A Talk About Social Advertising – Performance Vs. Brand

An article by Ayelet Noff    15 Comments

I attended an interesting panel discussion at LeWeb, moderated by Scott Rafer CEO of Lookery, about the trends in social advertising.  The discussion, which was called ”Social Advertising: Where’s the Love?,” focused on media proven revenue streams for social software and social networks in our current economic environment, primarily on the approaches of Brand Advertising vs. Performance Advertising.  Panelists included Philip J. Kaplan, Founder and Chairman of AdBrite; Travis Katz, International Managing Director for MySpace and Fox Interactive Media; Lorenz Bogaert, Co-Founder and CEO of Netlog.com; and Seth Sternberg, Co-Founder and CEO of Meebo.

The first question the panelists were asked was how their business is split between brand advertising and performance advertising.  For those of you that don’t know, brand advertising is advertising that places a strong emphasis on the company brand and spreading awareness by simply having potential customers seeing the ad.  In this method, advertisers are paid for impressions, simply for displaying the ad with the company’s name and logo.  Performance advertising, on the other hand, places the emphasis on direct response.  This means that advertisers are paid when users click, fill in a form or fulfill some other specific action.  The panelists responses uncovered an interesting trend– while in the past brand advertising accounted for the bulk of social advertisements, a trend towards performance advertising is becoming more and more apparent.

Philip from AdBrite, the 5th largest ad network representing over 90,000 sites and serving over 1 billion page views on a daily basis, says that he used to preach brand but has found that as of late even huge brands like Toyota are moving towards direct response, wanting to see results.  Direct response currently accounts for 80% of advertising at AdBrite, versus 20% brand advertising.  In his words, “direct response is where the big money is.”

Seth Sternberg talked about how, when Meebo started out with advertising, they thought branded ads would be best because of their long session times and wanted to charge the companies they were advertising on a cost-per-click basis, but companies tended to prefer paying based on impressions using a cost-per thousand impressions (CPM) model in which they would adjust the CPM based on click-rate.  However, Seth says that 2009 is showing a trend towards performance over impressions.  Companies are moving away from the CPM model and towards cost-per-click.

MySpace, on the other hand, is still placing slightly more emphasis on brand advertising than on performance with 60-70% of their advertising efforts on branding.  However, Travis says that their success in branding is due largely to their sophisticated ad-targeting technology known as MySpace HyperTargeting, which allows advertisers to achieve a higher number of relevant impressions as it targets branding campaigns to users that are receptive to them.  He also gave the example of MySpace’s partnership with McDonalds for the Big Mac Chant-Off, a contest where users could upload videos for an opportunity to be in a McDonald’s commercial which sparked a lot discussion and dialogue around the McDonalds brand.

It will be interesting to see how trends in social advertising will continue to change over the next year, largely due to the current economic situation.  While Philip of Adbrite and Seth of Meebo put the emphasis on performance over brand I have my doubts that performance advertising will overtake branding.  The true measure of a company’s success is customer response.  In my opinion, this can be much more accurately determined by online response and conversation than by the number of people that click on an ad.  Travis of MySpace talked about how social branding campaigns allow brands to interact with their customers and this, to me, is the future of advertising.

To see more watch the videos of the panel discussion below.