Despite this, social networks have grown in popularity from their ability to provide a platform for information sharing, communication, and relationship development and maintenance. In a world where individuals may have reduced physical contact and heightened time spent interacting with electronic devices, social networks have evolved to provide an online platform for personal, intimate, informal neighborhood and office chatter. They offer a sense of "contact comfort" in a society where many of us spend less time with actual people than we do with machines. Contact comfort helps to meet individual needs for affiliation and socialization. Social networks meet our need for contact comfort while also providing entertainment and information sharing.

Social networks are above all else communication hubs. While they all offer the core product of networking capabilities, networks do find ways to differentiate themselves. Myspace and Facebook support relationship building and maintenance. YouTube offers a venue for sharing and promoting videos and related opinions. Flickr enables photo sharing and reviewing. LinkedIn provides a form of self-promotion and career net-working. There are niche sites as well focused on any number of hobbies and personal interests. Catster, for example, offers tips and information on caring for one's feline companion with the added benefit of being able to talk with others who define themselves in part by the pets they love. Several social networks will be described in this chapter.

Social networks, like other online communities, are participatory, conversational, and fluid. Members produce, publish, control, critique, rank, and interact with online content. On Facebook, for instance, the second most popular social network, members can build a profile that includes information about their education, habits, favorite movies and books, and other personality indicators. They can send and receive messages to members, "friend" people, and join groups and networks. Profiles can be complemented with pictures, news feeds on member activities (e.g., Tracy just went shopping), and a variety of widgets.

Widgets are small applications made up of code embedded on a Web site. Facebook widgets enable members to virtually hug, wink, smile, and engage in a host of other behaviors. Most sites offer similar features, with messaging, profiling, and friending being the core functions of any network site. The interaction with others enhances the need to return to the site and continue the process of generating new content. The result is an online community of friends who may spend hours in the network each day.

Mashable, a social-networking news Web site, claims more than 350 social-networking sites exist. It wasn't terribly long ago that social networking was thought of primarily as a teenage pastime with general Internet population statistics suggesting only about 15% of Internet users visited social-networking sites.' Since those early days of online communities, social networking has taken off as a cultural phenomenon among youth with 70% of teens reporting use of online networking sites. These days adults, too, are social-networking online. Social-networking sites are among the fastest growing and most commonly visited sites online. According to Nielsen/NetRatings, the top ten most-visited social networking sites reach 45% of active Internet users.

Despite the diversity of sites targeting Internet users based on a host of hobbies, interests, and demographic characteristics, two sites, MySpace and Facebook, reach more than any of the others. It is reported by comScore that MySpace reached more than 40% and Facebook near 20% of Internet users in the United States. The raw figures amount to hundreds of millions of unique visitors at these sites.

There is no doubt that much of this growth can be attributed to the attractive features social networks offer members. At the same time, the flat learning curve for new adopters surely plays a role. Most networking sites have advanced options for members, but the basics of joining, completing a profile, and sending and receiving messages are simple enough to be mastered in moments. The ease of use has resulted in a steep rate of adoption for social-networking sites.

Given the audience size and the length of exposure time consumers spend in the network, it is no wonder that advertisers have embraced social networks for social-media marketing more than any other community environment. eMarketer estimates that marketers spent $920 million on social network advertising in 2007, including online display advertising, in-network community sites, and brand profile pages. What's more, the research firm predicts spending on social-network advertising to reach nearly $3 billion in less than five years. This figure may sound more impressive than it actually is given that social-network advertising is still under 5% of the total expenditures on online advertising.

 Additionally, the vast majority of spending is directed at the two juggernauts of social networks, MySpace and Facebook. More than 70% of ad expenditures directed to social networks in the United States is placed in these two networks. Though social networks are strong in international markets, social-network advertising is for now a phenomenon focused on consumers in the United States; U.S. spending accounts for 75% of all advertising in this venue.

Social-Networking Sites and Categories

Social-networking sites can be classified into four primary categories. General social-networking sites, like MySpace, have social networking among friends as the primary focus. There are also several social- network sites that are affiliated with major portals (like Yahoo! 360). Because of their portal affiliation, they are typically separated from general sites for classification purposes. Lastly, there are vertical social networks. Vertical social networks differentiate themselves by emphasizing some common hobby, interest, or characteristic that draws members to the site. These vertical networks do not attract the same traffic typical of general sites, but one might argue that the members are more involved because of the common interest that initially brought them to the site. Within this realm of vertical networks, sites exist for pet lovers (e.g., Catster), photography (e.g., Flickr), soccer fans (e.g., Joga), gays and lesbians (e.g., Glee), and more. Examples of each type of social-networking site are provided in Table 3.1.

Some social-networking sites are generating advertising revenue on a larger scale than others; eMarketer predicts that MySpace will capture a full 60% of the market for ad spending. Other major players for advertisers including smaller sites like sites like Facebook, Bebo, and Piczo, which expected to earn about 23% of ad spending on the social-networking realm. Portal-affiliated sites will garner about 11% of ad spending and vertical sites about 5%. It probably comes as no surprise that Myspace earns the lion’s share of ad spending, at more than $510 million for 2007 alone!

The landscape of social-networking sites changes daily as new entrants seek to enter a growing market. The number of sites with reasonably large name recognition is fairly small, but the Mashable lists entries for 350 social-networking sites! A few examples are highlighted below.

MySpace.com: A Place for Friends

Myspace is a general social-networking site with more than 100 million registered profiles and unique visitors exceeding 64 million per month. It is the mass market of social networking, akin to the Super Bowl for television advertising. In fact, the most recent Super Bowl broadcast partnered with MySpace to deliver additional advertising impressions for Super Bowl commercials by offering a MySpace community site dedicated to the ads. MySpace was initially intended for an audience of teens and young adults, but an analysis of MySpace user demographics from comScore corrects that perception. MySpace's age demographic is distributed over a range of ages with its largest category being the 35-45 age group (making up 40% of MySpace’s user base). A strength of MySpace is its broad appeal, developing at least in part from its vast array of features, including individual profiles, music, video, instant messaging capabilities, blogs, groups and communities, and a host of others. Given that social-networking sites exist (at least from the user perspective) to create and maintain personal relationships, using the largest network increases the likelihood of an existing friend base. Niche networks, in contrast, must rely on invitations from users to build membership and expand network. MySpace is the most successful network in leveraging what is known as the network effect. The network effect explains that a network gains value as more people join the network.

MySpace recently announced one of the most advanced developments in social-network advertising. It now offers an advertising solution for businesses that claims to microtarget ads to members. Because the ads are highly targeted based on the data in user profiles, the ads should have more relevance to and meaning for the target audience, resulting in a higher rate of response. This system promises to improve online advertising, especially for local advertisers, but its accuracy depends upon the accuracy of the data in user profiles and the quality of the data-mining function used to extract the segments for targeting. In addition to targeted display ads, brands can create brand profiles and communities.

Facebook

Facebook is the second largest social network. Though largely dwarfed by MySpace's size and traffic, it boasts highly involved members, many of whom report spending hours each day on the site and constantly checking for new Facebook messages on their mobile phones. When Facebook launched in February of 2004, it focused on high school and college students, relying on existing tangible networks to build the virtual network base. It has been enormously successful with the college audience. According to the GenX27 Youth Research Initiative, a higher percentage of college students use and prefer Facebook over MySpace. According to Student Monitor's Lifestyle & Media Study, Facebook is one of the top five "in" things to do on college campuses, second to iPods, named by 73% of students and tying with beer, which was named by 71% of students. Early estimates suggest that about 85% of all college students use Facebook, with 60% of them logging in daily, spending about a half hour per day on the site. Since that time, it has opened the site to non- students, expanded to several other countries, and earned more than 27 million members. An article featuring Facebook in Fast Company magazine reports that Facebook boasts 47,000 networks, 30 billion page views per month, and more photos than any other photo-sharing site, and is the sixth most trafficked Web site."

Facebook has offered advertisers more strategic value than perhaps any other social network. It has accomplished this with a mix of strategic vehicles, including targeted display ads and sponsored stories, known as Social Ads and Sponsored Stories, branded profiles known as Facebook Pages, a developer incentive program to encourage content development called Facebook Developers, and a social news feed of brand-related user behavior called Beacon.

Facebook Social Ads are targeted at specific users based on member profiles and behavior in the network. For instance, Facebook Social Ads can be delivered to users whose friends have recently engaged with the brand's Facebook profile or visited the brand's Web site. Even the location of delivery for social ads can be targeted with ads appearing next to news feeds of friends (a Facebook feature that allows friends to update others on their recent activities) who mention the brand. By delivering ad impressions that are related to news feeds, Facebook encourages discussion and word-of-mouth communication about a brand.

Facebook Pages are brand equivalents to user profiles. It is the location on the site where brands develop their brand personas. They can be enhanced with applications from the business itself and from developer widget applications.

The free developers feature enables programmers to create widgets, mash-ups, tools, and projects for Facebook users. These small applications are popular with consumers and are useful to brands that utilize them to maintain a presence on user profiles. For example, FaceBank is a widget that enables Facebook users to track expenses (and share information about expenses with friends). Another popular application is Lickuacious, which lets users rank friends according to the popularity of their wall posts. The Wall is Facebook's comments feature.

Facebook Beacon offers brands a way to virally distribute information about user brand-related activity. News feeds notify friends of a user's engagement with a brand's profile and Web site along with specific product search history and purchases. The news feed stories act as a form of word-of-mouth promotion. Further, they are targeted in that the feeds are then seen by friends who are also likely to be interested in the brand. Beacon offers a potentially powerful way to utilize the influence tactic of social proof, the influence a group of others have over a consumer's decision. This feature should provide more value for advertisers who will benefit from the additional exposure and the easy transference of opinion-leader information to others in the network. However, it has been criticized by privacy advocates and some brands publicly expressed a discomfort with the degree of user information it reveals.

The above is an excerpt from the book Advertising 2.0 by Tracy L. Tuten Published by Praeger; September 2008;$24.95US; 978-0-313-35296-6 Copyright © 2008 Tracy L. Tuten

©2008 Dr. Tracy L. Tuten

Dr. Tracy L. Tuten is Associate Professor of Marketing at Longwood University and the author "Advertising 2.0: Social Media Marketing in a Web 2.0 World." Tuten's research interests include Web-based survey methods, branding and identity, and online advertising. She serves on the editorial review board for Psychology and Marketing.

October 2008