Advertisers have long been wary of appearing on social networking sites. Not only is there racy and often outright raunchy content on these sites, but they’re held in ill regard by some parents following several incidences of inappropriate contact between adults and minors made through the sites. But as audiences for the sites continue to grow, advertisers are finally getting more comfortable with them. A new eMarketer report, released earlier this month, forecasts that U.S. ad spending on social networking sites will balloon to $2.2 billion by 2010, more than double the $865 million the web research firm predicts will be generated next year. There are several factors contributing to the quick rise of these sites, including advertisers’ fear of getting left behind the latest trend, the launch of more specialized social networks targeting different demographics, and the expansion of advertisers beyond entertainment companies. Debra Aho Williamson, senior analyst for eMarketer and author of the report, talks with Media Life about the social networking boom, why advertisers are warming up, and who to expect there next.

Why are advertisers suddenly so interested in social networking sites?
 
Their interest in social networking sites has been building over the past several months. First came the early adopters in the entertainment, fast-food and automotive categories, followed by other companies in those categories.

Now what you are seeing is somewhat of a me-too effect, where marketers see their competition there so they feel like they need to be there too.

But more importantly, social networking is a new form of communication for young people, and marketers always want to be where these hard-to-reach youths are.
 

What will be the biggest factor driving growth in advertising at these sites over the next few years?
 
I believe there are actually a couple of things that will drive growth.

First is the growth of social networking in markets outside of the U.S. MySpace is really just getting going in overseas markets and other sites such as Bebo, Piczo and Hi5 are gaining traction as well. There will be significant opportunities for global marketers to make advertising buys that reach multiple markets, not just the U.S.

Another factor driving growth will be the rise of many niche networks that are focused on a specific hobby or interest. There are already quite a few of these, such as Boompa for automotive enthusiasts and MothersClick for moms, but there will be many more over the next few years.

Of course not all of these will succeed, but the more opportunities there are for marketers to reach targeted audiences, the better.

 
Do advertisers ever show reluctance to advertise on these sites because of the unpredictability of the product – that is, who knows what sort of content your ad ends up next to?
 
Yes, there is still some reluctance among certain types of advertisers. For example, pharmaceutical companies, because of the strict regulatory environment they must work within, are a difficult sell for social networking.

Other marketers are still quite conservative about their brands and brand image and are reluctant to enter the social networking whirl because they feel their brand may be compromised.

However, most marketers are now realizing that they must loosen the strings--as best they can--and get comfortable with the user-generated content environment. It’s not going away.

Additionally, there may be a benefit: marketers that engage consumers in social networking environments form a closer bond with them; it’s not just a message being pushed at people, it’s about interacting with and participating with a brand. That can be very powerful.
 

Can advertisers choose what their ads are put next to on these sites?

Yes, many social networking sites have created content areas that aren’t so different from what you’d find elsewhere on the web. MySpace has sections for music, comedy and film, for instance, and much of the content is editorially programmed.

For advertisers that are more squeamish, these solutions may make sense. Most social networking sites also let advertisers buy slots on their home page, which is also editorially controlled.

 
Obviously MySpace is the biggest draw, but what are some other, less-known social networking sites driving this spending?
 
Bebo is strong in several international markets, and Piczo is building strength as well. Hi5 has an interesting strategy of rolling out its site in different languages (rather than country by country) and can offer marketers the ability to target not only by country but by language or ethnicity. Of course there’s also Facebook, which has generated a lot of attention in the U.S.
 

What do advertisers find most beneficial about these sites? Is it the ability to connect with a hard-to-reach young audience or the fact that they’re actually receptive to the ads?
 
A marketer advertising on a social networking site can deliver a brand message to one person and that person can choose to send it on to myriad other friends. The holy grail of one-to-one marketing of the early days of the internet now becomes one-to-one-to-many.

Young people have grown up with the internet and they are completely comfortable expressing their opinions online, good, bad or ugly. Marketers that want to stay relevant in this market are realizing that they need to join the conversation, not be above it.
 
With social networking, marketers can gain an understanding of how messages are spread virally and how they can involve customers (and potential customers) in the marketing process. The benefit is potentially a closer relationship with a customer.
 

What product categories are most likely to advertise on social networking sites?
 
Entertainment companies have been big drivers of social network spending in recent months. A social networking profile page and promotion is practically a must for Hollywood studios launching a new movie.

TV networks are using social networking to publicize new shows or to offer free downloads. And music labels also are strong users of social networking. In addition, companies in the wireless, automotive and beverage categories have been notable advertisers.
 

Are there other specific web niches where advertising is growing this fast, or are social networking sites among the leaders?
 
Online video advertising is growing quickly; eMarketer forecasts that U.S. spending will rise from $410 million this year to $1.3 billion in 2008 and $2.9 billion in 2010. I believe that online video and social networking will be two very powerful ad markets in the next few years.