Following up on a recent Research Brief on the trust placed in word of mouth marketing, a timely release from Nielsen Online provides October's top U.S. social networking sites and blogs, which shows that MySpace.com had 49.5 million unique visitors in October 2007, growing 19 percent over October 2006.

Top 10 Social Networking Sites for October 2007 (U.S., Home and Work)
Site	Oct-06(000)	Oct-07(000)	Percent Change |
Myspace.com	49,516	58,843	19%
Facebook	8,682	19,519	125%
Classmates Online	13,564	13,278	-2%
Windows Live Spaces	7,795	10,261	32%
AOL Hometown	9,298	7,923	-15%
LinkedIn	1,705	4,919	189%
AOL People Connection	5,849	4,084	-30%
Reunion.com	4,723	4,082	-14%
Club Penguin	1,512	3,880	157%
Buzznet.com	1,104	2,397	117%
Source: Nielsen Online, November 2007

 

Top 10 Blogs for October 2007 (U.S., Home and Work)
Site	Oct-06 (000)	Oct-07(000)	Percent Change |
Blogger	21,572	34,104	58%
WordPress.com	2,104	11,440	444%
Six Apart TypePad	8,813	10,601	20%
tmz.com	7,107	7,805	10%
LiveJournal	3,366	4,260	27%
Xanga.com	4,760	2,741	-42%
Thatsfit	534*	2,613	389%
Gizmodo	941*	2,135	127%
Autoblog	920	1,949	112%
StyleDash	1,319	1,947	48%
Source: Nielsen Online, November 2007

 

Facebook alone has some 300,000 unique South African users and generates 10.5 million page impressions from South Africa each month, while MySpace boasts 288,000 unique South African users and gets 35 million page impressions from the country each month.

Local sites such as MyVideo, with 20,000 unique users, and CherryFlava Blog, with 115,000 unique users, are also attracting attention from South African users. MyVideo is on a steep growth path - it has doubled its monthly page impressions to 100,000 from 50,000 in July 2007.

Many marketers are starting to look at social networking as a viable channel for interacting with their customers and prospects, but are not sure where to start. What follows are five tips for getting the best results from using social networking as a marketing channel.

1. Don't get caught up in the hype

Many marketers see the massive hype that social networking has attracted in local and international media, as well as the huge audience numbers, and rush headlong into the fray.

But one should step back and ask the following questions: Is social networking relevant for my brand? What do I hope to achieve by dedicating budget to social networking sites? Can social networking deliver a good return on investment for my business?

You might benefit from experimenting with a small initial investment into social networking to see if it is right for your brand. Social networking will only deliver the results you are hoping for if you set a sound strategy and clear objectives from the outset.

2. Engage with your audience

Social networking is a cornerstone of Web 2.0, a whole new world where the audience expects you to engage with it rather than blasting out an advertising message.

We've found that standard banners don't perform well on sites such as MySpace - in this interactive environment, users simply don't respond to boring banners and skyscrapers. Engaging creative that draws the user into an interaction with the brand works much better - games, competitions, incentives, and applications (such as the numerous widgets and apps on Facebook) often produce good results.

3. Set the right metrics for success

Many advertisers are disappointed by the clickthrough rates they experience from social networking sites. The average clickthrough rate on MySpace is 0.10% and the rate on Facebook is a mere 0.04%. These numbers are well below the average industry of 0.3-0.4% for major portals and other sites.

But in the social networking space, the clickthrough rate is not the most important measure of success. We need to gauge things such as interaction and engagement to get a true feel for how well a campaign on a social networking site has performed.

For example, we could measure how much time people spent playing an online game or how many of them actually downloaded a video clip and forwarded it to their friends.

4. Investigate pricing and audience numbers carefully

The big social networking sites are US-based and many have dollar-based minimum charges for advertising with them. Since South Africa is a small market, many brands might find that the minimum fees might not be viable for the potential returns. One needs to investigate how many South Africa users there are on an international social networking site before committing to the minimum fee you will pay for advertising there.

5. Don't put all your eggs in one basket

Users might be spending an increasing amount of their online time on social networking sites, but that doesn't mean that portals dedicated to news, entertainment, sports and so have lost their audience.

Your customers and prospects won't spend 24 hours a day on Facebook, but will visit a multitude of other sites for personal and business reasons. For certain advertising messages, a travel or news site might be a more appropriate medium than a social networking environment.

Social networking is an exciting new environment, but it complements the other online outlets and channels rather than making them obsolete.

Advertisers should not put their entire budgets into social networks, but should rather test them upfront to see what works for them and what doesn't, as well as the role social networking has to play in their online marketing mix.

Closing words

Social networking is a new channel, which means that there's still a great deal of uncertainty about how one uses it to the greatest effect, and indeed, how one can measure success in the channel.

Local marketers can reach millions of users on networking sites and interact with them in rich new ways. But to achieve success, they will need to set clear goals upfront for their investments in social networking and then experiment with the channel to find out what works best for their brands.

Ads still dominate online marketing spend.

More than three-quarters of US marketing professionals surveyed think that social media marketing—also known as Web 2.0—can give them a competitive edge, according to Coremetrics' "Face of the New Marketer" study.

The same respondents said that only 7.75% of their online marketing spending went to such tactics.

"Marketers are aware of the impact that social media marketing can have on their overall program but view it as uncharted territory, not worthy of their budget," said John Squire, senior vice president of product strategy at Coremetrics, in a statement.

 

This may be true for many marketers. But it misses another reason why Web 2.0 is an also-ran in spending to online ads, search engine optimization and other tactics.

Although respondents were enthusiastic about social media marketing, they did not say that the need for competitive advantage should necessarily determine budget. Not every Web 2.0 tactic is appropriate for targeting every Internet user, so marketers could be prioritizing other media in their budgets.

As for what Web 2.0 tactics marketers were using, user-generated content was by far the most popular, followed by blogs, RSS feeds and social networks.

 

Still, many social media users are avid shoppers, making them an attractive audience for many marketers. Web 2.0 users spent more than $27 billion online in the United States in the second quarter of 2007 alone.

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.

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%)

Regarding objectives for using widgets, the top uses respondents cited:

• Helping audiences promote conversations/interest on social media sites such as MySpace and Facebook (32%)
• Improvingthe speed and efficiency for implementing technologies on their site (29%) as the top uses.

Regarding current social-media challenges:

• Integrating community-generated content with the rest of the website and understanding best practices for new/evolving technologies were rated the top challenges.
• Closely behind was keeping up with new social media technology advances.

Regarding OpenID and Microformat initiatives:

• 14% said they fully support open standards.
• 22% reported that they would support open standards provided there were no security issues.
• 43% said that they had not yet reviewed open standard initiatives

 

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.

 Last week, News Corp. announced that Fox Interactive Media turned its first annual profit on revenue of $550 million. With an estimated 80% of FIM revenue coming from MySpace, that translates to about $440 million in MySpace revenue for the fiscal year, which ended June 30. Almost all of that comes from advertising.

To those who had their doubts about MySpace, News Corp. CEO Rupert Murdoch had this to say during the earnings call: "It wasn't so long ago — 24 months — when many said we were embarking on a fool's errand. In the 12 months prior to our acquiring MySpace, the site generated $23 million in revenue. Today, on the back of its durability and success, we are forecasting that MySpace alone will generate in excess of $800 million in revenue in fiscal '08."

eMarketer has projected that MySpace would generate $525 million in US ad revenue in calendar 2007 and $820 million in 2008. Both of those figures will likely rise when we issue our next social network ad spending forecast later this year.

Three factors will drive increased revenue for MySpace in the near term. It has begun beta-testing a new targeted advertising tool that will significantly increase CPMs. Parent Fox Interactive Media's deal with Google to supply search technology is providing increased revenue. Lastly, MySpace's international business has ramped up significantly.

At Facebook, which lately has stolen a lot of MySpace's thunder, revenue may also surpass our projection of $125 million in 2007. It now has 31 million active users, up from 8.9 million in September 2006, and generates 40 billion page views a month.

Clearly, its deal with Microsoft to sell banner advertising (reportedly contributing $200 million to Facebook's coffers through 2008) is a big revenue driver. (A flap last week over some banner ads appearing on the Facebook page of a British extreme-right-wing group will likely blow over.)

So, all is rosy in social networking, right? Well, not exactly. With banner ads and search deals plowing in a good chunk of revenue for these sites, what happens to the original promise of social network marketing: delivering a message to one person and having that person spread the message to his or her network? That part is still a work in progress.

Marketers are still grappling with how to measure the effectiveness of forming groups; as one commenter recently wrote on the Valleywag blog, "is simply joining a group really driving sales, profits, and metrics that actually matter?"

eMarketer projects that marketers will spend $900 million advertising on social networks in the US this year.

That figure will likely increase, at least in the near term, but if advertisers simply go for the low-hanging fruit of banners and search instead of reaching for the exponential effect of pass-along, much of the promise — and potential — of social networking will be lost.

 

Some MySpacers never log off.

MySpace and other social networks may have more growth ahead, according to data on June 2007 Web usage from Compete.

The firm measured what it calls "attention" (defined as the percentage of all time spent online that is devoted to one site), and attention for MySpace jumped 20% in June 2007 from the previous month.

In fact, the top six social networks all saw increased attention, and the top 20 social networks received over 15% of all attention in June. MySpace consumes an outsized share of Internet user time overall.

For marketers, this matters in part because many social networkers are willing to host or pass along sponsored content.

One study, from Microsoft Digital Advertising Solutions, concluded that "the advertising potential for social networking is huge: 70% of UK social networkers are prepared to include sponsored content on their personal page, whilst 10% have already branded their space."

The UK is similar enough in Web usage that it can serve as a directional guide to Internet behavior in the US. In the study, 68% of UK social networkers said they had visited another Web site after seeing something on a friend's social network page. Just under half used a search engine to learn more and 35% had forwarded the space, ad or link to a friend.

eMarketer Senior Analyst Debra Aho Williamson said, "There's no doubt that social networks take up a huge amount of Internet time, especially for younger demographic groups.

"However, the continuing challenge for marketers is to find ways to engage consumers in this environment. Often, their attention is directed toward their friends and their own profile page, not necessarily the advertising. When social networks get better at targeted advertising, consumers will be more likely to respond."

Facebook has more than 31 million active users, with an average of more than 100,000 registrations per day - and an average of 3% weekly growth - since January 2007, according to figures the social-networking site released this month (via Poynter Online’s E-Media Tidbits).

The number of active users has doubled since the site opened registration in Sept. 2006, according to the figures.

Some other data tidbits released by Facebook:

• More than half of Facebook users are not in college.
• The fastest-growing demographic is the 25+ age group.
• Facebook is the sixth-most trafficked site in the United States*.
• Users spend an average of 20 minutes on the site daily*.
• The site is the No. 1 photo-sharing application on the web*.
• Photo application draws more than twice as much traffic as the next three sites combined*.
• Canada, with more than 3 million active users, has the most users outside of the US.
• The UK has the third-largest user-base, with more than 2 million active users.
• Over 1,800 applications have been built on the Facebook Platform.
• More than 75% of Facebook users have used at least one Facebook application.
• Canada has the most users outside of the United States, with more than 3 million active users
• The U.K is the third largest country with more than 2 million active users
• Remaining top 10 countries in order of active users (outside of the U.S, Canada and UK): Norway, Australia, South Africa, Lebanon, Sweden, Egypt and India