• by Mark Walsh  @markfwal, November 13, 2006

In a bid to aggressively monetize its social-media properties, Yahoo this week will kick off a high-profile initiative for Nissan Motors. The new campaign, set to launch Wednesday, follows another recent milestone for the company. It recently launched the first corporate page on its Yahoo 360 social-networking site for Travelocity.

Yahoo says more sponsorships and marketing will follow, encompassing Yahoo 360, Yahoo Groups, and Yahoo Video.

MySpace has shown that corporate sponsorships tailored to a Web 2.0 audience can pay off. A study by market researcher eMarketer estimated that MySpace will generate $525 million in advertising next year, compared to $95 million on social-network offerings from portals like Yahoo 360, MSN Spaces, and Google's Orkut. By 2010, eMarketer forecasts that social-network ad spending will reach $2.1 billion in the U.S.

Yahoo is ready to cash in. "We have this phenomenal asset we offer to marketers in our huge range of communities," said David Kopp, senior director of product management for community applications at Yahoo.

But while Yahoo is stepping up efforts to draw advertisers to its Web 2.0 sites, the company faces challenges. Yahoo's homegrown social-networking site, the 20-month-old Yahoo 360, drew just 5.7 million unique visitors in September, compared to 55.8 million for MySpace and 13.3 million for Facebook, according to ComScore Media Metrix. Users spent on average 11 minutes per session on Yahoo 360, compared to 30 minutes on MySpace.

In a recent blog post about reported acquisition talks between Yahoo and Facebook, Forrester Research analyst Charlene Li went so far as to declare Yahoo 360 "kaput." In the same post, she noted that at Yahoo's analyst day earlier this year, company executives never mentioned 360 while extensively discussing their social-media strategy.

Similarly, in touting Yahoo's social-media properties and strategy during the company's third-quarter conference call last month, CEO Terry Semel failed to mention 360. Nonetheless, Yahoo insists that it's committed to the social-networking site, which remains in testing mode.

Besides trying to work out the service's kinks, Yahoo officials say they haven't moved faster to monetize 360 or other social properties for fear of alienating users with a barrage of unwelcome advertising. Kopp noted that 360 only began accepting advertising in August, and wants to focus on hosting campaigns that fit its community culture. That means running "entertaining, interactive promotions that will strengthen the communities in 360 and within Yahoo," he said.

Travelocity's promotion was developed in that vein. As part of a broader campaign centering on the disappearance of Travelocity's red-hatted spokesgnome, it allows people to submit Roaming Gnome sightings and send in video auditions to replace him. "We felt like this was a great way to create this community, so we approached Travelocity with the idea, and they took it to Yahoo. They were thrilled," said Erin Bredemann, management supervisor at McKinney, the agency responsible for the campaign.

The "Nissan Live Sets on Yahoo Music" will offer bimonthly concerts in front of a live studio audience on a sound stage created by Yahoo Music in Los Angeles and Webcast at music.yahoo.com/nissanlivesets. Nissan will advertise on the site using streaming video, games and animation.

Yahoo emphasizes that unlike MySpace or Facebook, it offers a range of integrated social-media properties that have more than 100 million users in total. "We tend to look at it holistically, because ultimately for our users, those boundaries aren't terribly meaningful," said Kopp.

Travelocity's gnomewatch page on 360, for instance, integrates Flickr for photo-sharing, Yahoo Video for sending video auditions, and Yahoo Groups for creating or joining enthusiast groups around the promotion. For the Nissan-sponsored shows on Yahoo Music, audience members will be given Flickr-enabled phones to take photos. And an upcoming campaign for a pet-food brand will create areas where animal lovers can post photos of their pets using Flickr and ask pet-related questions on Yahoo Answers.

Across their properties, Yahoo can also track users' habits and interaction with campaigns for the benefit of advertisers. For their part, marketing executives acknowledge that Yahoo offers a social-media package that can't be discounted. "One thing Yahoo brings to the table is scale that even MySpace doesn't quite have," said Manning Field, senior vice president for branding and advertising at Chase Card Services. "If they can deliver the time spent that MySpace does, they would be a behemoth."

In August, Chase struck a deal with Facebook to become the exclusive credit-card sponsor on the college social-networking site for a year. Field called Yahoo "a great channel" for Chase. "We're always ready to look at their offerings."

Not everyone views the whole as greater than the sum of Yahoo's parts. Jeff Lanctot, vice president and general manager at Avenue A/Razorfish, said the agency has placed advertising on Yahoo social-media sites on behalf of clients. "However, the sites just don't have the number of users that Facebook or MySpace has at the moment," he said.

Despite championing Yahoo as a social-media portal, Kopp conceded that its approach doesn't help any one site to stand out. "Our social media offering is so broad and has so many components that we don't put all our attention on one product experience, and I think we probably suffer for that," he said.