The document discusses the impact of social network advertising, emphasizing its growth potential despite only 2.5% of online ad spending currently directed toward social networks, compared to a worldwide ad spending of $40 billion. It highlights the importance of user engagement through custom applications and Facebook pages rather than groups, recommending strategies for brands to effectively communicate and build relationships with customers. The document also contrasts the demographics and ad capabilities of Facebook and MySpace, illustrating a shift in consumer preferences and advertising strategies in the social media landscape.

1. Social Network Advertising Hussein Fazal [email_address] “ In 2008, if you’re not on a social networking site, you’re not on the Internet.” - IAB Platform Status Report, April 2008

2. Social Networking - Reach of Web population Source: comScore Inc, Worldwide Feb’08, All Locations, Persons 15+ 53.7% 15,794 29,412 Germany 52.0% 17,583 33,813 France 84.3% 18,181 21,567 Canada 76.7% 25,502 33,249 United Kingdom 66.4% 108,248 163,024 United States 65.4% 538,375 823,203 World-Wide Reach Social Networking (‘000) Internet Users (‘000)

3. Canada - Continuous Growth

4. Social Networking goes beyond facebook! Source:ValleyWag, June ‘07

5. 4th most-trafficked website in the world More than 35 translations available on the site, with over 65 in development However, facebook is the largest

6. Worldwide online advertising spending: $40 Billion Worldwide social networking ad spending: $1 Billion Advertising Budgets While social networking reaches 65% of Internet users only 2.5% of online advertising spending is directed to social networks! WHY ?

7. Social Network Advertising can be done with small budgets Large brands simply are not sure what to do Large brands are ‘scared’ to lose control Spend just simply hasn’t caught up yet – similar to the transition from traditional advertising to online advertising several years ago There must be a shift in mindset as ROI isn’t as easy to measure WHY? 85% of social media users think that companies should interact with them through this medium – emarketer 40% of users have made a purchase based on advertising found on social networking sites - razorfish

8. Banner Advertising Virtual Gifts Creating a group Creating a Page Building an application Advertising with facebook

9. Right-hand column – CPM or CPC buys CTR of 0.04% Banner advertising w/ facebook

10. More than 95% of facebook members have used apps Better placement Better CTR Deeper Reach But still, not taking advantage of being on a social network! Banner advertising on applications

11. Users can deliver gifts publicly or privately Virtual gifts are given a high priority on the news feed so they spread far and fast Sponsored Virtual Gifts People buy virtual gifts! (Estimated to provide $3 million in revenues / month for facebook (source: insidefacebook.com)

12. Post discussions, photos, videos, links Easy to send updates directly to members facebook inbox Easy for members to invite their friends The group 1,000,000 Strong for Stephen Colbert grew from zero to one million members in 9 days!) Group acts as a ‘Bumper Sticker’ on users profile pages Create a central place for customers, partners, and friends to participate in conversations around your brand Facebook Groups

13. Message blasting limited to 5,000 people (increased from 1200 as of June 2008) Can be a target for spammers Cannot add custom applications Facebook Groups Drawbacks Groups are good for quick active discussions attracting quick attention BUT if you are looking to build a long-term relationship between your customers and your brand, pages are the way to go

14. Launched in November 2007 – similar to groups BUT: More flexibility to add content incl. facebook applications No limitation to number of fans you can message You can view demo info of your fans – age, gender…. Pages can now have custom flash or HTML (fbml) Users become a ‘fan’ of your page No ads on right hand column Facebook Pages

15. Facebook Page Example - COKE Coke Page has over 1.2 Million fans! Grown virally from news feed News feed is the holy grail of facebook viral growth!

16. How do I grow my group/page if I am not Coke? Create a reason for users to become a fan and keep coming back i.e. win prizes by becoming a fan of crest whitestrips Create an area for discussion, not a branded destination Kick off with a banner advertising campaign to build-up initial user base

17. Gives you an easy way to bring your customers together and opens a ‘long-term’ relationship Must be comfortable with negative chatter about your brand Facebook is committed to continuing to build out the pages functionality BUT – There is a MORE ENGAGING way to communicate with your customers… Build a Custom Application Are pages/groups the answer?

18. Apps can offer a specific level of branded engagement whereas pages are generic More control over the holy grail. What is more engaging? “ Hussein became a fan of ABC” “ Hussein challenges you to beat his score in the ABC super contest - Prove Yourself.” Highest level of user engagement Most people join a group/page for the ‘bumper sticker’ and forget about it Custom Applications

19. Build virality into the core of the application Give users a natural and compelling way to invite others i.e. ‘You scored 1200 – Can your friends do better?’ Take advantage of holy grail (feed) Cost per install campaign with Ad Networks Banner advertising Cheap Incentivized installs Build an application There are over 50k application in the app directory with 140 added per day, so how do I make my app grow?

20. FedEx created “Launch a Package” 300k active users in 6 days because VIRALITY was built in app Branded App Example - FEDEX

21. Reebok created “Talkin’ Crazy” where users could write ‘smack’ on shoes and send to friends Branded App Example - REEBOK

22. Build a page with a reason for users to be a fan Can be used later to message blast your fan base Build an engaging custom application Built in virality is the key Cross promote the two – encourage app users to become fans of your page and fans of your page to install the app Run a banner campaign to get the initial user base With no budget restrictions, what should I do?

23. Banner advertising used to be only for large brands Enough about facebook – what about myspace? Until October 12 th when they launched ‘myads’ self serve advertising for budgets between $25 - $25,000 Minimum CPC rate of 25 cents Can contain images Advanced targeting options Estimated to provide daily revenues of $160k for myspace already! (source: TechCrunch)

24. myspace has an older demographic facebook has a demographic that reaches people with higher income + more educated facebook has a higher demographic that is African American and Asian. Myspace has a lot more Hispanic users more people are addicted to Myspace (time spent) – skewed due to music users myspace demographics myspace vs facebook

25. Nike Soccer 50,000 fans Watch clips, discuss soccer, links… myspace is a mess! Trailing behind – most examples are from 2006! myspace pages

26. What else is out there?

27. socialvibe Users and brands together support causes Can place widget on facebook, myspace, bebo, myyearbook… profile!

28. cyworld Over 90% of South Koreans in their 20’s are on cyworld Cyworld profiles (“minihompy” or mini-homepage) Users can ‘decorate’ their avatar and mini-homepage with branded and non-branded items

29. Social Network Advertising spending – small but growing Opportunity for brands – but must change mindset Facebook is the dominant player Can do a lot for very little $ New industry - lot’s of innovation still to come conclusion

30. Questions?