Social Media: The New Marketing Frontier

I found this article posted on twitter by @OlivierVasquez and realized that while some of the statistical information may have changed, the concept  behind it is still very relevant to today.

Social networking: The New Marketing Frontier

The many faces of advertising

By Heide B. Malhotra
Epoch Times Staff

Advertising, a business concept almost as old as humanity, is still evolving. It changes with new developments in technology and people’s understanding of society.

Today, newspapers, magazines, and other print media are losingadvertising opportunities, while electronic publications are gaining advertisement earnings.

“Mobile marketing and advertising are coming of age. Seen as the most personal means of communication with consumers, mobile advertising is rallying to overcome the stigma of larger advertising markets—print, TV, radio and online,” ABIresearch said.

Research reports suggest that the latest trend in the advertising industry is going mobile and taking advantage of social media such as Twitter, Facebook, and MySpace.

Social media has increased in popularity, and such sites increased hits by 230 percent since 2007, when hits had increased by a mere 20 percent over the prior year. Advertisers see in these numbers a fantastic opportunity to reach customers.

“Mobile is being embraced by advertisers of every category,” according to a Quattro Wireless report.

Social network user numbers are staggering, vastly increasing the exposure potential to products through advertisement. Twitter’s popularity has increased 347 percent over the past year, with 4.7 million people taking advantage of the microblog, according to Slideshare. Facebook has over 100 million users through mobile services, and Myspace with 11.4 million people using its mobile services.

Marketing professionals and advertisers are becoming savvier in promoting their products. ABIresearch claims that by 2015, mobile advertising will gain a strong foothold and increase from $313 million in spending to over $1.2 billion.

“Mobile advertising, once thought of as the medium of mobile personalization advertisers—such as ringtones—has become an effective strategy for brand and premium direct response marketers,” Quattro Wireless said in a statement.

Seize Them While You Can

Two months ago, Google finalized its acquisition of AdMob, a mobile advertising network. This firm is heralded as one of the largest global mobile advertising networks.

“It’s clear that mobile advertising is growing incredibly fast with lots of businesses innovating at great speed,” Google Inc. said in a recent blog post announcing the acquisition.

AdMob has become Google’s flagship for advertising products. “We want to unleash agencies’ and advertisers’ creativity on all mobile devices and deliver them better results from their campaigns, drive better returns and more choice for publishers and developers, and help people get better ads and more free mobile content.”

AdMob didn’t come cheap. Google paid around $220 million in cash and another $530 million in Google stock, for a total outlay of $750 million, according to several Securities and Exchange Commission (SEC) filings.

Don’t Count Out Competition

Apple Inc. had dropped out of the market for AdMob and instead bought Quattro Wireless, also a mobile advertiser and considered to be the third largest advertising network, for $275 million, a mere fraction of what Google paid for AdMob.

Yet, in granting Google a license to purchase AdMob, the Federal Trade Commission (FTC) reasoned that Apple bought Quattro Wireless at the end of 2009 and is thus keeping competition alive. The FTC predicts that Apple will give Google a run for its money in the race for a strong mobile advertising network.

The FTC rationalized that Google and AdMob gain customers based on hits instead of brand recognition, popularity, or knowledge of the product.

“Advertisers often buy ad space through auction rather than through sales relationships, and pay for theadvertising on a ‘per click’ or other direct response basis,” according to a FTC statement.

Marketing experts don’t believe that competition was the motivator for either of the two companies when acquiring the mobile advertisers.

Market statistics vary, but according to a Quattro press release, mobile advertising expenditures will grow to $1.6 billion by 2013 from $416 million in 2009, numbers that are more optimistic than ABIresearch’s predictions.

“The motive behind Google’s and Apple’s acquisitions is clear: Define the market while the industry is young,” according to report by Knowledge@Wharton (KW).

Social Media in Vogue?

Social networks are the latest trend for developing an effective advertising campaign.

“Twitter is one of the social media tools that can be used as [a] tool for your agency’s social media marketing strategy to generate online traffic and a pipeline for new business leads,” according to an article on the socialmediatoday website.

Twitter is running advertisements in the form of tweets, including from Starbucks Corp., which sent messages for a free refill of a reusable tumbler bought on Earth Day 2010.

Twitter needs to find a model that brings in earnings, which so far has not materialized, despite a market value of $1 billion, according to KW.

Yet, some advertising experts are reluctant to see social networks used as an advertising tool, no matter how many hits or how many users.

“In examining the typical users of social networking sites, it becomes evident that many people join these sites for socializing, not shopping. As such, many members are annoyed by social networking ads, and do their best to ignore them,” states an article on the Social Networking website.

“Social Media Advertising spend[ing] is growing rapidly, whilst others [sic] traditional online (if you can call it that) [spending] is on the decrease,” said Raj Anand, a global expert on social media and technical issues, on his blog.

Anand details different industries that have been advertising on social media and uses Neilsen AdRelevance research to make his point. In the business, travel, and entertainment sectors, social mediaadvertising has increased by 184 percent, 364 percent, and 812 percent respectively between 2008 and 2009. Other sectors show equally impressive numbers, though no other numbers come close to the entertainment increase.

“Looking at all the pros and cons of social network advertising, my conclusion is that we have just seen the tip of the iceberg. Social networking is barely 8 years old and SMA [Social Media Advertising] even younger. There are new platforms like Spotify popping up who are revolutionising the way we advertise and engage with audience on social media,” he said.

The article talks about how many social media users become annoyed with advertising.  I know Facebook has stepped up their “ad” game by adding even more banners both on the left side of our profile and now also mixed in the news feed.  So how can companies effectively marketing on social networks without simply annoying potential customers?

Tomorrow I’ll be posting another very interesting article that talks about “how” to market effectively in our online social world.  Gone are the days of  “pushy” sales tactics, now it’s important for businesses to understand exactly how the “slow and steady” approach can be extremely beneficial.

Until then, I’d love to hear your thoughts on using social media in your advertising and marketing campaigns.

Posted on by Toresa

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