• by David Berkowitz , August 11, 2009

The "what's next" in ad targeting is well upon us: targeting consumers based on their social graphs.

If you're an advertiser or you represent one, you may have tried targeting consumers based on when they were born and their chromosomal makeup (demographic), where they live or happen to be at the moment (geographic), what they're viewing on a Web page (contextual), what other Web sites they've visited (behavioral), or what keywords they're entering in a query box (search engine marketing). Yet now it's possible to target consumers based on their associations with each other.

This new form of ad targeting may not have a great name yet; last week I brought up one idea for a social naming convention and we'll probably need others. The concept revolves around targeting consumers based on their social graph, or the map of who they're connected to. The theory is that if I expressed interest the movie "Bruno," then some of my closest connections would also be interested, and they should be targeted in turn. In that case, if the advertiser targeted my friend Don Steele and my dad, two people close to me in my graph, it would have found a receptive audience. Granted, the advertiser might not have done so well targeting my wife and mother-in-law, who were not as keen to see a movie about the self-described "biggest Austrian celebrity since Hitler."

The theory of targeting the social graph is based on some established research, such as a landmark 2006 study from Wharton School of the University of Pennsylvania Professor Shawndra Hill. Knowledge@Wharton reported in 2007: The study examines the influence of social networks by studying a large telecommunications firm that was marketing a new service. '"Network neighbors -- those consumers linked to a prior customer -- adopt the service at a rate three to five times greater than baseline groups selected by the best practices of the firm's marketing team," the study finds. "In addition, analyzing the network allows the firm to acquire new customers who otherwise would have fallen through the cracks, because they would not have been identified based on traditional attributes."

The study had its limitations, though. The network effect was much stronger for a new technological service the firm was promoting than it was for a new pricing plan. One theory is that the network effect is much stronger when the product or brand promoted lends itself to organic word-of-mouth buzz. Far more research is needed across more verticals to provide a clear understanding of what's happening. Hopefully more will come from Professor Hill and others in academia, but certain social graph ad targeting companies could help fill in some gaps.

I've met with a number of such companies recently, including 33 Across, Media 6 Degrees, Lotame, and Socialmedia.com. Unfortunately, I've given so many verbal non-disclosure promises that I can't share too much dirt about any one in particular, especially in this secretive and competitive field. The good news is that I can offer you something better: a buyer's guide, with ten kinds of questions you should ask when incorporating social graph ad targeting into your campaigns. There aren't always right answers, but this process will help you better understand how this advertising works.