Every company wants to obtain the greatest possible yield from its marketing dollars. Corporations are constantly trying to determine better ways to direct their advertising dollars in order to more efficiently target potential customers. It now appears that there is a solution that will bring about the greatest possible efficiency to marketing and advertising spending — the Web 2.0 and social networking.
The Web 2.0 is merely a new evolution of the World Wide Web. Bringing user-generated content to the Web site, it provides a higher level of participation, collaboration, input and power to the Web surfer. With this new empowerment, social networking groups have been formed that attract like-minded people who share information and build relationships on their favorite Web 2.0 sites.
As these online “socialites” spend more time on these sites, they become impervious to traditional media. In fact, as a result of increased usage of social networks, over one-third of social networkers spend less time watching television and reading newspapers and magazines. Additionally, online socialites say that peers and colleagues have more influence over their purchases than any other source of information.
This phenomenon has created virtual communities of people with similar interests, resulting in an ideal, tightly-defined target for marketers. Corporations are now beginning to realize that social networking offers wonderful opportunities for them to get their message to the people who are most likely to buy their products.
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The Power of Social Networking
It hasn’t taken long for research firms and marketing companies to start analyzing the behavior and buying habits of people who participate in social networking groups. Researchers are beginning to sound almost like analysts of psychological studies and, in a sense, they are.
What they have found is a new “door” for advertisers to enter where they can find a discrete, highly-targeted slice of the population to which their advertising messages would have the most appeal and would most likely result in their products being purchased. Such research will go a long way to help corporations obtain the highest possible yield from their advertising dollars.
“The most frequently visited social networking sites are visited by approximately one out of every four Internet users at least once a month. So despite not receiving visits in the quantities, or with the frequency enjoyed by the major search engines, a significant number of Internet users are currently visiting these sites somewhere between daily and monthly.”
The study then goes on to caution marketers to “identify the social networking sites whose ‘communities’ of visitors closely match the profile of their target customers and prospects.”
Vertical Industry Targeting
Social networking sites are now available that attract specific hobbyists and professionals such as golfers, nurses and other tightly-defined communities of people with mutual interests. This has created a unique opportunity for companies to use their advertising dollars to target specific, vertical industries within which there exists a commonality, an affinity of interests.
Though YouTube and MySpace have achieved a good deal of success, their target audience is not tightly defined. The iProspect study addresses sites that do, in fact, tightly define its audience:
“Sites such as del.icio.us (bookmarking), LinkedIn (business-to-business) and TripAdvisor (travel and hospitality), though visited by less than 10 percent of Internet users, nonetheless can serve as highly targeted, extremely effective means to reach very specific profiles of potential customers. Marketers should research their industry’s/niche’s universe of social networking sites, and explore those offering this special targeting.”
Social networking is still in the early stages of its development, yet one out of three Internet users is already taking advantage of a site containing user-generated content to help make decisions to buy or not to buy something. This bodes well for the future of these sites that take advantage of so-called “word of mouth,” our human nature to trust the recommendations (and warnings) of fellow consumers more than we do the claims and “marketing-speak” of professional advertisers.
No Passing Phenomenon
In a recent article for the E-Commerce Times, entitled “Social Networking: A Web 2.0 Revolution,” I give a more detailed description of the Web 2.0 and its implications. The most striking realization about this new evolution of the World Wide Web is that it is no temporary phenomenon; it is here to stay.
Web users have been empowered as never before. There is no possibility of putting the genie back in the bottle. The future will mean only more empowerment to the user. Clearly, this evolution of the Web is truly helping marketers a great deal. They can now succinctly focus their marketing efforts and achieve much greater leverage for their advertising dollars.
All in all, everyone benefits.
Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at Ted@capitalsourcepartners.com.