Apr 192006
 
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It seems social networks and user generated content that pervades them is now most definitely the next advertising dollar frontier. As reported by MediaPost, MySpace is about to create TV programming around it’s uploaded videos and start to introduce major media buy within that.

The enormously popular social networking site is working on deals that, Gold says, would extend the life of a TV sponsorship for a marketer, “integrating social networking into the TV show and their traditional TV buy.” All this would expand the life of a TV deal from “30-seconds to 3-months,” he added

MySpace now has 77 million members, mostly younger users, and is adding 230,000 or more a month. It has been touted as an emerging powerful tool for youth oriented marketers.Already some 100 advertisers regularly buy into the site including Honda Motors, Toyota Motor Sales, Wendy’s International, and Cingular Wireless, to name a few. Additionally, MySpace already has many deals with TV networks, which sponsor the site.

Simple – get the ads to the where the eyeballs, ears and index fingers are, certainly to where audiences are most attentive, in their trusted social networks. How long will they remain trusted though? How many uninvited guests will it take before MySpace turns into TheirSpace?

Another report from the Center for Media Research actually starts to quantify the UGC ad world. I copy the exec sum below:

Blogs, Pods and Really Simple Stuff Deliver Advertising At An Increasing Rate
…reports that advertising spending on user-generated online media – blogs, podcasts and RSS…has grown to $20.4 million by the end or 2005. Spending on blog, podcast and RSS advertising is projected to climb another 144.9% in 2006 to $49.8 million.
Some of the key growth drivers are continued audience fragmentation, the perceived ineffectiveness of traditional advertising, and the desire to reach the elusive 18- to 34 year-old demographic.
Other key findings included in the Executive Summary:

  • User-generated media remains primarily national in scope with 98.1%, or $20.0 million, of all advertising spending coming from the broader market in 2005
  • Advertising networks and click-throughs are the largest ad insertion methods, generating $8.0 million and $7.8 million, respectively
  • Blog advertising accounted for 81.4%, or $16.6 million, of total spending on user-generated online media in 2005, but blog ads will comprise only 39.7%, or $300.4 million, of overall spending in 2010
  • Podcast advertising totaled only $3.1 million in 2005, but is projected to reach $327.0 million in 2010, when it will account for 43.2% of all user-generated media advertising
  • Spending on RSS (Really Simple Syndication) advertising totaled $650,000 in 2005 and will grow to $129.6 million in 2010
  • Total spending on user-generated online media is forecast to grow at a compound annual rate of 106.1% from 2005 to 2010, reaching $757.0 million in 2010
  • Technology was the largest single category at $4.0 million in 2005, due primarily to the technology-savvy early adopters of user-generated media
  • Auto was the second largest marketing category, generating $3.9 million in 2005, as car manufacturers utilized user-generated media to market their higher-end models to the “influential” demographic
  • The media industry spent $3.2 million to advertise in user-generated media in 2005, as the industry tried to capitalize on its advanced knowledge of the consumer shift away from traditional media

It is no surprise that blogs and podcasts look like the major ad spend in 3 years time (70+%) but I really think, returning to the first part of this post, that UGC TV will be bigger. Whether delivered to your portable media player, broadand TV or PC, the appetite for original, unlimited programming will mean a vast audience exodus from traditional ad placement areas and I suspect this will include static and dynamic (non-rich media) web pages.

Posted by Gary Hayes ©2006

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