Social network advertising is a term that is used to describe a form of Online advertising

Online advertising

Online advertising is a form of promotion that uses the Internet and World Wide Web to deliver marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, blogs, Rich Media Ads, Social network advertising, interstitial...

 that focuses on social networking sites. One of the major benefits of advertising on a social networking site (facebook

Facebook

Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...

, myspace

Myspace

Myspace is a social networking service owned by Specific Media LLC and pop star Justin Timberlake. Myspace launched in August 2003 and is headquartered in Beverly Hills, California. In August 2011, Myspace had 33.1 million unique U.S. visitors....

, friendster

Friendster

Friendster is a social gaming site that is based in Malaysia, KL. The company now operates mainly from the three Asian countries namely in the Philippines, Malaysia and Singapore....

, bebo

Bebo

Bebo is a social networking website launched in July 2005. It is currently owned and operated by Criterion Capital Partners after taking over from AOL in June 2010....

, orkut

Orkut

Orkut is a social networking website that is owned and operated by Google Inc. The service is designed to help users meet new and old friends and maintain existing relationships...

...and many others) is that advertisers can take advantage of the users demographic information and target their ads appropriately.

The Social Network Advertising Market

eMarketer predicts that $2 Billion will be spent this year (2008) on social network advertising worldwide and that this market will continue to grow - reaching $3.8 billion in spending by 2011. However, a large portion of this spending is predicted to be coming from the US market. As Internet usage continues to grow in other parts of the world, and social networks continue to proliferate, advertising dollars on social networking sites outside of the US will begin to play a major role.

There have been many claims that Social Network Advertising will revolutionize the online advertising market. Most famously, founder of facebook Mark Zuckerberg, announced that "For the last hundred years media has been pushed out to people, but now marketers are going to be a part of the conversation." No doubt social network advertising is a significant new way of reaching customers, but the market is far from being mature.

"In general, it's been improving but we still have a long way to go. Things have been going well this year...it's hard to predict where social networking will come out." - Sergey Brin (Google Co-Founder)

Forms of Social Network Advertising

There are three major classifications of Social Network Advertising:

• Direct Advertising that is based on your network of friends - This can be the most effective format but also causes the most controversy. An example is the Facebook beacon project. Based on an action your friend has taken, you might see a message in your news feed saying 'Bob has just bought a 'RadioHead CD from MusicWorld'. This can be an extremely effective mode as often people make decisions to purchase something or do something based on their close group of friends. However, there is also a lot of controversy surrounding this as it can be considered exploiting the personal relationships you have with your friends and also raises privacy concerns.

• Direct Advertising placed on your social networking site - This is a more traditional form of web advertising that is minimally effective. Just like you see banner ads on many other sites, this is a similar concept, except on a social networking site. You can see these - for example - as a brick in the top right of MySpace pages, or as a banner on the left of Facebook profiles and so on. There are two differences however - One is that these social networks can take advantage of demographic data on your profile and hence target the ad directly to you. Secondly, these types of ads can also be placed by individual developers on their application pages through ad networks such as SponsorPay, AdParlor, Twtbuck
  Twtbuck
  Twtbuck is a performance based social media advertising and crowdsourcing platform which connects people with influence in Internet, especially social web, to big brands...
  
  or Offerpal. They have access to the same data and can generate income for application developers giving them further motivation to create apps and giving advertisers a more engaging way to reach out to these social networking users.

Thats it

• Indirect Advertising by creating 'groups' or 'pages' - This is an innovative marketing technique in which a company will create a 'page' or 'group' that users can choose to join. They will use this to build up 'subscribers' or 'fans' and use this to market a contest, a new product, or simply just to increase brand awareness. These groups can quickly grow in numbers of subscribers which can become a very effective marketing tool.