Social network data to bolster digital marketing

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By: Wise Marketer Staff |

Posted on October 17, 2006

The growing trend of 'social network marketing' (aka. 's-commerce') is bringing marketers closer to their target audiences in sectors as diverse as retail, leisure, entertainment, automotive and real estate, according to marketing firms LeadWurx and Compete Inc, both of which are now offering targeted social marketing services.

LeadWurx has announced the beta launch of its Social Network Marketing  (SNM) platform, which merges the company's data mining application with its advert-serving engine to intelligently target social networks based on consumer behaviour profiles. Owners and operators of web-based social networks then receive a share of the advertising revenue from these relevance-based campaigns.

Data means relevance
Without social networks, web advertising revenue comes from pay-per-click and banner ads that are often largely untargeted. According to LeadWurx, less than 3% of visitors click on those adverts. Even in the case of paid-for social networking web sites (such as dating or business networking services) less than 5% of all members signing up actually end up paying the web site's operator directly for the service.

However, the company points out, social network operators can gather a wealth of personal data that allows them to target specific and relevant adverts, increasing the chance of profitable click-throughs. In its initial beta testing phase, more than 15% of targeted consumers responded to LeadWurx adverts over a six month period.

"With respect to all customer-centric businesses, understanding the consumer's behaviour, channelling ad spending to target that behaviour, and being able to track the direct success of those campaigns is the future of the advertising industry," commented John Cataldi, CEO for LeadWurx.

Data and privacy
Indeed, more than 200 million consumers have already given their personal details to social networks such as MySpace, Facebook, Linked In, YouTube (now owned by Google), TagWorld, Friendster, and Match, among others. This collection of valuable consumer data before ads are served can help to ensure the timely delivery of the most effective messages, in the correct context, to the right consumers, at the right time.

LeadWurx is keen to point out that its advert server does not invade the privacy of the consumer, as participating social networks only issue it with non-identifying data, and consumers are given the choice to participate for various rewards.

Deeper engagement
Another e-marketing service provider, Compete Inc., has conducted research into the growing influence of social networks, examining the convergence of the social networking phenomenon and e-commerce, and dubbing it "s-commerce". Compete's analysis revealed that social networkers are increasingly turning away from traditional media and toward their peers for information and product recommendations. This change provides marketers with a new opportunity to reach consumers by launching s-commerce initiatives that combine best practices from social networks and e-commerce.

According to Complete, by welcoming active consumer participation throughout the entire marketing process, companies can engage consumers at deeper levels and achieve far greater sales and marketing goals.

A growth industry
Growth in online social networking has been significant, as consumer visits to such web sites have increased 109% since January 2004, while site usage (measured by pages viewed per member) has increased by 414% over the same time period (almost four times faster than member growth).

The study found that, as "internet socialites" spend more time on these web sites, they become increasingly impervious to traditional media. More than one-third of social networkers reported spending less time watching television and reading newspapers or magazines as a result of their increasing usage of social networks. These consumers also reported that peers and colleagues hold more influence over their purchase decisions than any other source of information.

The marketer's challenge
The challenge, Compete says, is for marketers to somehow connect with consumers while they increasingly become disengaged with traditional marketing channels and campaigns. The new s-commerce approach recognises that transactional and social web features can be merged and that marketers can gain ground by involving consumers in promoting and selling their offerings.

Other findings of the study included:

  • People join social networking sites to receive four main benefits: to meet people (78%); find entertainment (47%); learn something new (38%); and influence others (23%).
  • Online socialites have a different spending profile than other consumers. Annual discretionary income for online socialites is nearly US$8,000 (20% higher than consumers who have not used a social networking site), and they spend nearly 25% of their disposable income on online purchases (compared to 17% for non-socialites).
  • Today's s-commerce innovators are using one of six strategies to integrate consumers into their sales and marketing efforts: branded micro-sites; customer reviews and ratings; online customer forums; peer-to-peer transactions; product-focused blogs; and community-created products.

According to Stephen DiMarco, vice president of marketing for Compete, "By understanding why people seek out social sites, and the factors that shape their participation, marketers can explore new ways for their brands to thrive within the social web."

For additional information:
·  Visit LeadWurx at
·  Visit Compete at