Don’t let “other media’ marketers tell you otherwise: social media advertising is booming. But we shouldn’t be surprised: 80% of Americans network on social sites monthly in some way — and 7-8% of those participate by uploading blogs, videos, and music. In fact, 6/10 of the top visited sites (at least in the U.S.) are social in nature (facebook, youtube, wikipedia, etc.) Businesses ignore these trends at their own peril.
Curious about what social media has done for other businesses? Want to know what the market looks like for 2011? Check out this handy guide:
The Current Landscape
The current landscape for social media advertising is promising: A 2010 report by Social Media Examiner reported that “67% of marketers plan on increasing their use of blogs, Facebook, video/YouTube, Twitter, and LinkedIn.” The biggest beneficiary of the increase is Facebook, of course, which reported nearly $1 billion in 2010 revenue. Another study by Forrester Research (via ClickZ), entitled “U.S. Interactive Marketing Forecast 2009 to 2014,” predicted that by 2014, “interactive marketing” would increase to $55 billion – 21% of all marketing costs in 2014 — as advertisers and marketers “shift dollars away from traditional media and toward search marketing, display advertising, email marketing, social media, and mobile marketing.” And spending on social media itself is expected to swell to around $3 billion by 2014.
How Has It Grown?
Changing Social Media Practices
This year, both Twitter and Facebook — the biggest players in the social media world right now — experimented with changing their user interfaces. Twitter changed theirs to integrate more multimedia into the stream; they also added “promoted tweets,” a new ad campaign that allows companies like DisneyPixar (whose promotion of Toy Story 3 was the first promoted tweet) to “trend” for an unspecified length of time.
Facebook transformed their interface to highlight users’ personal information, in effect making it easier for marketers to create better targeted ads.
Location, location, location. Nowadays, social media websites are obsessed with where you are. Foursquare, Gowalla, Twitter, and Facebook now all have features that allow users to “check in” from various places of business, and has marketers excited about bringing in foot traffic and having customers share their experiences online. Users are awarded “points” or other kinds of rewards for entering a local restaurant or retail shop.
Social Buying Sites
“GroupOn,” a popular “deal-of-the-day” site, was the social media success of the year, having rejected both Yahoo’s $3 billion offer and Google’s $5 million proposal to buy it out. LivingSocial isn’t far behind, either — it secured a $14 million investment in mid-2010. (And so are a number of other copycat sites, like BuyWithMe, EverSave, and Tippr.)
Social buying entails the following: if a certain group of people decide to purchase a proposed “deal” on the website, then it goes “live” and becomes available to all who subscribe. It’s a cheap, effective way for businesses to advertise — after all, discounts and deals were the first form of “viral” marketing.
Who Uses What and Why?
According to USA Today, Facebook is King: “More than 300,000 businesses — one-third of them small businesses — have a presence on Facebook. Members of its fastest-growing demographic — those 35 and older — have enormous purchasing power, a powerful incentive to marketers.” A 2010 study by Colloquy and the Direct Marketing Association finds that Company size also plays a factor in the type of media it engages in: for example, companies with more than 100 employees are more likely to use Twitter, while companies with less than 100 are significantly more likely to use LinkedIn. Also, for companies with more than 100 employees, social media’s main purpose is to encourage brand loyalty and awareness; those with less focus on customer acquisition. Still, only 25% of survey respondents reported that they used more than 2% of their marketing budget on social advertising — probably because a) it’s relatively cheap and b) the nature of the medium makes it difficult to measure ROI (Return on Investment).
Which Companies Are Leading the Pack?
Zappos, MTV, and Ford — who reported spending 25% of its marketing budget on social media last year (more than twice the standard for the auto industry)– are the big names floating around the digital ad world these days. Zappos, the online shoe retailer, has at least 200 employees with active Twitter accounts, and its CEO Tony Hsieh has 1.7 million followers. Zappos’ innovative strategy? Recognizing hardcore fans with their own twitter tracking pages. Also, it virtually owns the conversation on business video blogging, through which it answers questions about — and introduces — new products.
MTV has rightly overtaken the social media market, as one might expect — they’re representatives of the digital age, after all. Their new “Music Meter” scans social networking pages for “buzz” bands to compete with MySpace and Vevo. This summer, the network launched its search for a new “TJ,” or “Twitter Jockey,” — applicants competed in “online challenges,” and two were nominated by the audience.