Digital Branded Content: Advertisers dip toe into virtual world

Social networks and virtual worlds provide a route to audiences drifting away from traditional media, but companies must ensure that their presence is actually welcome. Ben Carter reports.

MySpace has been described as many things during its meteoric rise to the upper echelons of the media sector, from 'the future of advertising' to 'all porn, spam and music'. Whatever your viewpoint, it is hard to ignore the impact the site is having on the media landscape for both consumers and advertisers - or its transition from being run by a handful of unknowns to being owned by the world's best-known media mogul.

MySpace's 60m-plus global users are a key reason why Rupert Murdoch parted with more than $580m (£300m) last year to take control of what he has called the future of media - after once dismissing the internet as a fad. Key to Murdoch's vision for MySpace was to establish it as a mass-market advertising platform giving brands the opportunity not only to advertise, but also interact with the website's users, building closer relationships with them.

While it is still early days for MySpace under News Corporation's ownership, there are signs that it is starting to become more commercial, having signed deals in the past few months with high-profile advertisers such as Lynx, the COI and Bono's Product Red in the UK alone.

Critics of Murdoch's strategy have questioned how easy it will be to tame and commercialise MySpace while maintaining its huge user base, which is crucial to its long-term success. It was for this reason that in the summer, a localised version of the site was launched for UK users. According to Jay Stevens, vice-president of operations for MySpace UK, this is key to ensuring that the site is as relevant as possible for users. This, it hopes, will help attract advertisers.

Stevens adds that MySpace is already putting Murdoch's vision of offering advertisers relationships with users into place. 'We have the banners and buttons, but enabling brands to connect directly with users is what makes it really interesting,' he says.

Stevens cites an example of a promotion currently running on MySpace around the release of teen dance film Step Up. Universal Pictures has built a MySpace page where fans of the movie can enter competitions, post videos of themselves dancing and obtain extra information about the film.

The page, which is promoted on the MySpace homepage and through search activity, has already attracted more than 2500 'friends' - the barometer used by the site for gauging a page's popularity.

Building niche communities around specific brands is an area that MySpace, as a social-networking environment, is perfectly placed to exploit. Stevens says it is already working with entertainment and media brands, although he is adamant that the strategy can work for any sector, providing an advertiser is able to offer interesting content. 'It is about us helping the brands to find individuals who are interested in them, and who they can give something back to,' he says.

Many mainstream advertisers have to date been put off MySpace by its reputation as an uncontrolled virtual community, where spammers and sexual predators are known to lurk, as well as some users' disregard for copyright. But while the fact that it was unofficial and created by its users has been a key part of MySpace's success, News Corp has sought to address these issues by embarking on a clean-up of the site and removing copyrighted material. Its new owner has also launched several dedicated channels, such as Film, Music and Comedy, to make it more attractive to advertisers by categorising users.

The creation of the channels is a natural evolution for MySpace's focus on specific subjects, such as music, which has led to it becoming known as a marketing platform for unsigned bands. However, analysts have warned that making the site too commercial could be risky, as users might turn away from the site if they feel their interests are being subjugated to those of advertisers.

The rewards of getting the balance right are significant. The near-$1bn (£520m) deal that News Corp recently struck with Google to offer its search engine on MySpace shows how much commercial potential there is in the network, as long as its millions of users continue to be as active as they have been.

MySpace is not the only social network becoming more commercially minded. Bebo, which helps people contact friends from school, college and university, has recently appointed its first UK sales chief and has plans to build a sizeable operation here.

Despite being based in the US, Bebo's biggest markets are the UK and Ireland, and in the UK it is the market-leading social-networking site, ahead of MySpace. According to industry insiders, it has been generating more than £1m a month in advertising revenue in the UK.

Jim Scheiman, vice-president of business development at Bebo, says that selling the concept of social networks to advertisers is not difficult because its core audience is 16- to 24-year-olds, which is the group that is 'fast tuning out of advertising'.

He claims that brands are tiring of typical digital advertising activity such as banners, buttons and skyscrapers because their core audience is ignoring them, and are instead seeking to offer 'something that is cool, fun and likely to spread virally across our site'.

Bebo calls what it sells 'engagement marketing' and has already signed deals with brands such as Pepsi, Disney and McDonald's. Scheiman says that rather than just packaging advertising in a different way, it is actually offering a platform where users can choose to interact with brands in which they are interested, thus giving advertisers a more engaged party from the off.

Key to engagement marketing is the size of Bebo's user base; even though the site is just over a year old, it has nearly 30m users globally. As many of these are still at school or college, the company has had to be careful not to be seen selling directly to its community. For this reason, Scheiman is adamant that the site's ad-funded content is served to users on an opt-in basis, 'as otherwise we would lose our community'.

He cites the example of a promotion that Bebo ran for Disney in Ireland around its Cars film. It created a sponsored homepage for the lead character Lightning McQueen, encouraging users to interact with the film and its characters. Hundreds drew Lightning McQueen on their pages, while 5000 people put Cars content on their page. A trailer for the film was viewed by 500,000 people.

Scheiman says Bebo users are effectively becoming brand advocates by not only choosing which brands they want to interact with, but also by displaying content and branded applications on their pages.

Because of its target audience, Bebo won't work with certain advertisers, such as cigarette, gambling and alcohol brands. The site has also appointed a safety officer to ensure it does not become a haven for paedophiles.

While there is an argument for entertainment, music and youth-focused brands to use social networks, whether they can work for any sector is open for debate.

Emma Batchelor, digital director at media agency Vizeum UK, which counts AOL, Npower and Coca-Cola among its clients, says there is a danger of brand overkill on social networks, especially as, in essence, advertisers 'have to be invited in'.

'As an advertiser, you have to ask the question whether you have the right to be there and whether you are adding value,' she says.

Ensuring that brand activity is relevant to a social network's core audience is crucial for advertisers wanting to tap into niche communities. Univillage, a social network for students at universities across the UK, has recently launched. Its premise is that by signing up and connecting thousands of students, it can provide an ideal marketing channel to brands seeking access to one of the most lucrative consumer groups.

Henry Yates, chief executive of Univillage, says that while it is crucial the site is not over-run by advertising, it is looking to add key partners that can effectively build their own branded networks within the website.

It has already attracted Red Bull as its first commercial partner. The energy-drink brand is about to launch a network for students offering content, competitions and access to special events. 'We want to give brands their own student network,' adds Yates. 'If you give users special offers and a reason for them to interact and get involved with it, then it does work.'

It is not just social networks that are trying to capitalise on 'web 2.0', as the increasing role the internet is playing in people's lives has been termed - virtual worlds, too, are making a noise, and the one with the most sonorous trumpeting at the moment is Second Life.

Having already attracted its millionth member since its launch in 2003, it is being talked about in the press on an almost daily basis. Residents can interact, create their own persona, design their own houses and fashions, and launch businesses - and the world now even has its own Reuters journalist to report on what's going on there.

The world claims to have a growth rate of 12% a month due entirely to word of mouth. Commerce is carried out in an area called The Marketplace, using an in-world currency that can be converted to US dollars at online currency exchanges.

At this early stage, it is unclear how brands can benefit from having a presence in the virtual world, but some marketers are keen to be seen to be involved at the cutting edge of digital, and brands including Reebok and Toyota have encouraged users to design their own products for use in the world, presumably improving awareness and brand equity. Fashion brand American Apparel has even gone so far as to open its first virtual store there.

Vizeum's Batchelor says there is certainly advertiser interest in Second Life, although as the membership base is currently predominantly American, few UK-based brands are willing to take the plunge.

However, Channel 4, true to its reputation for innovative thinking, announced last month that it is to provide free content for Second Life's first TV station. It won't carry traditional TV advertising, but will rather seek brand involvement once it is up and running, according to Rivers Run Red, which brokered the C4 deal.

Social networks and virtual worlds have one thing in common for advertisers: they are 'hot', and therefore attractive for brand owners trying to offset declining audience figures across traditional media. But while their commercial value is evident, it is still early days, and most of the sites have become overnight hits precisely because they are uncommercial and new.

Trying to commercialise MySpace, Bebo or even Second Life, which rely on daily user interaction, won't be easy unless they limit brand activity to advertisers which have a right to be there and, even more importantly, those which the networks' users are desperate to get something from.


In October, Product Red, the scheme backed by Bono to raise money for and awareness of the fight against Aids in Africa, launched a campaign through MySpace, inviting users to join the Red cause.

Tom Anderson, the MySpace character who sends a welcome message to all new users, emailed a large proportion of the MySpace global user base, inviting them to find out more about Red's co-branded MySpace page at

The page featured details about the initiative, which is supported by global brands such as American Express, Converse and Motorola, as well as a link to Red's website at

According to Hitwise data, the Red website experienced a 70-fold increase in UK market share in the first week of the campaign, to take top spot in its Communities category. This compared with 73rd position the previous week. Brands associated with Product Red have also benefited from the MySpace promotion: 9.3% of visits to the Converse website and 2.2% of those accessing the American Express site come via the Red website, according to Hitwise.


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