Fall 2008 - Marketing Dimensions from Felber & Felber Marketing

	Fall 2008

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Social Networking Website: The New Ad Medium With ROI?

By Michelle Hirsh
Television, in the days before digital video recording, limited your freedom by controlling when you could watch your favorite shows. You had no choice but to follow the station's schedule. The Internet, of course, is just the opposite. Since the Internet provides much more freedom, the ability to advertise to a captive audience is difficult… or is it? In the early years of advertising on the Web, it was almost a crapshoot if your ad was targeted and your return on investment was worth it. In the past five to ten years, advertisers demanded more tracking, accountability and targeting measures. With the rise of social networking, targeted advertising has reached a whole new level. Questions such as, "How much will it cost me to advertise on a social networking site?" and "How do I know if I should be advertising online?" will now be answered.

Social networking sites like MySpace.com and Facebook.com allow users to create personal profiles with basic background information such as age, high school and college(s) attended, location and marital status. With today's technology, you, as an advertiser, have the ability to pinpoint college students and young professionals. For example, if you own a local jewelry store you have the ability to target those in a relationship who live in Cleveland and are unmarried between ages 25 and 35. On LinkedIn.com, your ads can target companies or people living and working within a few miles of your business.

Sounds interesting, right? But, how much does this highly targeted advertising cost? Well, the simple answer is it could cost as much as you are willing to pay! For example, on LinkedIn.com, you pay $10 per 1,000 impressions (definition: number of times your ad appears on screen) and if you want to target your ad by location, industry, etc., you may pay anywhere from $3.00 to $6.00 extra. After determining the desired target(s), you then choose your total budget. Your specific ad lasts for as many impressions as you purchased before the campaign began. Your budget could be as low as $25 or even as high as $2,000 – hence why you can pay as much as you want.

Impression advertising is just one form of measurement. Other sites, such as Facebook.com, allow purchasing based on per–click. "Pay–per–click" advertising is similar to impression advertising, the difference is the cost is only applied if someone actually clicks on your ad. Every ad campaign comes complete with a report of how many times your ad appeared and how many click–thrus you received (how many times someone clicked on your ad to get through to your site). And of course, suggestions are included on how to gain more clicks – just by increasing your budget!

So, is it worth playing the daily game of how much should I spend today on my skyscraper (def. tall vertical ad) or leaderboard ads (def. horizontal ad that stretches the entire width of the page and is near the masthead)? Truth be told, it all depends on your business and your customer's behaviors and psychographics. Regardless if your company is business–to–business (B2B) or business–to–consumer (B2C), you should first look at your website and ask yourself: does my website currently convert a visitor to a customer? Your website needs to fully engage users (engage is the latest buzz word meaning that someone not only listens/reads, but is involved in your brand). There's no sense in advertising on the web if your website isn't good enough to convert a visitor into a potential customer. Conversion could mean a prospect called the company, emailed a contact or purchased goods through your site. If your website is less than attractive, or simply not user friendly, first clean it up and then consider web advertising.

In selling to the consumer market, online advertising is essential. Where you should advertise (such as social networking sites) will most likely be appropriate given the goods or service you specialize in. For example, if you sell beauty products, an ad to tweens and teenagers on MySpace would be ideal. However, if your business sells parts to manufacturers, then take a look at how your customers currently purchase goods or services. Take a moment to review their behaviors – for example, does your website give your customers the ability to browse, purchase and manage goods online? If so, an online campaign may be appropriate through targeting industries within LinkedIn.com, Ryze.com, Plaxo.com or Xing.com. If you recognize that your new business is a result of personal referrals, then online advertising may not be the appropriate advertising medium for you. It is true, as a business you can try to change people's buying behaviors (slowly, very slowly) – but, do you have sufficient enough capital to do so?

After researching where your customers come from, the next step is taking the time to understand the websites they visit. Although it sounds easy, a lot of legwork needs to be done first in order to then lay the foundation for advertising. But trust me, it's well worth it. Find out what news sites people visit, which online communities they belong to and what daily sites act as industry resources for them. From this research, you'll find their top websites and hopefully most of them offer online advertising services. Do your best to segment and target within these appropriate sites. Go as far as you can in targeting – something we call "micro–targeting." Remember, you can always find relevant sites to advertise on the web however social networking sites allow for more segmentation.

Now that you know why the sky is the limit in advertising online, have you decided if you should pursue advertising on social networking sites? While many B2C businesses are ideal for the Web, you really need to take a look at your core market. Also, remember from our other social networking articles that blogging can be just as important in your online marketing campaigns. Furthermore, don't forget that by just creating a profile on these social networking sites, you can boost your business recognition. Have you advertised on social networking sites and did it work for you? Share your story on our blog.

Contact Felber & Felber Marketing at 330.963.3664 or info@felberandfelber.com.

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