Social Networkers Don't Mind the Ads, Says Razorfish Report

Advertising is not a turnoff to people who love social media Web sites. In fact, many MySpace and Facebook users said ads on their favorite social sites have prompted them to buy something, according to a new report from Razorfish.

In its survey-based publication named “FEED: The Razorfish Consumer Experience Report,” the digital marketing agency says 76 percent of the 1,006 people surveyed said they didn’t mind seeing ads when they logged-in to Facebook, MySpace or the other social media sites they frequent. Razorfish also found that 40 percent of the respondents said they made purchases due to seeing those ads.

However, while consumers see a place for advertising on social networks, advertisers should think beyond traditional approaches, said Garrick Schmit, group vice president of experience planning at Razorfish. He said successful ad campaigns can come in the form of fan pages, games, widgets, videos and other “social experiences. “These experiences, or types of content, are what engage users today and will increasingly become the vehicle to acquire them,” said Schmit.

Razorfish describes the survey respondents as “connected consumers.” It defines them as people with broadband access who spent at least $200 online in the past year, used a community site such as MySpace and consumed or made some type of digital media including videos and music.

“Connected consumers have enthusiastically embraced social media (both technologies and networking sites), are actively building and refining their own trusted personal networks and are rapidly embracing new communication offerings like Twitter,” says the report. It notes that these users are “challenging” publishers, advertisers and marketers to give them services they find useful even though those offerings “have no immediate monetization models.”

The report suggests that smart marketers and publishers will figure out how to “merge tactics” so that the wall between content and ads is increasingly dissolved. “Content, in our view, will become advertising,” the agency believes.

However, the report admits this evolution will not necessarily be easy. In fact, it says online advertisers and publishers are venturing into “uncharted territory,” and need to take a scientific approach that will require new tools and services. Razorfish warns that “today’s widget might become tomorrow’s TV set” making it a challenge to understand and manage users’ connections “with almost no explicit controls.”

In the report the agency explains it was surprised to find 91 percent of respondents use Google, Yahoo, MSN, AOL, and Ask.com as their Internet homepages. Over 60 percent of these people have customized their homepages with content feeds and widgets. The report notes 55 percent said they use widgets with some frequency and 62 percent use them on sites such as Facebook and iGoogle.

The researchers found that, while those who view online videos don’t mind the presence of advertising, they prefer banners and “newer, emerging forms of video” ads including tickers and interstitials to pre-roll video ads.

While video ads might not be as powerful as their makers might have us believe, Razorfish says retail loyalty programs — such as Amazon’s Prime and Best Buy’s Reward Zone — have a big impact on purchasing decisions.

“Clearly consumers are receptive to advertising with online videos, but the preference for companion banners speaks to the notion of choice,” said Schmit. “People will always choose to click or view advertising that interests them instead of waiting for a pre-roll that may not align with their interests.” Given the fact that most online videos are short, Schmit said “there’s no joy” in watching a pre-roll that can be half as long as the clip itself.

The widespread use of widgets suggests people are comfortable “with the concept of distributed experiences” bolstering Razorfish’s suggestion that content and services distribution is becoming more important than Web destinations. This is a big challenge for publishers, especially those focused on media and entertainment because they “currently have no clear path towards monetizing content distribution across the Web,” says Razorfish.

“I definitely think there’s a place for a widget advertising network,” said Schmit” He said photo-sharing sites Slide and RockYou do this well, and he noted widgets “get really interesting” when advertisers make content or services that are consumed and interacted with through widgets.

While Web destinations may no longer dominate, the report also notes that targeted, personalized recommendations offered by some sites can have an impact. Sixty-five percent of survey respondents said they made repeat purchases from a Web site that sent them a recommendation based on their purchase history.