Advertising on Social Network Sites

User generated content is hard for advertisers to target consumers and it seems that the response rate on ads are low compared to other types of placement, such as on TV and newspapers. According to Forrester Research, 64% of Face Book (FB) users use social network sites to communicate compared with 52% for MySpace (MS). In addition, 17% of FB users tend to be attracted to the site for entertainment compared to MS users of 21%. Although both sites attract similar audiences in terms of reacting to advertisers and influences of behaviors, 11% of MS users send information to friends which influence their opinions, while 10% of FB users are almost at the same level of this type of use.

Attracting different age groups to particular ads for products is not a simple task for marketers. Therefore, social marketers have to reconsider their plans according to a site’s strength. For example, MS is rich in branding opportunities, which FB uses viral advertisers. Agencies spend anywhere from $20,000 to $100,000 to create a page that is going to attract users, which is a big expense if people are not attracted to their ads. MS trys to attract users to a website by including a video and it seems to be more attractive to consumers using this type of advertisement.

In fact, only 57% of social network site users said they clicked on an ad in the past year, compared with 79% of all internet consumers. Despite its phenomenal growth, social networks have yet to reach online advertising goals. It’s a place where marketers are able to serve ads, promotions and offers to friends of friends based on a friend’s recommendation, and where word-of-mouth marketing spreads to create waves of self-selecting consumers eager to interact with marketers, according to eMarketer. In May 2008, eMarketer projected advertisers would spend $1.4 billion to place ads on online social networks this year. eMarketer also forecast ad spending on social networks would reach $2.4 billion in 2011.

The challenge will be to see what types of ads will attract the kinds of people that will actually start interacting with their products ads or forward the information to others.