As more social networking tools, like Facebook, begin to take over the internet, we are going to see a change in the way advertising works. Facebook has already taken a stab at this and has broken through the boundaries of conventional advertising of click through rates that we have talked about in class. Instead, they are concentrating on applications and sponsorships in which advertisers can engage the use of their potential customers. The applications that the advertisers invest in are geared towards the individual who will use them and incorporates some strategy that will catch the person’s attention and enable them to interact with the advertisement.

Michael Kingdon wrote this article (the first link) on engagement advertising and what we can expect in years to come. According to Kingdon, we can expect to see Facebook joining Google as one of the main connections into the digital world. Social networking sites will become more prominent as people strive to keep in touch with one another in an easier fashion. As for advertising, Kingdon says, “Although search will still be a powerful tool, the big money in digital marketing will be in getting people to engage with a brand.” Unlike today where people compete to buy an ad slot that has the better frequency of display or a slot with high internet traffic flow, companies will be trying to create unique ways of engaging the consumer in their advertisement. There will be no “standard ad” that will be shown to everyone on the side of Google or on a banner across the top of your email page. Ads will be targeted directly to the consumer who is viewing them.

In class we have talked about finding the best matching for advertisements based on calculating the value that the advertiser would receive based on the prices for those slots. Pretty soon, this method will become obsolete as advertisements become more advanced and high tech. It will no longer solely depend on how many impressions (the amount of times that one page is shown to one person) that the advertisement receives, but also how well that advertisement can engage a person’s interest. While currently Facebook’s applications are free for the creators, Facebook has created another advertising opportunity for companies, in which they become a “sponsor”. Here they are offered advertising on Facebook’s group pages, there own page where they can control unlimited pictures and information, and stories that pop up on user’s home pages. These have become exceedingly effective forms of advertising, yet come at quite a cost. To become a Facebook sponsor, you must pay $150,000 every 3 months. Big companies and entertainment like Victoria’s Secret and the Dave Mathews Band have jumped on this opportunity, but it will take some time for the smaller ones to be able to compete. While these smaller companies are contemplating which mode of advertisement to go through, they could create a free application. Now the only challenge they will face is advertising this form of advertisement (the application). Since there are so many applications on Facebook, it takes a very engaging and innovative application to make a profit. In the coming years, we will have to rethink the terms of which we price our advertisements as the advertising industry becomes more advanced.

http://gigaom.com/2007/11/07/future-of-online-advertising/

http://valleywag.com/tech/online-advertising/facebooks-secret-rate-card-284029.php/