• by Catharine P. Taylor , April 7, 2011

Readers of this column should know that when it comes to social media advertising, I don't always believe the hype. The most recent time I wrote about this was back when the hot topic was why Facebook didn't just go public, already.  

I proposed the theory that, even as the social platform heads for a projected $4 billion in total revenue during 2011, its main revenue stream -- advertising -- isn't soup yet, and that, until it is, Facebook might not want to open its kimono to the world.

Why? When you compare the clean, linear, cause-effect nature of paid search to social ads, it's easy to come away thinking there's still much work to be done. In a world full of discussion about whether Google or Facebook is on more of a juggernaut, it's worth noting that in social advertising, it's not a simple matter of picking good keywords and letting the algorithms do their work.  

Still, a body of knowledge is forming about how ads in social contexts are working -- including a study, released yesterday, that measures what its makers call the Social Activity Index. Commissioned by appssavvy, the study used some of the most comprehensive data on social advertising engagement out there, having been conducted across, as the report says, "hundreds of campaigns, hundreds of millions of social activities, and billions of ad impressions run on the appssavvy Social Activity Platform." For comparison, appssavvy compared this data to benchmarks on display, rich media and paid search provided by eMarketer.

Before I continue, however, I should delineate how appssavvy defines social advertising -- or, as the company terms it, social activity advertising. This is worth doing for reasons other than that it will help you to understand the results. From the report: "Social activity advertising serves ad impressions against events rather than content." Or, as appssavvy CEO Chris Cunningham put it: "Social activity is defined as what someone is actually doing as opposed to what is around what they're doing." These are not just ads that run on social platforms, but ads that are part of the social experience.

Therefore, whether it's in social gaming or served into a tweetstream, social activity advertising is more contextual. The report also notes that these ads tend to differ from other forms of online advertising, such as display, because they often have more levers with which people can interact, like sharing, "Like"-ing or following.

OK, that's enough of a drumroll. Here's how social activity ads in the study compared to other online ad forms: they performed more than 11 times better than display, more than twice as well as rich media, and almost as well as paid search - which just goes to show you that if all you're doing as a so-called social advertiser is running a lousy display ad in Facebook, you could well be missing the point. As an advertiser, Cunningham says, if you're "tapping into the stream of activity, the results are through the roof." (The company's formula distilled a social activity ad's expense and engagement vs. other forms of online advertising to determine efficacy. The full report can be downloaded here.)  

Now, whenever a study comes out, there are bound to be naysayers, especially when -- as in appssavvy's case  -- the study supports its sponsor's core mission. (The company, through three different products, works to put advertising into social context.) But we already know that context matters. If it didn't, paid search wouldn't be so effective -- and frankly, display advertising wouldn't have such dismally low click-through rates.  

Another recent example of the power of context in social is Twitter's Promoted Trends, which recently saw a jump of as much as 30% in ad rates. If you're not familiar, that ad unit calls for marketers to "buy" a trend, hopefully one that works well contextually with what people might be tweeting about on a particular day. The Promoted Trend is displayed alongside Twitter's Trending Topics. 

While context is key, the results of the appssavvy study also demonstrate something else that the larger online ad industry really needs to figure out: how to make advertising more engaging in general. To a certain extent, in display, a clickthrough is a clickthrough is a clickthrough. There's some sort of surprise behind the curtain, but we're generally not so curious to find out what it is that we'd actually click on it. The appssavvy data suggests that if you not only give people ads that are in context, but also give them a variety of ways in which to interact, engagement goes up. That isn't rocket science, but sometimes the simplest ideas get lost in the over-analytic shuffle.

There's much more to the study than I've distilled here. But in terms of turning social advertising into soup, the findings in this report are important ingredients.

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P.S.: I'm soliciting agenda ideas for the next OMMA Social, to be held June 8 during Internet Week in New York. Get in touch!