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A March 2009 Nielsen report, Global Faces and Networked Places (PDF), on the growth of Social Networks (Member Communities) and what this means for advertisers has confirmed some widely accepted truths, namely:

• Social Network are a worldwide phenomenon (used by 67% of the online population)
• Facebook was the big winner in 2008 (time spend on Facebook up 566% on the previous year)
• We spent more time on Social Networks in 2008 than in 2007 (up 118% in the UK)
• UK users now spend one in every six minutes on Social Networks (that’s 17.4% of our surfing time)
• The demographics of member communities is changing, as more older users join and younger users leave (50+ up 4%, 0-17 down 9%)

While the popularity of social networks is obvious, the way to use these effectively as advertising platforms is not. This is because users of social networks have a greater sense of ownership around content and are less inclined to accept ‘look at me’ advertising (38% considered advertising on social networking sites to be an intrusion compared to 29% the year before).

When it comes to advertising (or more precisely earnings potential), not all networks are equal. MySpace, despite having a smaller global reach, generated around $US1 billion in ad revenue in 2008 compared to estimated earnings for Facebook of just $US300 million. The principal reason for this is that MySpace is viewed as more of a niche player, with its focus on entertainment and video content, and is therefore a more effective platform for targeting teenagers and young adults. For this reason, more companies run more campaigns on MySpace, than on Facebook.

UK Advertising Campaigns on Social Networks

What should advertisers do?

Social networks and advertisers have compatible interests. The networks need advertisers to monetise their audience; while the advertisers need to be on these networks if they want to engage their customers, this is after-all where they’re spending a greater part of their time. If social network advertising is be effective, Advertisers need to work closely with the network providers. They need to design campaigns that meet the values and expectations of the community and engage the members in a conversation, rather than pushing a marketing message. The ad units themselves must to tailored to suit the community and not simply ‘resized to fit’. Both the advertisers and the campaign should add value to the users, or risk being flamed by the community. And above all, the message within the advertising should be authentic and the campaign true to the values of both the community and the advertiser. If advertisers achieve this match, their social network campaigns stand a good chance of being successful; although, as the Nielsen report also points out, “the magic formula, to overcome the attraction of ad free personal space while at the same time effectively monetising online’s most heavily used sector, hasn’t yet been found”.