Capitalizing on social media's advertising potential

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Consider: You're a businessman or manufacturer with a controlled social network in which suppliers, distributors and customers share information and collaborate. Here, social networking benefits include improved brand awareness, customer loyalty, channel communication and market research.

However, for all the friends, visitors or traffic that your company's social media initiatives may have garnered, the reality is the metric that matters most at day's end is dollars earned. And the fact is, if a business has created its own social networking site for customers and partners, the advertising opportunities are tremendous.

But up to this point only the major social networking sites have truly capitalized on this potential.

Imagine how another company, offering a complementary product to your own lineup, might be interested in advertising on your social site. Here, b-to-b social networking sites offer a very attractive advertising medium. If your community is active, passionate and influential, then you've got everything a marketer looks for in an advertising medium.

We've seen numerous examples among our own clients of organizations leveraging their networks to reel in advertising dollars. We've seen sites that were originally created for purely recreational purposes begin to turn advertising profits. The “fish are in the bucket,” so to speak, when it comes to a concentrated target market, and this opens up doors for other forms of revenue beyond traditional click-throughs, such as sponsorship.

Loss of control
So why aren't more companies leveraging their social media presences to earn advertising dollars? With companies investing so much in creating a social media presence, why isn't this standard practice? Because, when your business creates a presence on any of the major social networking sites, like Facebook, you are in many ways the technological form of a “sharecropper.” These major networks have evolved into revenue-generators by selling the advertising rights of your community out from under you.

To sell the ad rights to a specific site, one must actually own the network. It is typical that a company owns its company Web site and therefore its ad space; but when it comes to social networking sites, most companies have little or no control over ad placement. So even in cases where the parent network offers advertising options, those opportunities tend to be limited and tightly controlled.

How can a business control its advertising platform? Through the use of a platform, not a network, that gives control over advertisements directly to that business. This can be accomplished through custom design—or if the cost of working with a designer is a problem—by using a service that provides total ownership of content.

In fact, it is now possible to integrate a totally independent niche network within a major social network, like an island's relationship to the mainland, creating potential to capitalize on the mass appeal of Facebook and Twitter while preserving autonomy. (A note of caution, however; some of the major services for creating a social networking site retain ownership of your content, so be sure you don't fall into this trap.)

By taking complete control over its proprietary social networking site, a business can use and monetize its network by selling its advertising platform, extending even further social's intangible benefits such as increased cooperation and communication.

The concept of the product life-cycle indicates that a business is always looking to be better, stronger and faster. In this era in which businesses are looking to cut costs and identify new revenue streams, organizations are wise to look to their social networking initiatives, not only as ways to promote their business but also to directly generate revenue.

The bottom line, however, is that you must own your own data and content in order to tap this potential.

Dominic Wheatley is CEO and co-founder of SocialGO ( He can be reached at [email protected]

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