Social networks are so intriguing to marketers because they represent the internet equivalent of a popular hangout, thoroughfare or stadium.
If you're looking for eyeballs, social networks like Facebook and MySpace have no shortage of them. But eyeballs don't always equate to revenue, or ROI, and capitalizing on them has proven hard for marketers and social network owners to do.
State Farm, the US-based insurance giant, is dipping its toes into social network marketing by sponsoring Us Weekly's new Facebook page. Right now, that Facebook page is bland and only has 2,918 fans, but Us Weekly is planning to roll out a new one and 'like a good neighbor' State Farm 'is there' for its launch.
According to AdAge, the sponsorship "extends a campaign State Farm is already running with the celeb magazine" and Us Weekly "plans to use Facebook page sponsorships as added value or independent ad inventory for other advertisers after that". Financial terms of the deal, or how much value the Facebook page sponsorship is given by both parties in their existing deal, is not known.
As AdAge points out, what otherwise appears to be a small experiment between State Farm and Us Weekly could have implications for other brands that have much bigger followings on Facebook. ABC's hit series 'Lost', for instance, has over 750,000 fans on Facebook. Is it possible that ABC could create and sell inventory against its Facebook page?
It's almost a certainty that Us Weekly won't be the last brand to sell a Facebook page sponsorship but it still remains to be seen whether or not these sponsorships will produce big dollars or whether they'll serve as throw-ins to sweeten larger deals.
That may depend on how these sponsorships perform. And that's where I have mixed feelings about online sponsorships in general, particularly on social networks.
On one hand, giving brands more integration within the user experience seems like a much better approach than selling them display ads that are ignored and I think that this will increasingly be recognized by more and more marketers.
On the other hand, there has always been a lot of waste in the offline world when it comes to sponsorships and they're not always the easiest initiatives for brands to quantify accurately as far as ROI goes. If online sponsorships become a sort of ethereal 'branding' exercise, they won't deliver anything more than display ads.
There's an important element in sponsorships not to be overlooked: activation. Contrary to popular belief, most brands don't simply spend lots of money on sponsorships and leave it at that. They 'activate' against them. What is activation? Put simply, it's leveraging a sponsorship to make it meaningful. Sometimes that takes the form of events built around the sponsorship, contests, special offers, etc. By most accounts, the average sponsor spends several dollars in activation for every dollar invested in the sponsorship.
Because of this, sponsorships can be extremely expensive. That's probably why a recent survey conducted by a division of ad giant WPP found that over 50% of companies plan to cut sponsorship spending this year.
I see no reason why online sponsorships will be much different. If sponsorships like the one State Farm has acquired from Us Weekly are to be more than throw-ins for larger deals, there has to be planning, activation and accurate tracking of ROI. At this time, the State Farm/Us Weekly deal is intriguing and worthy of monitoring but probably doesn't represent real validation of a Facebook page sponsorship model. Yet.
The other interesting aspect to this story: the fact that Facebook isn't getting a cent from the deal. But that's a whole other story.
Photo credit: cambodia4kidsorg via Flickr.