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Advertisers Employ Social Media

Can advertisers take advantage of users’ online social activities?

Google seems to have nailed the online search advertising market, finding the magic formula to attract both advertisers and consumers. The Web is still wide open, however, for approaches to advertising that catch users at other points in their online lives, perhaps when they’re not actively searching for something. At TechCrunch Disrupt, a Web technologies conference in New York last week, there was a crowded field of companies hoping to provide new ways for brands to advertise online or to consolidate existing efforts to communicate through social media.

Using the users: VideoGenie CEO and founder Justin Nassiri, right, and technical lead Rob Starling, center, presented onstage at the TechCrunch Disrupt conference in New York last week. VideoGenie is among a new breed of advertising companies hoping to weave advertising into users’ online social activities.

WeReward, for example, which made it to the second round in the startup battlefield competition at the event, is an Orlando, FL-based company that attempts to convert social activities that consumers are already enjoying into ways for advertisers to get attention. The company noted that users are already using services such as Foursquare to share their locations, and sharing photos through sites such as Flickr. WeReward adds an incentive for users who participate in advertising-related activities.

For example, a company such as Domino’s, which is a client, might offer rewards to users who post photos of themselves getting pizzas delivered. Users can check out lists of tasks from advertisers and claim points for completing them, and these points can be redeemed for discounts or small sums of money.

Another startup, VideoGenie, based in Palo Alto, is hoping to harness users’ passion for creating videos and posting them online. Brands can issue calls for videos on certain subjects, and the company’s platform makes it easy for everyday people to produce usable content. The platform gives users a specific prompt and a tight time constraint, which VideoGenie hopes will make it more likely that the brand will be able to use the video without editing. The platform also makes it easy for the brand to offer rewards or discounts to users who complete videos or whose videos are selected. This startup is currently profitable, and is backed by angel investors that include Google’s Eric Schmidt.

Several companies at the event, such as GeoToko, a Canadian startup, hoped to help brands harness the dizzying array of social services through a single interface. GeoToko, for example, works with the review site Yelp, the location-based services Foursquare and Gowalla, and the microblogging site Twitter. The company hopes brands will use its platform to offer prizes, discounts, and contests through all of these sites, increasing efficiency for advertisers.

Big advertisers are interested in experimenting with new forms of online advertising. Frank Cooper, a senior vice president at Pepsi and its chief consumer engagement officer, said onstage at the event that big brands today have to be open to trying out different advertising schemes in order to reach an increasingly fragmented audience. Cooper said he’s been closely following the ways people behave in online social spaces, and he’s interested in finding ways to weave in place a layer on top of that experience, with a brand that consumers perceive as adding value. He said the big question is, “Where do we actually have a deeper engagement with consumers?”

To Cooper, engagement goes beyond convincing a person to buy something. It’s been achieved when the consumer feels he or she has a relationship with the brand and steps forward to act on behalf of the brand or with the brand. For example, Pepsi recently ran a campaign inviting customers to suggest changes to its popular Mountain Dew drink. But engagement can be hard to measure using traditional methods, Cooper acknowledged, but he believes that big brands today are competing for this type of attention from consumers. They’re competing for cultural impact, not just product sales.

Advertising companies of this type, however, will have to demonstrate that they can sustain interest from clients beyond the experimentation phase. Some companies, for instance Starbucks and Red Bull, have shown they’re willing to try out new types of online campaigns. But companies offering these alternative ways to advertise online will have to demonstrate strong value at some point to win advertising dollars from more cautious companies, the judges noted. Chris Fralic, for example, a judge who is also a managing partner of FirstRound Capital, noted that some of these more experimental companies seem to have appeal only to advertisers who have already bought into the idea of user-generated content.

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