Turning social network traffic into dollars

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MySpace could ultimately charge more for a corporate page by creating an embedded IM application for a character like Wolverine from "X-Men."

MySpace appears to be considering the idea. "We haven't offered one to date, but we have the capabilities and will explore the opportunity with clients in the future," said Ann Burkart, a MySpace spokeswoman.

RelevanceNow said it is in talks with more than one major social network in the United States and Australia, and its social intelligence technology is being used by several such networks already. Zakos did not divulge partnerships because of nondisclosure agreements.

Targeting practice
Targeting online visitors can be difficult, too, if the audience isn't big enough. The challenge is to aggregate enough members and ad inventory to make it worthwhile for advertisers to buy.

Aggregate Knowledge in Palo Alto, Calif., which is still in stealth mode and is backed by Google investor Kleiner Perkins Caufield & Byers, may also have an ad solution for social networks. Aggregate's founder, Paul Martino, discovered a technique for classifying affinity groups when he worked as CTO of Tribe.net, and has been developing the idea at Aggregate.

Aggregate has developed algorithms to determine what are called "affinity clusters" of people and, based on the personality profiles of those people, targets ads. It does this not by analyzing an individual's habits, but by looking at people's habits in aggregate. So if a group of people visit the sushi forum on Yahoo Groups, then go to Open Table to make a reservation, then turn to MySpace to talk about the experience at the restaurant, Aggregate has a general personality profile of that group, and can cluster people into it and target ads based on the affinity.

"We get around issues of scale," said Martino. "There are hundreds of other ways to skin a cat."

Portals such as Yahoo and MSN appear to be best positioned to sell targeted advertising in their social networks with technology that helps them analyze hundreds of millions of users based on demographics, psychographics and even time of day. What's more, they have the advantage of being able to analyze the habits of people across Yahoo and MSN's multiple properties, such as those devoted to finance and to sports, to garner more ad-targeting data. But their nascent communities--Yahoo 360 and MSN Windows Live Spaces--have yet to make a splash like others.

"It would be a technology challenge for newer (social networks)," said Wenda Millard, chief sales officer of Yahoo. "Not for us; we have such a huge platform, and we've been in the targeting business for such a long time."

MSN and Yahoo have experience selling corporate-mascot "chat bots," too. MSN, for example, offered a "Billy Bones" pirate character via IM that fans of the film "Pirates of the Carribean" could add as a buddy and chat with.

For this reason, Facebook teamed with MSN in September to sell Facebook's graphical ad inventory.

Earlier this year, MySpace also inked a deal with Google to display MySpace text advertising targeted to content on the page. That deal, according to a source, is about Google attempting to understand how to drive up ad response in social networks because revenue sharing terms, in this case, were not favorable to the search giant.

"Before we see sophisticated databases that are applying social mapping to ad display and selection, we'll see something much more basic, like funneling people into channels that advertisers already understand how to buy," said Mark Pincus, chairman and cofounder of social network Tribe.net.

[rpgetz]

My Space Maximizing

My son (24) and all of his centers of influence participate in My Space. Advanced technologies are obviously the growth area in advertising and marketing. I wonder if there are any plans to offer local and or regionalized sponsorship opportunities to clients?