Is There Marketing Opportunity In Social Networks?

Last month, I discussed the marketing opportunity found in new Internet media like blogs, podcasts and RSS feeds. Now, it's time to turn our attention to another new Internet media phenomenon: social networks.

Social networks are set up to allow people to connect with each other. With their roots in early Internet bulletin boards, social networks enable fast, creative interaction among users. There are networks around business contacts, like LinkedIn and openBC (which is based in Germany). There are networks around particular consumer demographics, like MySpace and TagWorld for the youth crowd, CarSpace, for auto enthusiasts and ParentsConnect, for young parents. Many of these networks have attracted large numbers of registrants and fast rates of growth. MySpace, for example, boasted 100 million profiles as of August 2006. Rupert Murdoch's News Corp. bought MySpace late summer for $580 million, an amount that looked crazy then and now looks pretty smart.

OK, so plenty of people are connecting on these networks. They are sharing information about themselves in detailed "profiles," exchanging photos and music, and discussing all kinds of topics. But how can marketers take advantage? So far, there are 3 ways: advertising, market research and PR.

1. Advertising

Most social networks accept standard banner and text advertising as well as sponsorships. But the ad formats can get a lot more creative, too. MySpace allowed Wendy's to create an actual profile for a cartoon character of its distinctive hamburger, called Square, who has already garnered 78,000 links with so-called friends, meaning other MySpace users who were charmed by the posting. NBC television created a contest on for its hit show The Office on YouTube, the video-clip sharing site that Google has agreed to acquire for $1.65 billion. The research company eMarketer estimates that 2006 will see $280 million spent on advertising in social network sites in the U.S., with another $70 billion spent in other markets. Still small potatoes, but growing fast.

2. Market Research

One benefit of the MySpace purchase to News Corp is testing out of new ideas for media and entertainment. Market research companies are quickly figuring out how to harness these communities for research purposes. MarketTools, which created the leading online survey tool Zoomerang, now offers a service that allows marketers to create their own customized social networks-similar to consumer panels of the past-in order to pose questions and get feedback and ideas. Some observers feel that, ultimately, the greatest value to marketing from social networks will be fresh ideas-far more valuable than mere advertising.

3. PR

The most obvious application in the free-wheeling world of consumer-generated media, of course, is public relations, namely, building buzz and influencing conversations. Marketing agencies are developing clever ways to participate in social networks, by posting comments, maintaining blogs and tailoring their press releases directly to consumers and bloggers. Like all PR efforts, the lack of control presents a risk. For example, BurgerKing and VW, trying to get involved in MySpace by building fake profiles, have recently received considerable negative reaction from users.

As marketers consider developing a strategy for the social networking phenomenon, they should keep the following in mind:

1. Examine whether your company has the DNA to play in this space. It requires a willingness to take risks, to avoid "marketing-speak," and to be candid-or at least to appear candid


2. Involve your PR professionals, who are trained to figure out ways to manage conversations. (Advertising professionals are more adept at delivering paid messages.)


3. Designate an employee, or hire an outside service, to monitor how your company is being discussed online. React to the discussion the same way you would handle a mention of your company-positive or negative-in traditional media. In the online world, you need to act more decisively, and with extra speed.


4. Identify influencers in these networks, and look for ways you can influence them in your favor. Ideas: invite them onto an advisory board; send them early information about new products.


5. Keep in mind that the social networking phenomenon may fall apart as rapidly as it rose. This is unproven territory, a shifting sand. Hedge your bets.