A recent batch of product and funding announcements (Webtrends and Nielsen, CrowdTap and Hearsay Social, respectively) points to a real trend: The infrastructure and business ecosystem for social-media advertising is developing rapidly. That’s good news for marketers and online publishers — and even for Facebook competitors — as a robust ad infrastructure is critical for growing the market beyond the $3 billion forecast for U.S. spending in 2011. The tools and systems rolling out will help the 800-pound Facebook, of course. But they will also be valuable to smaller social-media companies and even traditional media, and they will generate revenue for tools, data and agency services.
A year ago, I wrote that the winning strategies belonged to whichever companies could help big-brand marketers reach large numbers of their target customers, integrate social marketing with traditional media and measure campaign performance. Now the social-media ecosystem is adding resources around social marketing management and advertising measurement, two pillars of those strategies. For example:
- In recent weeks, management tools maker Hearsay Social raised $18 million for its local-market focus, while analytics supplier Webtrends released a new tools suite for Facebook pages. And CrowdTap raised $7 million to bolster its influencer-community marketing services.
- Two of the big online-traffic-measurement firms, comScore and Nielsen, are rolling out new services for measuring social-media advertising using familiar TV techniques. Each wants to establish the “currency” that big advertisers and online sites use to value ad inventory and compare performance across different advertising media: TV, print and online.
Getting “social” on company pages
Today most social-media advertising comprises boring display units on inexpensive social-network pages. It’s not particularly “social.” But marketers use it to drive audiences to company pages that feature interactive conversations, video and coupons, and that can access Facebook’s feed to build recurring use through fan-friending. Last week Foursquare added self-service tools for its own company pages, while Google is still figuring out its approach for Google+.
Facebook uses its EdgeRank algorithm to filter its feed for user relevance. That can limit the company messages delivered, fiendishly encouraging ad buying to remind fans to visit. Reportedly, Facebook may be reconsidering that strategy, but regardless, tools and services that coordinate page and ad management will be the winners. The companies I mentioned are among the early leaders, along with companies like Efficient Frontier, iCrossing and Buddy Media. And last week, Facebook announced that it was opening up its advertising API that had previously been limited to a handful of partners. That means there will soon be more management, analytics and services companies able to leverage Facebook data.
Measuring social advertising
Social advertising tools and services will need to integrate data from multiple sources for campaign analysis and optimization. Gnip, which licenses and resells Twitter’s “firehose” data, says that two-thirds of its customers are social media agencies. But to work successfully, tools also need offline consumer and enterprise information (Experian, Acxiom) and third-party online-traffic analysis from the likes of comScore and Nielsen.
As noted, those two both have new social measurement services that feature the TV-advertising concept of gross rating points, or GRPs. GRPs are arguably a simpler measurement than online metrics that track unique individuals and interactions, and advertisers use them to measure their efficiency in buying TV time. While an online GRP might seem like a step backward, it is necessary to make big brands spend more of their overall advertising budgets on social media. They need to be able to compare online-advertising efficiencies and effectiveness with traditional media. Integrating a GRP with measurement techniques that gauge audience engagement — something brand advertisers will pay a premium for — will grow overall online spending.
All of this action in social advertising is healthy: Its business ecosystem is too immature to demand much consolidation or pick winners easily. A year ago, I thought big players like Yahoo and traditional media companies could garner social ad dollars due to their advertiser relationships, multichannel experience and ad-friendly content. But they’ve done little, and the social ad ecosystem will aid Facebook and smaller social players just as much.