October 13th, 2008

In Bid for Small-Business Ads, MySpace Launches Self-Service Advertising Platform

By Rachel Metz
Minneapolis Star-Tribune

Just because your band doesn’t have the bucks for a six-figure advertising campaign doesn’t mean you wouldn’t be interested in promoting it on MySpace.

At least, that’s what the Internet social network is banking on with a new self-service graphical “display” advertising platform that lets small businesses and individuals target their pitches to site users by characteristics like gender, geography and musical preferences.

Called MyAds, it was rolled out in “beta” test phase in late September after a three-month closed test. MySpace disclosed the service Monday in the News Corp.-owned company’s latest attempt to cash in on its vast audience. Advertising has yet to fully blossom on networks like MySpace and Facebook, partly because advertisers have questioned how attentive people are to pitches in such casual, social settings.

The idea of self-service advertising is not new — Google Inc. has been doing so for years with text-based ads through its AdSense platform. But it has generally been more difficult to combine self-service with display ads. While Yahoo Inc. is trying to merge do-it-yourself tactics with display ads through a new advertising platform, its tools for advertisers won’t be available until next year.

With the new MySpace service, advertisers can upload their own ads or make them quickly with an online tool, and set a budget of $25 to $10,000 for their campaigns.

Advertisers can choose to target, say, fans of the band Coldplay who live in San Francisco. The advertisers then pay MySpace each time someone clicks on their ad. Ads can link to other MySpace pages, such as a band’s profile, or external Web sites, like a ticket-buying site.

MyAds makes use of the targeting capabilities MySpace rolled out in October 2007, letting marketers hone their ads to specific groups of people by using public data on users’ profiles, blogs and comments.

Jeff Berman, MySpace’s president of sales and marketing, said the company was aware that some bands and small businesses wanted to be able to advertise on the site, but that it’s not economical for MySpace to have ad sales staff devoted to working with small- and medium-sized businesses. Hence the automated system.

“This opens the door to an entire massive class of advertisers who have been effectively barred from the online display market,” Berman said.

Despite the faltering economy, Berman is confident the time is right to roll out such a service. He said more than 3,500 advertisers have signed up.

“Advertisers are looking for less-expensive and higher (return on investment) advertising ASAP,” he said.

While the economy may be dampening the dramatic growth the online advertising market has logged over the past several years, revenue from display ads — the second-largest segment behind search ads — is still rising. In the second quarter, display ad sales rose almost 13 percent to $1.9 billion, according to a recent report from the Interactive Advertising Bureau and PricewaterhouseCoopers LLP.

David Hallerman, a senior analyst with eMarketer Inc., said MyAds sounds like a useful incremental revenue source for MySpace. But given that text ads tend to elicit more clicks than graphical display ads, he wonders how many advertisers will try the service and then not come back to use it again.

Pam Dixon, executive director of the World Privacy Forum, worries that MySpace’s combination of low ad prices and an automated system raises the risk of fraudulent ad postings. Dixon also expressed concerns about the ability to target ads by certain categories, such as gender and age group.

MySpace users are able to opt out of having their public data shared for ad targeting purposes. Berman said fewer than 1 percent of MySpace users have chosen not to have their data shared.

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