Advertising and Social Media: Going Up?

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Guest post by Kelley McGrath

Last year, companies spent $4.7 billion on social media advertising. This year, companies bumped up their efforts to advertise on social networks with an extra $1.4 billion, bringing the total spend to $6.1 billion for 2013.

And experts don’t expect this trend to slow or plateau any time soon. By 2017, it is projected that companies worldwide will spend $11.0 billion to advertise on social media platforms.

Most of the major social networks have incorporated advertising into their profitability, but it hasn’t been around as long as you might think. And now, almost all the major social networks are incorporating advertisements. The question is: are they doing it well?

I submit two examples of major social networks that have incorporated advertising, but in starkly different ways. They both play with the balance of attracting as many advertisers as possible to make the most profits while not scaring off visitors with phony ad placements. Who’s got the right idea?

Facebook and Advertising

The social media behemoth has come a long way in advertising since 2004. What started out as small advertisements to college students called “flyers” has become a multi-billion dollar enterprise. Facebook began offering advertisers a way to target users in 2009, by gender, age, interests and more. Sponsored Stories began showing up in users’ news feeds in 2011.

Now with Graph search, which was introduced in 2012, Facebook has given advertisers another way to find and target users. The Social Graph provides data advertisers can use to target these individuals.

The Good

Facebook has been really smart about rolling out new advertising platforms gradually. This put them in the position to continually be able to offer new perks and methods to advertisers.

The Bad

Facebook did a good job of keeping advertisers happy, but it might have come at the cost of its 1.19 billion monthly active users. Members, like this writer at Forbes, are watching helplessly as their news feeds fill up with “suggested posts” which are essentially just targeted advertisements. Despite the fact that the advertisements seamlessly fit in a user’s feed, they can sometimes overwhelm the content the user actually wants to see.

The Takeaway

I think Facebook might have a hard time fooling users into thinking Facebook is all about them if they continue with their current advertisement trend. Readwrite.com may have said it best; with the latest updates to the site, “Facebook Dispels Any Remaining Confusion: You Are Its Product.”

Advertising on Foursquare

This location-based social network uses GPS and allows users to “check in” at certain venues around their city. This lends itself well to location-specific websites based on where the user last checked in. According to Foursquare’s website, “Over 40 million people use Foursquare to decide where to go next.”

With Foursquare, companies can have their ad viewed by potential customers in the area. The ads work well for businesses because they only pay if a user reacts to the ad shown “– either by tapping to see [the] business details or by checking in at [the] business.”

Even large companies like Verizon FiOS are taking advantage of these location-based ads. The ads will appear when users in D.C., Baltimore and Boston check-in on the mobile Foursquare app.

The Good

It’s an easy way for businesses to target local customers. Foursquare users target potential customers with “Promoted Updates.” The ads don’t intrude on the user experience, either. Mashable reports that users will only find ads in the “Explore” tab.

The Bad

Since Promoted Updates on Foursquare are delegated entirely to an “Explore” tab, they are probably less intrusive than the Facebook ads. However, users looking for more niche businesses like local coffee shops and boutiques may be disappointed by the number of large chains that have earned a spot on Foursquare.

The Takeaway

This is the very picture of discreet social media advertising. The idea fits with the overall theme of the social network. Foursquare began as a way for people to connect with friends and places nearby. The Promoted Updates give users a way to find new places, and promote local businesses. To me, it’s a win-win.

In addition to Facebook and Foursquare, Instagram and Twitter have also tried their hands in the integration of advertisements with varying degrees of success. Snapchat recently acquired Instagram’s former director of business operations Emily White, leading many to believe that monetization through advertisements is on the horizon for the social startup.

Remember the early days of social media, when there was very little, if any, social media? It seems we simply cannot survived without it. Or at least make money without. it

What about you? What’s your take on the continued growth of advertising in social media?

Kelley McGrath
Kelley McGrath is a recent graduate of Wake Forest University and working as a digital marketing professional. She specializes in sports tech and social media. You can follow her on Twitter at @KelleyAnneMac.

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