The Next Step for Behavioral Targeting: Social Media?

Social media offers an online outlet for people to connect to each other and an opportunity for marketers to leverage the power of trusted recommendations. This opportunity has grown dramatically as technology and providers multiply to support a broader and deeper set of users. In social media’s early days, the advertising opportunities to reach this highly engaged audience were limited. It has also been challenging to incorporate effective ad placements in social spaces without violating real or perceived privacy firewalls or simply annoying users who claim the space as their own. Today select providers have incorporated some of the same behavioral targeting aspects that create efficient mechanisms for advertisers in display ad networks and other online ad placements. With the growing percentage of ad impressions committed to the social outlets, it pays to take a closer look at how to reach and motivate users in this important space.

I recently spoke with SocialMedia CEO Seth Goldstein about this growing phenomenon and his business. SocialMedia offers an innovative model that brings together the efficacy of behavioral targeting and the wealth of consumer data available on the social networks. The company targets ads to users based on the actions they take within applications on Facebook and the other social networks.

Robin Neifield: Tell me about SocialMedia. What do you do?

Seth Goldstein: We are a social advertising network. We turn developers of social media applications into publishers so they can make money from advertising via their applications on Facebook. We have over 1,000 developers in our network, which represents about 3,000 applications, which touch more than 20 million unique users each month. We provide a monetization service not unlike [Google’s] AdSense does for Web publishers. The applications are made available to users of social networks, mostly Facebook although we are on Bebo and expect to hit MySpace this year, and they get installed based on relevance, viral nature and so on.

RN: How does the way traditional ad networks use BT [behavioral targeting] differ from your approach?

SG: We look at it slightly differently. There have been several generations of advertising: display; then search; Google followed up with contextual like AdSense, and then with behavioral targeting, which is based on individual users’ behavior across the Web, and the history built there. We focus on the next level, which is social advertising. We can take advantage of the power of all the prior generations and the information that goes with it, but then we can also factor in new data about how these people interact with each other in a safe, sharing-based environment. This is a capability advertisers have never had before.

RN: What behaviors can you target or factor in?

SG: I like to use a term called “peerfluence,” which is essentially influencing people based on what their peers are doing or have done. We can see people interacting with each other within the network or in an application, then derive a sense of which friends are more influential than others to that particular user. For example, certain friends interact with a travel ad, others interact with an electronic ad, others interact with an automotive application. Based on those behaviors, we can rank, filter and target ads.

RN: From the advertiser’s perspective, what kind of segmentation can they do?

SG: They can get the general age, gender, etc., demographic information. We can also drop cookies and segment based on what people are doing across our network, which, of course, is the hallmark of BT.

RN: So if I want to reach heavy users of applications in a certain vertical or interest range, you can do that on your network?

SG: Absolutely. If I want to reach 28-year-old females, living in the U.K., who use travel applications a lot, I can do it. The hallmark of social networks is that, obviously, they’re social. Contextual and behavioral advertising look at the individual in a vacuum; they don’t factor in how commercial choices are motivated and filtered by people they do or don’t trust. We have 20 million people on social networks, and this is an audience not watching TV or reading papers. They’re spending their time on Facebook. So we give advertisers a means to interact with them in a meaningful way.

RN: What are the additional advertising opportunities? Can they buy button or banner space?

SG: Yes, they can do buttons or banners; in fact, we serve 100 million ads a day. There are also opportunities for sponsorship, as in sponsoring a product inside someone else’s application. Advertisers can even build their own application or do screen takeovers inside an application. One interesting option is advertising within a sequence-based application such as a quiz. If a user has to take 15 steps before getting to the payoff, placing an advertisement on the thirteenth step, where it can’t be overlooked, will yield some high returns.

RN: Beacon was a major privacy issue for Facebook. Is the fallout impacting your business?

SG: The challenge there was that Beacon was predicated on bringing in third-party data from outside Facebook. They were crossing two channels and people weren’t comfortable with that. But people feel comfortable sharing personal information within the network environment, which is where all our targeting takes place, so we don’t run into that issue.

RN: Where do you see this going? What is the next step in your model?

SG: True social advertising. How do you educate advertisers on how to spread their messages between two people? If I’m an advertiser, I want to enable users to bring my message to someone else, or many other people. People have been talking about word-of-mouth marketing for years, but turning it into something people can actually use takes a lot of time and trial and error.

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