More brands start paid conversations online

12 May 2010

NEW YORK: An increasing number of advertisers are offering consumers incentives to talk about their brands on the web, according to PQ Media.

The company said this kind of "social media sponsorship" occurred when firms give netizens "material compensation" like money, trips and gifts for promoting their products using digital word of mouth.

This can include adding reviews or favourable comments to long-form text or status updates on social networks, often with "accompanying visuals" such as images and video.

PQ Media said that marketing expenditure through this channel rose by 13.9% to $46m in 2009, basing its figures on the views of agencies, advertisers, analysts and trade bodies.

More specifically, manufacturers in the consumer packaged goods, food and beverage, health and beauty and media industries were among the biggest spenders over the course of 2009.

"Cash-sponsored social media", which seeks to start specific conversations and can utilise services from specialist networks, recorded the biggest uptick, improving by 37.3% to $10.3m last year.

Non-paid social media, which covers the exchange of samples or coupons to brand ambassadors, people who seed viral campaigns and digital marketing agencies, saw a gain of 8.5% to $35.7m.

One factor behind these trends was that many brand owners are now aiming to connect with "influentials" like young women and mothers.

PQ Media reported that many members of these demographics – or what it described as "vloggers" – were paid to shop and upload videos to YouTube praising the items they had purchased.

"Some of the female vloggers claimed to generate over a $1,000 a month and the most popular girls were said to have earned more than $100,000 in a year," the consultancy argued.

Overall, it estimated that social media sponsorship registered a compound annual growth rate of 77.6% between 2004 and 2009.

While this medium accounted for 2.7% of the total outlay on word of mouth marketing in 2009, this was up from just 0.5% at the start in 2004, and budgets should rise by a further 23.6% to $56.8m in 2010.

"Brand marketers move dollars to where their target consumers are spending time to build relationships with them," said Patrick Quinn, ceo of PQ Media.

"As social media captures more of consumers' time, brands are warming to social media sponsorships as a new method to engage, educate and activate them."

"We believe this sector will be among the fastest-growing alternative media in the near future because of the growth of social media, driven by popular mobile and online applications and devices."

One of the main challenges of social media sponsorship is that brands can quickly lose control of conversations, while there is also a lack of an agency boasting a nationwide reach, PQ Media said.

The Federal Trade Commission issued a new set of guidelines governing this emerging area of marketing practice late last year.

Its main provisions included new rules requiring the formal disclosure of any links that consumers and celebrities have with brand owners when speaking about specific products. 

Data sourced from PQ Media; additional content by Warc staff