Features

Debunking the Myths of Social Media Advertising

Written on
Jun 2, 2009 
Author
Anu Shukla  |

socialmedia3_small.jpgADOTAS — Social media has revolutionized advertising in countless ways, and while industry grapples with the changing landscape, one thing is certain — new platforms require a new approach.

In recent months, offer-based channels have been thrust into the spotlight, and into the middle of the lead quality debate. While some view this new approach as a simple spin on the “win a free iPod” incentivized racket from the early 00’s, the reality is that the offer-based model is worlds apart from old-school incentivized marketing — and it works. Here’s how: this model gives advertisers the opportunity to reach consumers in a new way by enabling them to earn virtual currency, redeemable within their favorite social games and applications, in exchange for taking part in advertising offers. What makes these offers so compelling is that they are scientifically engineered for targeting, relevancy and maximum conversions.

Today, social Web audiences are deeply connected to and have a strong affinity for their online communities. They are so engaged, they welcome and even depend on the opportunity to partake in ad offers which allow them to earn virtual currencies for free, rather than forking over real dollars to heighten their social experience. Further, only the most relevant offers are presented to each user, based on their demographic profile and social activities—thereby helping to ensure high lead quality. So, why the skepticism, you might ask? Bear in mind the many myths that surround social media advertising.

Myth #1: Consumers don’t click ads on social Web sites or games.

While the Click-Through Rate (CTR) for most ads on social networks hovers below 0.10 percent, the average CTR for offers embedded in the user experience through offer-based platforms is closer to 25%. Rather than interrupting users from playing their favorite game or chatting with their friends, these offers actually engage with users and become part of the Web site or application’s in-game mechanics. In addition, an optimization engine is capable of learning exactly which ads are of most interest to individual users, presenting only the most relevant ad offers that are targeted based on demographic, geographic and behavioral data points.

Myth #2: There’s no way to measure ROI with social advertising.

Although it can be difficult to accurately measure the ROI in social media advertising campaigns, these key measures can reflect ROI quickly and reliably:

• online traffic and sales leads;
• click-through and conversion rates;
• costs (tracked so they can be compared to the benefits)
• customer interactions

The beauty of the pay-for-performance, offer-based advertising model is that advertisers get the results they’re looking for at a set price. The reason is simple: with CPA deals, the publisher only gets paid when the advertiser makes money. Plus, the social media audience is loyal, large and profoundly engaged, so rather than ignoring an ad, they are interacting with the brand through each offer. Ultimately, what advertisers value is the quality of the audience, not just clicks, and this amounts to big ROI for social media.

Myth #3: Social networks and games are just for teenagers.

The reality is that consumers of all ages are now taking advantage of the networking and entertainment value that social networks provide. Online communities in the form of virtual worlds, multiplayer games and social networks are beginning to gain momentum in the 40+ demographic too. Although, the largest proportion of users remains those aged 18-25, the fastest growing groups across the US, Europe, Asia, South America, the Middle East and North Africa, are markedly the 35-44, 45-54 year-olds, and, perhaps most interestingly, the 55-59-year-olds.

Myth #4: Lead quality and conversions are poor on social networks.

With the social Web’s huge reach, and with sophisticated targeting engines and data verification systems, the quality of leads from the offer-based channel far exceeds industry standards. And because of the way the offers are tightly integrated into the game play of social Web sites, more than 20% of the consumers who visit the advertising interface complete at least one offer per visit.

The social Web audience feels a genuine bond with the applications they use and games they play, often devoting hours at a time and returning with great frequency. Because of this connection and level of engagement, social Web consumers are more willing to honestly and openly interact with the advertising offers presented to them because it ultimately helps them get more enjoyment out of the game. Along with tapping user engagement and targeting the right ads at the right people, mechanisms such as data validation, strict offer terms and clear instructions also ensures lead quality.

Myth #5: There’s no way to truly engage with consumers on social networks or games.

Virtual currency is the secret sauce to engaging with users and creating loyalty or what we call, “stickiness.” Once a virtual economy is implemented, users begin to develop a need for and motivation to acquire virtual currency and virtual goods. The way to truly measure engagement is by tracking time spent on the site, on an application, and by the frequency of visits. From what we have seen, consumers spend an average of nearly ten minutes engaging with our ad interface, viewing over 8 pages per visit, and returning about 14 times each month.

Once users start taking offers, it becomes easier to accurately predict which offers each consumer will be interested in completing. By identifying these top-performing offers for specific demographic audiences, advertisers are able to develop an ongoing relationship with users, and learn more about them as consumers.

The social Web is the new frontier for advertisers. With the growth in new platforms and the awe-inspiring expansion of the social Web audience, new approaches must be embraced in order for the industry to fully capitalize on this rare opportunity to engage with consumers. If the problem with traditional advertising is that they distract and detract from user experience, then the future of social media advertising rests on making advertising part of that experience.

– Express your opinion, comment below.





Anu Shukla is the Founder and CEO of Offerpal Media, the leading virtual currency monetization solution for social networks, social applications, online games, virtual worlds, mobile apps and other social publishers.

The company's full-service "Managed Offer Platform" enables site visitors to earn points or virtual currencies in exchange for taking part in scientifically targeted advertising offers.

Reader Comments.

Are there any figures on the longevity of social networking games and their virtual currencies? Just from anecdotal experience on social networks, it seems like a game will sweep through like wildfire and then be quickly forgotten. There are a couple fanatics that remain playing afterwards, but the majority of people move on.

I guess what I’m asking is: in the metrics that you provide, do you find that the majority of the people who visit your games display the levels of interaction you cite (10 minutes per visit, 14 visits per month), or is there a smaller pool of fanatics who are raising the overall averages dramatically?

BTW: Great article – thanks much for sharing actual data!

Posted by TheCosmonaut | 11:11 am on June 3, 2009.

TheCosmonaut — thanks for your comments. You raise an excellent question, to which there really is no set answer. Yes, some applications or web sites certainly experience a swift rise and a corresponding decline, but others have been able to maintain their user base for an extended period of time — more so now that the industry has matured. It all depends on how engaging, viral and addictive the experience is.

In terms of the numbers we’ve provided, there is certainly a subset of the audience that you’d consider the “addicts,” who are helping to bring the numbers up overall, although I don’t know that I’d describe it as “drastic.” Certainly as an advertiser or a publisher you’ve got to make sure to cater to these users, but the middle-tier users are just as important. Someone who engages with our ad interface for 5 minutes per visit rather than 10 and comes back say 7 times a month rather than 14 is still extremely valuable.

Thanks,
Anu

Posted by Anu Shukla | 6:40 pm on June 3, 2009.

Good post.
I have done ‘social media marketing’ since around 2000, for example for the German national Ice hockey league.
The key is always to generate a story that triggers the target groups reactions. So this must be specific per topic and target group and then any campaign can fly – social or not. So, even in social media, content is king.

Posted by andreas.wpv | 10:14 am on June 4, 2009.

Hi Anu,
First off, congrats on the article I read in the Sacramento Business Journal highlighting many of the widget and application development companies that have been successful raising money and doing very well revenue-wise. You wrote right after Myth #1 that “the average CTR for offers embedded in the user experience through offer-based platforms is closer to 25%”

Twenty-five percent? Really? I guess I could see 2.5% or that even .25% would be better than the industry average .1% but your percentage seems pretty inflated.

Posted by Scott Pannier | 6:14 pm on June 4, 2009.

Hi Scott,

Thanks for your kind words. I agree that the incredible CTR sounds almost implausible, but you have to keep in mind that we’re not comparing apples to apples here.

The CTR I’m referring to isn’t about users clicking on a banner ad alongside some irrelevant content. It’s the CTR for users that visit our offers page inside of social applications and online games. When users visit our page, they are already highly engaged with the application/gaming experience, and they are there specifically to search for ads they find interesting and relevant, of which there are many. Thanks to our targeting and optimization engine, those users typically find at least one, and oftentimes multiple, offers they’re interested in, so they end up clicking through to learn more.

The difference is that CTR traditionally measures how effective an ad is at getting a user’s attention. In our case, we already have their attention, so our CTR is a measure of how compelling and relevant the offer is.

Thanks,
Anu

Posted by Anu Shukla | 8:12 pm on June 8, 2009.

“Social media has revolutionized advertising in countless ways”

Name one.

Posted by Ad Whore | 4:24 pm on June 9, 2009.

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