"Social networking is plainly the future of media," says Greg Tseng, co-founder and CEO of San Francisco-based Tagged.com. Online social networks (OSNs), he says, are like MTV, poised to evolve from "a crazy idea to a global brand. They're not going away."
Still, as OSNs become ingrained in people's lives, marketers keep struggling to develop campaigns that integrate brand messages without turning off increasingly jaded consumers. To that end, Tseng says, a key trend in OSN for 2007 is a heightened focus on integrated brand engagement.
This year, advertisers were expected to spend an estimated $280 million online. But that amount is small potatoes compared to usage, Tseng says, particularly among teens, who constitute Tagged's target audience. "Especially savvy consumers change their behavior a lot quicker than advertisers change behavior," he explains. "It's true of any new medium. [So] the disparity is temporary."
In terms of revenue-generating business models, OSN sites remain in an embryonic state. Some, such as MySpace, have turned to music-downloading services and real-life events to boost their bottom lines; Facebook this fall introduced a low-cost, self-service marketing component, and several corporations have launched their own branded social networking sites and channels. In an effort to appeal to its target's passion for self-expression, Tagged relies on advertiser-sponsored "tags" - graphic icons that kids can trade à la online friendship bracelets.
"Like logos on clothing," Tseng says, the tags "automatically imply endorsement for a product [and] allow for significant brand engagement integrated into the fabric of the site. But they're less intrusive than regular advertising."
Jim Scheinman, vice president of business development and sales at San Francisco-based Bebo.com and former head of business development at Friendster, agrees that engagement marketing and participatory advertising is an emerging trend. Teen- and millennial-targeted Bebo is working with advertisers to sponsor home pages, "skins," and other branded content so kids who are attracted to a sponsor "will make it their own, and spread it virally, becoming brand advocates," Scheinman says.
Brand integration is "absolutely a way to fit in and stand out as part of a social network," says Michael Streefland, vice president of marketing for SK Communications-owned Cyworld USA. But as online consumers become more sophisticated, he says, so must their relationships with advertisers. The sponsor must be brought into the community "beyond 'click me, touch me, view me,'" Streefland says.
Since its U.S. launch earlier this year, Los Angeles-based Cyworld has worked with marketers to create programs that are "not interruptive or [about] sneaking an ad in, but part of an overall self-expression experience," Streefland notes. This is accomplished by using tools, characters, and icons designed to promote empowerment and self-expression.
Equally important to the future of OSN is cross-device integration, Streefland says. "The online experience has really broken its boundaries," he explains. To users, mobile gadgets, IM, and online sites are "not separate channels."
In the coming years, Streefland predicts that consumers will turn to one online space as a hub, a place for their "Monday through Friday" identities. But they will also straddle a variety of other sites, each catering to specific, real-world interests, from needlepoint to nightclubbing. And it will all occur seamlessly over multiple devices.
With more targeted, niche-oriented OSN sites will come more targeted marketing opportunities, adds B.L. Ochman, a New York-based online consultant and author. "More people have begun to participate in [online] social networking," she says. "We're already finding more businesspeople feeling more comfortable. It just takes people a while to get used to it."