the conversation.

The IAB has been getting more activist of late, and it would be great to see them take the lead here as well. Their board is dominated by representatives from the big online and offline media companies, and they will need to lead the standard setting. (I’m looking at YOU Michael Barrett!)

Standards will be good for the whole industry. The sooner we get standards, the sooner social media/user affiliation marketing can go from being a custom business development deal every single time, to a line item in the spreadsheet of every media buyer at every agency.

UPDATE: Michael Barrett (Chief Revenue Office of FIM/Myspace) responds in comments

Comments»

1. Michael Barrett - April 25, 2007

How dare you call me out on your blog! In all seriousness your ideas are strong. Standardization of ad units and specs led to scale for internet marketing. There is no reason that this can’t happen in the “user affiliation” space. Some thoughts of caution however:
1. The number 1 reason that MySpace users like MySpace over other social networks is the creative freedom that we allow them in building their profiles. We need to be careful that standardizing “user affiliation” ad units doesn’t lead to the standardization of widgets, wallpaper, skins or whatever else users like to bling their pages.
2. We need to fugure out the economics and user experience. How does a Bebo, Facebook or MySpace get compensated for allowing thrid party developers to post ad supported user affiliation units and insure that these units meet our TOS that we strictly enforce.

We are sponsoring an IAB Leadership conference in June focused on social media. This could be a great panel discussion

2. (un)relaxeddad - April 25, 2007

And there was I thinking you meant standards of ethical behavior when running immersive marketing campaigns targeting children and young teenagers (Facebook, Bebo, MySpace, Gaia)…You certainly had me going there for a moment!

3. Ted Rheingold - April 25, 2007

Hear, hear!

4. Joe - Flixster Guy - April 25, 2007

Jeremy,

Anecdotally, while people may not know exactly how to value them monetarily yet, we have not had a lot of trouble getting advertisers excited about these kinds of measurable interactions (reviewing, favoriting, skinning, taking quizzes, etc.) – at least in the movie space. People definitely see the value…

My question is – given the limitless variety of interactive experiences one might create for a user around a brand – what would standards even look like? There is a big difference in value between someone adding a brand to the bottom of their friends list on MySpace vs making that brand the background and complete theme of their homepage. And of course there are limitless levels & possibilities in between. If you really can’t standardize interactive experiences – more like “product placements” in the offline analogy – is instead what we need really just a more sophisticated language to discuss and compare the value of these campaigns?

(Even more difficult in my mind, how does one quantify and measure the reverberating effects of a user affiliation – what the report above i believe called the “momentum effect”? If 10 of my friends see a spiderman skin on my page or read my review, what is that worth? Definitely something, right?)

As you often seem to be, i think you are ahead of the curve on a very interesting discussion.

~j

5. Shervin Pishevar - April 25, 2007

Jeremy, you were the one who opened my eyes to “velvet rope” strategy to exclusive, limited edition content a la Hot or Not’s virtual flowers. That meme combined with our early widget ad efforts exploded into a million and one new ideas about how to monetize widgets. How to create virtual brand swooshes that people pimp out their pages with in much the same way they bling their physical lives with branded clothes and consumers goods.

Our fundamental belief at Freewebs is that every human being will have a page of self-expression in our lifetimes. These personal web pages have to be branded as “you” and be a digital fingerprint of who you are- your representation of you to the world. If this theory holds then executing on a standardized and scalable framework in which those personal pages can be monetized is essential to building a healthy economic ecosystem where the users, brands and online distribution points (the web publishers) can thrive.

That widget ecosystem will thrive on a standard widget advertising unit that everyone can agree on and get behind. That economic unit has to be a synthesis of multiple trackable metrics of widget advertising success. That economic unit has to be an synthesis of multiple trackable metrics of widget advertising success. I call them the three i’s:

1) interactivity
2) installations
3) interconnection

When you add those metrics up based on industry wide agreement of proper weighting of each unit then you can come up with a unit that will drive the model. Here are the options for a name for that economic unit:

1) PPM (People Powered Media)
2) PPA (People Powered Advertising)
2) PPW (Pay Per Widget)
3) PPI (Pay Per Install)

I coined “People Powered Media” and “People Powered Advertising” because it essentially captures the soul the ecosystem we all want to build. This is human driven advertising. It is Web Product Placement driven by People. To us it is the very best form of endorsement of a brand that one could ask for.

This leads to a people powered contextual system that is contextual at a much deeper and meaningful level than any other system. We are talking about advertising that driven by an “algorithm of the heart”, an “algorithm of the soul” rather than an algorithm of machines. The hypothesis here is that a user will pick a brand widget that they have an affinity or passion for and that that users audience will most likely share those affinities and passions as well. Why would they be visiting that site in the first place? If that logic holds, this personal context can help seal brand loyalty that peer to peer and stickier than any other form of digital advertising we have experience to date. We see widget advertising as a billion dollar plus market and deeply believe that widget advertising will become a standard part of every brands digital marketing strategy.

I began seeding this market in 2005 with the Zathura widgets we did with Sony Pictures. Now we are getting pioneering brands like Cingular, Adidas, Reebok, New Line Cinema, Paramount and other on board. These are exciting times and we are feel we are on the cusp of something new and meaningful.

I agree with Michael that the IAB Leadership Forum is an appropriate venue to kick off this standards discussion, and welcome the opportunity to contribute. But it’s a heady issue and won’t end with the panel discussion. So on July 11th, Freewebs is hosting the first ever WidgetCon, a full-day conference tackling widget marketing’s issues head-on. The conference is in New York and we’ll be launching the promotion of the show any day now (as soon as we finish the registration widget…). Jeremy and Michael, I would love for the two of you to speak at Widgetcon.

6. Greg Tseng - Tagged guy - April 25, 2007

Jeremy, I’ve read every one of your posts and am finally commenting!

This is a powerful idea that is exactly on point. Lots of companies including mine have tried various forms of “user affiliation marketing” but as you mention we need industry-wide standardization to take this from a few custom deals with forward-thinking advertisers to a widely adopted form of online advertising. Duh, why didn’t I think of that? :)

So kudos on putting this powerful meme out there, and I’ll say publicly now that Tagged will be 100% behind it.

Best,
Greg

P.S. Check out Hotornot’s HotLists (http://hotornot.com/b) which is entirely built around user affiliation. James walked me through it last night… very interesting.

P.P.S. Shervin/Haroon – contact me about WidgetCon, I’m interested

7. Matthew T - April 25, 2007

Jeremy — your blog is always valuable.

Coming from the monetization space here, I would merely bring up two points focused on the “how,” not the “what”:

1) Product management (at both the widget level and the publisher level) needs to have some focus on fraud protection. Protecting against creation of content exclusively for monetary purposes (think of the spamming that goes on now with myspace, i.e. with multiple profiles/different “cute girl” pictures/exact same content advertising some dating site) needs to be key; especially to keep the integrity of the user affiliation site.

In my view, one standard would be a fraud protection standard solution per widget that is certified by IAB, etc. Perhaps an ability to terminate fraudulent users in x amount of hours.

2) If you talk about the “influence economy,” probably the closet (and most recent standard) that seems to have been accepted would be the “viewthru” metric that advertising networks are using these days to extract more value from advertisers. I would imagine that some soft of “first view” or *metric based upon first time a widget is viewed could be a standard. This is, of course, subjective.

However, I think this may bring to light the necessity for user affiliation sites to make their site data open for scrutiny and independent analysis and maybe as deep as the profile level in order to optimize a media campaign. I would love to hear other solutions or metrics.

8. jeremyliew - April 26, 2007

Wow. I’m psyched to see so much commentary from such luminaries!

Picking up on a number of the comments here; I suspect that we won’t measure “voluntary affiliation” standards by CPMs or other current metrics. The standards will be less about the number of pixels in a unit (the way banners are today) and more about the nature of an affiliation (e.g. “friending” vs skinning etc – more brand exposure on the profile = more value) and the breadth of “distribution (how many friends did the person have/how many people saw the affiliation/endorsement). This will allow for both the flexibility of self expression and the value distinctions. Matt T’s spam concerns are important too – every form of advertising will get gamed by the unscrupulous, and we’ll need to think about how it can be abused from the beginning.

Am interested in the conference in July.

9. Shervin Pishevar - April 26, 2007

Jeremy and Greg, we’ll definately follow up with you about WidgetCon. I invited Lance, Jia and Ro as well.

Jeremy, our thinking is that one of the 3 i’s – interconnections- will be a measure of the depth of connections that flower outwards and inwards from a widget that a user has installed on their personal webspace. What gets interesting about this is that the farther apart the degrees of separation the less weight that interconnection should carry. The less degrees of separation the more weight that would carry in terms of “peer influence.” If someone is one degree separated and they see my Reebok widget and grab it that should be more valuable than someone who is 6 degrees apart. The viral chain and degrees of separation and average viral load become interesting to track and make parts of the discussion around the unit.

10. matthewsf - April 27, 2007

Follow-up:

Jeremy I would just hazard one more point here as I read the posts in response.

As in all things business and/or internet, I would let rigorous testing take place to determine how, who, what individuals, degrees of separation, connections have influence. In essence, let the statisticians have at this problem.

—–
As a very minor side note, I wonder how this could prove or disprove Gladwell’s Tipping Point classifications of mavens, connectors, salesmen.

You could say I’m excited by the prospects of the conference.

11. Chris Marentis - April 30, 2007

Jeremy, we (Barrett, you, me) saw the benefits of standards when AOL finally adopted third party ad serving and rich media. In the early days of the internet large, non-standard deals made up the biggest revenue source for AOL and I suspect many others. As the business matured, standards developed and everyone adopted. Advertising revenue took off after that.

We are at a tipping point for widgets. Many widget platforms have emerged as “drop points” for widget content. Companies like Clearspring are focused on making syndication to all these venues scalable and accountable so monetization can happen. First step is independent and transparent data for both the content owner and “drop point”. The data in the beginning should be simple and well understood (like views).

Shervin and others are right on with the assessment that we have a big opportunity to redefine segmentation and audience value with widgets. As we move from a “push” to a “pull” programming and marketing communications environment, we can segment users by engagement and influence. At Clearspring, we already report these metrics. It will get very interesting over the next year as we extend the analytics and enable real time decisioning and optimization that is addressable to the widget level.

Count us in on any meetings or discussions on standards. We are here to help!

12. Peter Pham - May 1, 2007

Jeremy,

This is a very good idea, I think we definitely need to address how users are participating in social media, in particular what defines advertising when it comes to widgets. Is it only when there is a “click thru” when it’s being posted on another site? or is merely having the brand on the widget considered advertising if it’s the users choosing to associate themselves with that brand? Is that the same as a preroll video advertisement? I would say no, but it’s clear that there are many different combinations where we probably all have different opinions when it is, and when it’s not advertising. We definitely should collaborate and figure out how we all do what’s right for the end user and not upset the balance with partners. Not that we know anything about that ;)

Cheers,

Peter

13. Andy Monfried - May 1, 2007

Jeremy,

Interesting insight, and great comments from a wide variety of people (some) that I know personally, and respect greatly.

I do believe there need a change in “terms” when speaking with large brands…..We have been very impressed at some of the macro advertisers we spoke with, that are willing to test new metrics – and have been pushing their agencies to, “bring them new concepts and targets to measure and judge success.”

Our mission is to “sell media to advertisers, in the same manner that users consume it…” (regardless of the property)

Advanced Segmentation and Yield Managment, looking at more than users/inventory/behavior — is the key to making Media 2.0 more relevant for Brand Marketers — and empowering them with data, that makes them more intelligent, is the key.

A analogy, is selling “horse and buggy” marketing data (on how fast and great the new carriages are) in 1905.

Sounds great, but the Automotive industry is rolling out the Model T – and your horses are about to be relegated back to, working on the farm — and racing…

The Auto is here (with Media 2.0) – but, we are still packaging up the information in a “horse and carriage” world……

Thanks for inspiring the conversation Jeremy……

Andy Monfried
Lotame.com

14. deb schultz - May 1, 2007

Jeremy – amen. Too much confusion out there. As a matter of fact we will be discussing this at the “markets & relationships” track I am putting together for Supernova. Hope all commentors and interested parties attend. Should be some good discussions

Additionally, I’d like to see less reliance on the banner ad metaphor and more on building interesting means for brands to interact with individuals that are baked into features and functionality – but yeah that as even more complex..;)

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[...] revenue that they make, but today that revenue isn’t much. As I’ve commented before, we need a standard for social network advertising, and until that standard emerges, ad revenue growth will be slower. But this will come in time, and [...]

16. Cogblog - June 13, 2007

Do widgets ever generate revenue?

Jeremy Liew recently posted on the wave of posts (most notably Marc Andreesen and Seth Goldstein) about API power and how that works with Facebook.  I am working on my own post in this area, but obviously the part I gravitated toward was his mentions …

17. dan G - July 17, 2007

Interesting. We does anyone know how much it coast a company to advertise on a social networking site ( roughly) ?

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[...] but even more true for social media. As I have noted in the past, I believe that this is because social media needs a standard ad unit. Today the bulk of monetization within social media sites comes from IAB standard buttons and [...]

19. Ad standards starting to work for online video; social media next? « Lightspeed Venture Partners Blog - August 19, 2008

[...] social media, social networks, video. trackback For a long time I’ve been calling for standards in social media advertising. Today if an advertiser wants to make a social media buy across multiple social sites, they will [...]


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