Catch of the day

Last month, Facebook announced it had surpassed 180 million active users.  This is a staggering milestone for social networking sites, but the news shouldn’t be a surprise.

Every day, millions of people spend countless hours on Facebook and MySpace—looking for high school sweethearts, joining fan sites (such as Monty Python’s Flying Circus), sharing personal news, posting photos and videos and much more. But how many of you have thought about these sites as cost effective demand generation tools?

Traditionally, Google has been seen as the perfect demand generation tool. Capturing over 80% of all Internet searches, it seems like the place to market anything to anyone. As a certified Google Professional, I’ve steered countless clients in this direction with tremendous results.  But there is a downside to Google’s success. In the company’s last 10-K—its annual report summarizing its performance to the SEC–, Google disclosed that the cost of keywords had increased by 30% quarter over quarter for the last four periods. This means that businesses that once relied on Search Engine Marketing, may no longer be able to afford it in the future.

I personally manage a half dozen accounts, and I know this to be true. For one friend, I’ve seen keywords jump from $1.35 per average keyword to $2.75 just within the last six months. For larger businesses, the problem is even more pronounced. At my last company, we saw Google search terms go from $25 per click to $40. This type of increase could mean life or death for some companies. I know of two startups, dependent on cost effective search engine marketing, having to revise their business model in order to stay alive. For any company looking to survive in this downturned economy, this is very disturbing news.

Enter social marketing. Facebook and MySpace have created tools that make it easy and cost effective for companies to advertise. In just a few short weeks, I was able to build and place a number of ads on these sites that have an average click-through cost of less than $0.50 and are just as effective as my Google traffic.

To create an ad on Facebook or MySpace, just follow these easy steps.

Step 1: Join

The first step is to become a social networking user of the site. It’s easy to establish a personal page and then learn the mechanics of networking through Facebook or MySpace. You will quickly realize the effectiveness of these sites in sharing information across your network. This is the power of social marketing.

Step 2: Build a Fan Page

The second step is to build a fan page for your business. This is a structured page designed to promote your work. MySpace has great templates for musicians and comedians. On the other hand, their business templates are a bit lacking. Facebook has great business templates, but be careful that you pick the right one. You should experiment to find the right one.

Step 3: Create an Ad

Once you have a business presence, Facebook and MySpace will invite you to advertise your business. Facebook and MySpace do things a bit differently, so let’s start with Facebook:

I was able to launch my Facebook advertisement within 15 minutes. It’s quite similar to building a Google ad. You have 25 characters for your title and 135 characters for your body text. Facebook gives your reasonable latitude to write your copy, however they are sticklers about punctuation. You can add an image of your choice.

The targeting tools are excellent. You can target by age, gender, marriage status, geography, and interests. Unlike most ad networks, this filtering data is accurate because it is submitted by the user. For a small wedding business, I was able to narrow the ad service to just the 13,194 engaged women who live within a 120 mile radius. For larger businesses, you can narrow your target customer by interests such as toy collecting, mountain biking or playing video games.

The last thing you do is set a price. You can choose to pay by cost per thousand (CPM) and cost per click (CPC). You can also choose to direct your traffic to your own website or to your fan page. Both are useful depending on what you’re trying to achieve.

The MySpace advertising program (www.advertise.myspace.com) uses a similar targeting approach, but the ad creation and delivery process is very different. MySpace uses a traditional banner advertising model. When you first create your ad, you choose between a skyscraper ad (160 x 600), a box ad (300 x 250) or a banner ad (728 x 90). You can either load your own pre-built ad or create an ad from their creation tool. Amazingly, the tool is easy and fun to use. I was able to create a professional looking ad in 10 minutes.

Step 4: The Power of Applications

There is an alternative to creating ads in Facebook and MySpace. Instead, you can build a custom application to promote your business or product. The jury is still out on this approach. While you have the best chance of creating a customized brand experience, the user is forced to install the application. This is a big commitment for customers not quite familiar with your offering.

Even with President Obama’s new stimulus package, it will take a while for the economy to recover. Until then, businesses will have to look toward more cost effective ways to generate demand and attract customers. With the soaring costs of search engine marketing, think of social networking sites as the new Google.

Facebook, Google, Social Networking, Twitter