MySpace is tapping into its rich universe of content — that is, its users’ profiles — to bulk up its advertising platform…
Los Angeles — News Corp.’s MySpace social networking site is using personal details contained on users’ profile pages and blogs to sell highly targeted advertising, the company said Tuesday.
By matching ads to data on users’ personal pages, MySpace is ready to bring down Facebook’s rising star, according to Peter Levinsohn, president of Fox Interactive Media, the News Corp. unit that owns MySpace.
“What we are talking about is absolutely new capability to make [marketing] decisions based on user interests,” Levinsohn told investors and analysts at Merrill Lynch’s Media & Entertainment Conference on Tuesday.
The ubiquitous social networking Web site will be matching ads to people’s profiles so that visitors to, say, a music aficionado’s page will see adds for music Web sites.
“Now, the site will leverage users’ responses to questions about their likes and dislikes, and even scan their blog entries to determine ad placements.”
MySpace began to move in this direction in July with its offer of “interest targeting” advertising, culling likes and dislikes from its users’ pages to sell ads in 10 broad categories such as finance, autos, fashion and music.
The algorithms designed by FIM’s “monetization technology group” initially separated MySpace members into 10 categories representing key interests–such as autos, fashion, finance, health, sports, and video games. Along with standout keywords, the algorithms determine ad placement based on a member’s groups, friends, age, gender, and prior ad engagement history.
The site has more than 3 million users in each category and can place ads based on responses to questions about users’ likes and dislikes, favorite movies and music. Data is even extracted from blog entries, where users write at length about their lives.
“MySpace advertisers can now get much more than the basic demographic data contained in site registration forms, Levinsohn, told an investor conference.”
After more than six months of testing, MySpace is ready to implement its “interest targeting” technology on a broad scale, said Levinsohn, allowing brand advertisers to target consumers based on the information each shares with friends and family on a regular basis.
“On one hand, MySpace’s refined approach to advertising is emblematic of the increasingly sophisticated monetization of Web 2.0 technologies.”
“It is a great move for MySpace to do this,” BuzzLogic CEO Rob Crumpler told the E-Commerce Times. “It speaks to trends that are happening right now in the industry. We are finally getting a sense of how to get performance out of social media.”
For instance, industry surveys suggest that 65 percent of the people reading blogs do so because they value the bloggers’ opinions about the subject matter at hand, Crumpler noted — be it dating, literature or politics.
“Considering the huge network of user base they have, the company has access to large amount of personal details of their visitors which could help them sell more advertising.”
Advertisers see this credibility as a great vehicle around which to advertise, he said. However, it is only recently that new technologies have emerged to make such targeting easy.
The 100-employee team is now busy expanding the initiative into the “hyper targeting” phase by breaking the 10 main categories into hundreds of subcategories from which advertisers can choose.
“This is just the beginning for us,” Levinsohn said, envisioning a time when advertisers can easily drill down from entertainment lovers to movie buffs, to “Fantastic Four” freaks, to Jessica Alba admirers, and so forth.
Along with greater monetization opportunities, Levinsohn was candid regarding the forces driving innovation at MySpace. “I want to compare and contrast with Facebook,” he told conference attendees on Tuesday. “We have never really had a direct competitor with MySpace.”
Targeting ads well can be lucrative for MySpace and its corporate parent, but it can also backfire if users believe their personal expressions are being misused.
Last year, for instance, MySpace rival Facebook’s users protested the introduction of a new feature called “news feed” that automatically informed a profiler’s online friends of every page change, many users denounced it as stalking and threatened protests and boycotts, catching Facebook’s executives off guard.
Facebook had to quickly apologize and within days agreed to let users turn off the news feed feature so that others cannot easily see what they do, which they had not been able to do before.
Levinsohn said MySpace would only use information users have freely expressed on their pages.
MySpace should inform users it is using their profile information to sell more targeted ads, Beth Givens, director of the Privacy Rights Clearinghouse, a California-based nonprofit, said.
“Many young people do not seem to have privacy protection instincts,” Givens said.
MySpace is aware of such potential pitfalls and is likely to take the necessary measures to keep its users happy, Joe Rosenbaum, a partner in Reed Smith’s advertising, technology and media group, told the E-Commerce Times.
“From a legal standpoint, there will probably be some additional disclosures it makes to its users,” he added.
Levinsohn used the example of a user named “Jill” who identifies herself as a fashionista and wrote in her blog about the new fashion lineup.
“She even goes so far as telling us she needs new boots for the fall,” Levinsohn said. “How would you like to be an advertiser selling boots to her?”
“There are other potential pitfalls as well,” Kathy Sharpe, CEO of Sharpe Partners, a digital marketing agency, told the E-Commerce Times.
“This is a platform that requires the user to split attention between an ad and the content, such as a video,” she said. “That is different than TV, so we will have to see how it works out.”
Advertisers also might question the viability of the model, said Tim Vanderhook, CEO and founder of advertising network Specific Media.
“If they are able to truly identify in-market consumers in the various categories, they can instantly apply massive scale,” he acknowledged. However, “If they are not able to identify the in-market consumers, it will be a tough sell.”
Still, this is MySpace, and besides Google, it is “the smartest company around,” said Sharpe.
Levinsohn, on Tuesday, did not mention the national advertisers who have been testing its new technology.
By November, FIM is expected to launch an automated system for mid-sized advertisers to target desired consumer categories. With the service, it will provide advertisers with various response data.
At a conference in New York, News Corp. CEO Rupert Murdoch remarked on the importance of creating categories for advertisers to buy on MySpace and vowed “to build it better than anybody.”
Sales of targeted ads could help Web sites earn more per ad sold. Earlier this year, Yahoo Inc. launched SmartAds, a platform for delivering customized display ads, while Time Warner Inc.’s AOL bought the behavioral-targeting company Tacoda.
“To fend off criticism from privacy advocates, MySpace is also expected to let members opt out of its new targeting program.”