To accompany this article a series of interviews were recorded with such business leaders as Advertisers: Taking the plunge?
In summer 2007, Vodafone withdrew their advertising from Facebook when they discovered their brand nestling alongside groups supporting a far-right political party. The company had bought bundles of advertising space across a number of sites but didn't expect to find its name sitting next to extremist views.
Timo Soininen l Listen to the podcast
This illustrates the key concerns for advertisers when engaging with user-generated spaces: predictability and control. Despite these worries, over $1bn of ad revenues are being generated by user-driven sites in the US this year - a figure expected to exceed $4bn by 2011.
Stop advertising: start engaging
In Heather Hopkins' experience, many potential advertisers are keen to interact with user-generated content but aren't sure how: ‘I think we're still at the point where we haven't found the advertising medium that works for social media. But smart creative brains will be put to it, and I'm sure we'll come up with the right models. I expect to see multiple forms - including sponsorship, which is a model that's being tried, and seems to be working.'
As advertisers grapple with new ways to reach audiences via social media, they don't just need fresh technological tricks. They also need a change of mindset. Timo Soininen often finds himself explaining this to advertisers who are keen to enter the Habbo world: ‘We say "stop advertising, start engaging". It's all about going into the environment and not just displaying your message but being part of the environment. That will get you massively better results than just shoving display ads on site.'
Overcoming fear: opening new opportunities
Alongside its sponsorship programme, Yahoo! is also giving advertisers a way to get more actively involved through Yahoo! Answers (see panel). Even so, Jeffrey Revoy sees plenty who are hesitant about taking the plunge: ‘A lot of traditional advertisers are standing on the side, wondering if this is one of those times where they have to jump, even though it makes them feel uncomfortable, or if it's something that will evolve, so they can participate later on, when the risk is significantly lower.'
Sites that host user-generated material need to think through the level of protection they're able to offer advertisers against rogue content. For Jeff Henry, this is a vital issue: ‘All our forums are moderated and we act swiftly when notified of anything which could be inappropriate. For us, this is not the Wild West: the brand reputation is paramount. But if I look at what's happening in ITV Local - which already has nearly a third of a million people providing content - we're finding that there isn't a huge problem.'
Indeed, ITV's online presence enables it to service advertisers that it never expected to reach by opening up markets that were once inaccessible to a mass broadcaster. Since the introduction of ITV Local, the group can now offer ad contracts ranging from £10 to £10 million, covering multinationals like BMW right through to small businesses like the local BMW dealership.
Richard Rosenblatt l Listen to the podcast
Where the action is
Richard Rosenblatt feels that big brands will ultimately have little choice but to embrace social media: ‘Maybe it is true that some advertisers are still nervous, but MySpace took $500 million of advertising revenue in 2007, and it's set to do $800 million in 2008. And MySpace is all user-generated content - there is nothing else on there.
‘I'm sure advertisers in a perfect world would prefer to pick the exact content they want, but that's not how the world works. The number of pages generated by social networking is a huge percentage of the overall web and growing. If you build the audience, the advertisers will come because the audience is leaving everywhere else. They're not reading newspapers. Television's down. Radio's down. The web is where the action is.'