Posted on 31. Mar, 2010 by Robert Steers in Advertising, Marketing, Social Media

We have updated this post to include more social media advertising here.

Advertising is becoming the key way for social networks/aggregators to make money. The lure for advertisers is, they can target genuinely interested customers by placing the ads in relevant sections. As social networks and media mature, their audience size is beginning to exceed traditional media.

There are a multitude of dangers in using social media and aggregators for marketing and advertising, but these are no worse than the dangers associated with advertising on a major news website. Every advertising medium is unique and has its own benefits. Below we took all the information we could find on advertising through particular online media to provide a comparison. For each website, we took one campaign and an average of other information we found online.

Digg.com Reddit.com Facebook.com smh.com.au Google Adwords Startup Cost $20 $20 $50,000 $20 Cost for the

Campaign $40,000 $20 $37.23 $50,000 $34.80 Unique

Impressions 2800000 19,303 454,294 8500000 76,434 CPM $14.28 $1.036 $0.82 $5.8 $0.45 Clicks (280) 196 49 ~800 48 Click through

(Site Average) .01%

(.01% – 5%) 6.49% .01%

(0.01 – 0.05%) .01% 0.06% Cost Per

Click (142) 0.10 ~0.76 $62 $0.72 Sources 1 ][ 2 ][3] 1] 1 ] [2] + Own data Own Data Own Data Target Level Category Home (50 options) Any subreddit (hundreds) keyword targeting section targeting keyword targeting

The data available on each online advertiser was sparse to say the least. Every source we found had different ranges for “average” click through rates on each website. In the end, we included some of our own data to give a more complete picture.Our assessment of the situation is as follows;

Digg.com – Most data we could find indicated that it is VERY expensive to advertise on Digg for the amount of click-through you get. It appears they are running their costing closer to the online newspapers’ model of charging per impression. The major benefits and risk to advertising on social networks is you can get a community discussion about your ad or product. On Digg, this is harnessed by allowing advertising costs to come down if your ad receives a certain number of votes. Digg is the largest social aggregator on the web, so it attracts a very large and diverse audience. It may be worthwhile to advertise on Digg as an alternative to TV or online Newspaper advertising, because the audiences are similar. Conversly though, it appears, it could cost less to write decent content and submit it to this social aggregator, rather than advertise directly. IDEAL FOR: Games manufacturers NOT IDEAL FOR: Car manufacturers

Reddit.com – The information we could find about Reddit showed it was excellent value on a cost per click basis. However it appears that the audience on Reddit is significantly smaller than other media. By all accounts you are advertising to college-going, bacon loving twenty-somethings with no money. This significantly narrows the number of potential advertisers for the site. However, if you are advertising a new Star Wars convention, or you are promoting a T-Shirt of a narwhal eating the Kevin Rose, you may be in the right area. With thousands of subreddits available, you can pretty much name your target. If you want to advertise to the 2000 odd subscribers to the Doctor Who subreddit, then this may be the way to go. IDEAL FOR: Magic: The Gathering wholesalers NOT IDEAL FOR: Toothpaste producers

Facebook.com – Currently the advertising network in Facebook is somewhere between Digg and Google, both in terms of size and cost. You can target based on a wide range of criteria including location and keyword. However the click through rate is relatively low. We guess this is because the “targeting” system is not nearly as good as you would find on Google. Just because a profile says the words “football” as an interest, does not mean I am looking for anything to do with football right now, or even that I really like the game. The audience on Facebook is still expanding, however the targets are still the younger demographic. IDEAL FOR: Get Rich At Home schemes NOT IDEAL FOR: Photocopier salesmen

SMH.com.au (and other comparable newsosaurs) – The Sydney Morning Herald is one of the most visited news websites in Australia. It still has one of the most active online ad networks of any internet news media. However, as with other Newsosaurs, it still justifies its rate card by impressions/views. This may be fine for banks and car manufacturers that are looking to justify their branding spending by the number of people who see their logo. However most small and medium businesses would find the campaigns grossley under-perform compared to an online advertising campaign. Even when the ads on the website are matched with ads in their newsletters, the level of targetting and the activity associated will not satisfy most small advertisers. IDEAL FOR: Telcos and Car Manufacturers NOT IDEAL FOR: The manufacturers of Civ V

Google Adwords – The online advertising behemouth is the model on which all other online advertising is measured. The major benefits include targetting keywords and phrases, as well as reaching people when they are ready to buy. The downsides to Adwords are not so often talked about. Adwords are creeping up in cost in many competitive categories. Some advertisers expect to spend $5 to $10 per click, which puts some advertising out of the reach of those with a small budget. Also the deliberate or accidental click fraud is on the rise, as more competitors or adword spammers click on ads placed in valuable keywords. To get a reasonable return advertisers should be expected to start with spending at least $100 and spread the load into keywords that are less commonly used. Having said that, however, some markets are still untouched, and a large number of keywords have no competition at all. IDEAL FOR: The local Pilates instructor NOT IDEAL FOR: A startup webhost

If you have any experience advertising on social networking or news websites, we would love to hear from you!