Thursday, 27 November 2008

How effective is social media advertising?

The rapid growth of social networking sites such as Facebook and MySpace over the past few years has been a significant online success story and one that advertisers have been looking at closely as a potential new channel. However, two new research studies have placed some doubt on the role that these sites have for marketers.

MediaWeek has published a story reflecting this growth in web traffic but indicating how advertising on these sites has been very poor. It reports that over half the US now actively uses social networking sites, but so far advertising on these properties has been very limited. Sites like Facebook and MySpace are seen to significantly under perform when compared to overall online advertising, according to research firm IDC. Just 57% of social network users say that they clicked on an advert over the past year, compared to 79% of all web users.

MediaPost also reports that, possibly related to this trend, marketing departments are certainly intrigued by the possibilities of social networking sites but are still thinking twice about using them. Research commissioned in the US shows that 27% of senior marketing executives identified social networking and word-of-mouth as the tools they would most like to introduce to their marketing mix to compensate for anticipated budget cuts, but 55% also indicated a low current interest in actually incorporating the networking sites into their plans.

These results probably reflect the uncertainty of using a new form of media without seeing proof of the results that could be achieved. In addition, the social networking sites still need to develop an advertising model that will be appealing to advertisers and not antagonise users who may be concerned about the privacy issues of targeted advertising.

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