When Microsoft Corp. paid $240 million for a 1.6% stake in Facebook last week, it acquired the rights to sell Facebook advertising around the world. With 34.5 billion page views in September, according to comScore Media Metrix, Facebook is now the fourth most highly trafficked Web property worldwide.

Just how important is the international part of the equation? Facebook in September racked up 14.7 billion page views in the United States, comScore reported – just 43% of its worldwide total. Yes, the validity of the page-view metric is debatable, but for Microsoft’s sales organization, that is a flood of new inventory any way you look at it.

Monetizing that inventory is a question surrounding all social networking sites. How many of those page views of individual profiles and news feeds will attract advertisers, especially when measured against less risky options such as online video provided by established TV networks? While Microsoft may have a plethora of new inventory to sell against, it is worth asking whether the sales will be much more than low-CPM banners.

The good news is that consumers around the world are embracing social networking. According to Datamonitor, 75% of worldwide social networking members come from outside of North America.

Social networking penetration is already quite significant in Europe. In August, 78% of UK Internet users ages 15+ visited a social networking site, according to comScore. Half of German and French Internet users did as well.

Although Facebook is growing rapidly in many international markets, it will compete against MySpace and homegrown social networks such as France’s Skyblog.

Confirming the importance of the non-US market to social networking sites, MySpace CEO Chris DeWolfe told Bloomberg this month that the company will operate in 30 countries next year (from 23 currently) and could generate half its sales from outside the US by 2012.

So, as the quest for social network ad dollars continues to ratchet upward, the international market is looking more and more likely to be the source of the biggest revenue growth.

Many languages and mores. One Internet.

Fourth quarter will decide.

"Growth in Britain's marketing industry has been strong overall, and some sectors have seen record gains," said Karin von Abrams, senior analyst at eMarketer. "Online spending in particular is robust and expanding.

"But the impact of recent turmoil in the financial markets should not be underestimated, especially in the UK," Ms. von Abrams said.

The Web accounted for more than 6% of all UK marketing spend in the third quarter of 2007, according to NTC. The company also found that more than 40% of companies allocated at least 5% of their total marketing spending to the Internet.

As recently as June 2007, the Internet Advertising Bureau UK, PricewaterhouseCoopers and Wilkofsky Gruen Associates predicted that UK online ad spending would reach $9.9 billion by 2011.

"Marketing budgets tend to be cut quickly in response to changing business conditions, so the strength of the Q3 survey suggests that marketing spend held up well in the face of the current financial turmoil and that the real economy remains so far largely unaffected," said Chris Williamson of NTC Economics, in a statement.

"However, it will no doubt take some time for the full effects of the banking crisis to be felt, so it is likely that these strong Q3 numbers represent a peak in the current cycle," Mr. Williamson said.

eMarketer shares the view that advertisers are a little cautious as a result of financial market uncertainty.

"In fact, we picked up signs of growing uncertainty in the early summer, and our existing forecasts for 2008 and 2009 reflect this change of mood," Ms. von Abrams said.

eMarketer's 2011 UK online ad spending projection is $1.7 billion lower than the IAB UK figures.

"It is encouraging that growth in the industry in Q3 remained strong and appears to be unaffected by the upheaval in financial markets," said Moray MacLennan, chairman of UK-based ad trade group IPA and chairman of Europe at M&C Saatchi, in a statement.

"The data for Q4 will be key in revealing the extent to which recent economic news has affected marketing budgets," he said.

The vast majority of marketers who already use social media are bullish on social-media spending, with nearly 9 in 10 saying they plan to “increase” or “increase significantly” their spending, according to a recent survey by social-media application provider Prospero Technologies.

Prospero’s “2007 Social Media Survey” found that 30% of online marketers who use social media plan to spend significantly more on social-media applications in 2008, while an additional 58% also plan to increase spending, though not “significantly.”

Some 59% of respondents reported that social media performance in 2007 met or exceeded their marketing objectives.

Survey participants were from leading brand organizations from a variety of industries, including Media, Education, Financial Services, Health, and Sports and Gaming.

Asked about social media return on investment (ROI), 35% reported positive ROI and 41% said that ROI was “unknown.”

Responses to questions about how web marketers measure ROI reveal that direct sales revenue is not a top measure for determining social media success:

• Respondents said that total number of site visitors (17%) was the most important criterion for assessing social media performance.
• Total number of pageviews (15%) and number of subscribes/community members (15%) were next, followed closely by length of visit on the site (14%).
• Some 12% cited ad revenue and 9% said sponsorships as important measures of success.

“The majority of respondents see engagement with their brand as the most important measure of social media success, while more concrete ROI measures such as sales and new business leads carry less weight,” said Rusty Williams, cofounder and vice-president of Prospero Technologies.

• Regarding the types of social media applications in use:

• Blogs (13%) and discussion boards (12%) topped the list of those in use in 2007.
• Regarding 2008 plans, discussion boards and blogs again top the list (10% each), followed by ratings and reviews (8%) and profiles/social networking applications (8%)

About the study: Prospero’s 2007 Social Media survey was conducted online in September 2007, gathering responses from over 50 businesses currently using social media applications, including organizations from the following industries: Broadcast Media, eCommerce and eCRM, Education, Financial Services, Health, Manufacturing, Online Media, Print Media - Magazines and Books, Print Media - Newspapers, Professional Associations, Sports and Gaming.

We've just spent a very stimulating few days at ad:tech in London, gaining some extremely useful insights into the major new interactive marketing trends and engaging with some of the top minds in the business. We have been thinking about how it can all be translated into a South African context, and the opportunities that are ensuing for advertisers in our market.

ad:tech is the foremost global interactive advertising and technology conference, dedicated to connecting all sides of today's brand marketing landscape. We've listened to eminent keynote speakers and attended lively panel discussions and interactive workshops. The latter have been attended by professionals from all spheres of our industry: specialist agencies, tech providers, media owners and clients. There has been rich debate and we've gained some really good insight into how different people are dealing with the key elements being identified. I thought I'd use this opportunity to give an overview of the hot topics that have emerged.

Re-engaging with the consumer

The most pervasive theme of the conference is that we need to re-engage with the consumer as the primary entity in all our endeavours. The world begins and ends with your customer. Consumers don't stand still - their attitudes and needs are constantly evolving.

To the four ‘P's of media needs to be added a fifth - participation. Participation is the new consumption. The strong message from client and industry champions is that digital media is changing not only consumer behaviour, but also the way in which consumers engage with brands. The most important dialogue in the marketplace is the one happening between consumers. After this comes consumer-to-brand dialogue, and only then brand-to-consumer interaction. In other words, brands are no longer driving these conversations.

What is crystal clear is that we need to engage with consumers and constantly adapt to their movement. Great ideas need to be wrapped up in consumer insights, and successful brands will be the ones that listen to consumers, understand and participate in their conversations, and take what they are saying to heart.

Integration of communication channels is essential

The emphasis is now squarely on the integration of online and offline media, and all forms of communication that occur within them. We constantly need to evaluate what our marketing activities are doing for our business objectives. This harks back to David Ogilvy's famous quote: "If it doesn't sell, it isn't creative". Remember that all your activities are driving some sort of sale at some point in your relationship with the customer, so you need to communicate in a cohesive fashion.

The impact of Web 2.0

Much of the abovementioned change in consumer behaviour can be ascribed to the ascendance of Web 2.0; especially its social networking aspects. The questions are: how to integrate the opportunities presented, and when is this appropriate? The golden thread to remember is that everything needs to tie meaningfully back to your brand. Don't get caught up in the hype; craft a well though-out strategy that is appropriate and that dovetails with your business objectives.

The importance of measurability

Changes in online behaviour have led to ever-improving metrics to more accurately gauge visitor interaction. Metrics are evolving together with consumer behaviour. We are starting to understand things like "renewed intimacy", the longer term value of each customer, and how cross-channel marketing impacts it.

There is more choice in what we can measure, requiring a better understanding of what you should actually be measuring for your business. All the data in the world won't help you if you are not using it appropriately.

Concluding thoughts

There has been rapid change in our industry over the past years, and this rate is speeding up. It is perilous to ignore the online medium and the changes within it. However, you need to make sure to engage in a strategic and considered way.
The end-to-end journey is what's important - take a holistic view, and remember that technology is simply an enabling layer, not a miracle cure, so use it to engage meaningfully with your customers.

The global village is indeed emerging - the online world of the average consumer in Shanghai shares much with our own and we're excited to see that South Africa is heading in the right direction. We'll discuss all these insights in greater depth in future articles.

Internet advertising revenues (US) for the first six months of 2007 were nearly $10 billion - up some 26% from $7.9 billion in the first half of 2006 - and yet another new record, according to the “IAB Internet Advertising Revenue Report” from the Interactive Advertising Bureau and PricewaterhouseCoopers.

Internet advertising revenue totaled nearly $5.1 billion in the second quarter of 2007 - for the first time exceeding the $5 billion mark in a quarter, IAB said; that was a 25.4% increase over the equivalent period in 2006, as well as a 4% increase from the $4.9 billion in the first quarter of 2007.

Search revenue accounted for 41% of 1H07 revenues, consistent with the equivalent period in 2006. Display advertising, the second-largest format, accounted for 32%, followed by Classifieds (17%) and Lead Generation (8%).

Other findings from the IAB/PwC report:

• Consumer-related internet advertising spend is still the largest category, accounting for 54% of 2007 second-quarter revenues, up from 49% for the equivalent period in 2006.

• Financial Services, the second-largest category, accounted for 15%; Computing advertisers followed with 11%.
• Within the Consumer category, the largest sub-categories in 2Q07 were Retail (46%), Automotive (21%), Leisure (13%) and Entertainment (9%).

• Online advertising remains concentrated with the 10 leading ad-selling companies, which accounted for 70% of total revenues in the second quarter of 2007.
• Companies ranked 11-25 accounted for 12% of revenues, and those ranked 26-50th accounted for 9%.

• Some 50% of 1H07 revenues were priced on a performance basis, up from 47% reported in 1H06.
• Some 45% of 1H07 revenues were priced on a CPM or impression basis, down from 48% for the same period in 2006.
• Some 5% of first half revenues were priced on a hybrid basis, unchanged from the equivalent period in 2006.

The full report from PwC/IAB is available here.