This article is the second in a four-part series on social network advertising. Get caught up on my previous article below.

CPC Advertising on Social Networks
 
Search engines succeed by identifying a good match between a user's query and a relevant ad, which attracts a click. Extended to display advertising on publisher sites, search engines' content networks succeed by semantically processing the content of the page and finding ads that are relevant to the "meaning" of the page. The technical term for this is contextual targeting. It is quite a challenge, and the effectiveness of a program like Google's content network is truly an impressive computational linguistic feat. 
 
In contrast, Facebook and MySpace do not have to solve this difficult computational problem in order to target their ads effectively. This is because they know so much about their users. When users log in to their social network accounts, the networks' advertising engines have access to all of their profile data for the purposes of ad targeting. Social networks like MySpace and Facebook collect a wealth of detailed information about their users -- the very purpose of a social network profile is to serve as a repository of users' personal information. While users may use this information to connect with friends, advertisers can use this information to understand and target their audience. Both MySpace and Facebook offer self-service pay-per-click advertising platforms that allow anyone to create ad campaigns that are hyper-targeted based on the demographic and psychographic data in users' profiles.
 
How do different targeting options differ?
There are four predominant types of ad targeting in use today.

• Keyword Targeting: Users search for keywords on a search engine, and ads are presented that match their search query.
• Contextual Targeting: Ads appear on a page with other content, such as a blog post or article, and the ads are targeted to match the "contextual" content of the page. 
• Behavioral Targeting: Users take some action, such as visiting a Website, or searching for an airline, and they receive a browser cookie that records their action. Then, later, ads on other sites are targeted to them based on the information in that cookie. Search engines typically do not offer this type of ad, but there are many advertising services that specialize in behavioral targeting or "re-targeting" of users who have already visited your site.
• Psychographic/Demographic Targeting: Users are logged into a site, usually a social network, where they have a profile containing personal information about them and their interests. Ads are targeted based on this personal information.  Because there are typically many targeting options that can be used in unison, this type of targeting is often referred to as hyper-targeting.

Who Should Use Demographic/Psychographic Hyper-targeting?
When evaluating whether hyper-targeted social network ads are right for you, as with all methods of targeting, you want to ask yourself how you describe or define your target audience. Can you define your target audience in terms of a very specific demographic or psychographic profile? For example, if you are a Harley-Davidson dealership in downtown Philadelphia, you could perhaps define your core audience as men over 18 who live within 50 miles of your store and who list among their interests "motorcycles" or "motorsports" or "Harley-Davidson."  In contrast, if you operate a chain of restaurants across a diverse geographical area, you might find that your customer base is too broad and diverse to make hyper-targeting worth the effort.

Narrowly targeting your audience is good for you, the advertiser, because it helps you connect with individuals who are likely to want whatever it is you're offering.  But it is also good for the ad publishers, because well-targeted ads are more likely to result in clicks, and subsequent revenue for publishers. Just as Google uses "Quality Score" to reward ads that will appeal to users and draw clicks, social networks with hyper-targeting capabilities will reward you with a higher share of the available ad impressions and lower costs per click if you narrowly target your ad. Generally, the more targeted an ad is, the better pricing you'll get. This is especially true on MySpace, where the interface actually shows you price estimates based on your targeting options.
 
Even if you feel that your customers are not easily hyper-targeted, consider the possibility of targeting a subset of your customers. For example, an online DVD retailer might find that overall, their audience is very broad, but they might want to individually hyper-target a single ad for the DVD Yoga Pregnancy: Pre-and Post-Natal Workouts to women who were age 20-40 who indicated their parental status as "Expecting" or "Just Gave Birth" and who list "Yoga" among their interests.

Another important consideration is that hyper-targeted social network ads are much more time-intensive to manage than most search engine CPC networks, and have much less user-friendly account management interfaces. It is only worth this effort if you have found that you cannot adequately target or reach your audience through search engines. The payoff of hyper-targeting is potentially great, but the management investment is also quite significant.

Demographic Targeting on Facebook
So, if you want to set up demographically/psychographically hyper-targeted ads on Facebook, what do you do, and how do you do it well?
1.   You will need to do this via a Facebook account, so if you don't have one, create one at http://www.facebook.com. If you already have an account, log in.
2.   At the very bottom of the page, click on "Advertising."
3.   Follow the instructions to set up your advertiser account and create your first ad.
4.   When you begin the ad-setup process, you'll see a big form with lots of options.  Most of this is self-explanatory, but here are some highlights and things to consider.

• Unlike typical PPC ads, Facebook "text" ads include an optional image.  You should always use an image, even if it's not terribly interesting. Your ad will be larger, get noticed more, and be more effective if it includes an image. If you don't have any other appropriate image, use your logo.
• Description text can be up to 135 characters, which is nearly double the 70 you get on Google or Yahoo.
• Ads can be hyper-targeted based on location, age, sex, birthday, education level, current and former workplaces, relationship status and sexual orientation, language, and "connections" (which people or entities they are friends with).  A final option, the most useful one, is called "keywords.” These are not keywords that the user searched for, but rather words that appear somewhere in their profiles. Unlike search engine keywords, you cannot enter arbitrary keywords here. Instead, there is a large fixed set of keywords options, and Facebook will prompt you to select one of the available "keywords". Take advantage of as many of these options as you can. If any of these options seem to describe your users, use that option to target your ads.
• Set a campaign name and budget, and you're all set.

Demographic Targeting on MySpace

• The setup process on MySpace is very similar to Facebook, but a few other considerations apply.
• You do not need a MySpace user profile to create an ad campaign. However, you will need to create a separate advertiser account at http://advertise.myspace.com.
• While Facebook ads are all the same size, MySpace ads come in three different sizes. For each size, you can make an ad using text and an image, although in each case the image size will be different.
• If you have banner ad creatives with images that are 728x90px (leaderboard), 300x250px (medium rectangle), or 160x600px (wide skyscraper), you can use these instead of the image and text format.
• If you do not have banner ad creatives, MySpace offers a nifty Ad Builder tool to help you create one.
• MySpace's equivalent of Facebook's "Keyword targeting” is called "Interests and Occupations". The interface allows you to browse through available options and choose the ones that best define your customers.

Closing Advice
Social network hyper-targeting is an awesome capability, which offers certain advertisers a very precise way to reach their target audience. Some advertisers see these capabilities and say "I've been wishing I could serve my ads only to female football fans in Massachusetts to sell these pink Patriots jerseys."  But there are many more advertisers whose audiences are broad, who really don't need all this targeting granularity. So, I have two pieces of advice if you are considering a hyper-targeted social network advertising campaign:
1.   Make sure this is really worth your time. For more than half of the people reading this post, it's not worth it. It's a lot of power, and a lot of settings, so don’t get involved unless this really jumps out at you as something you've been wishing you could do.
2.   If you do get into the hyper-targeted social network ads, take advantage of as many of the targeting options as you can. Your ads will be cheaper and more effective.
 
Ehren Reilly, Clickable SEM Guru
Note: Clickable employees volunteer several hours a week to helping other search marketers succeed. "Clickable Gurus" participate in numerous online search communities to provide straightforward answers to numerous questions, and, each week, one of the gurus posts a search marketing tip to the Clickable Blog.

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Great post Ehren. As you say, for most advertising professionals reading this article, the campaign set-up for hypertargeted campaign is too much work for the scale it delivers. I wonder if Facebook has made a conscious decision to pursue smaller advertisers over big brand advertisers.

Gregory, I seriously doubt that Facebook has made a strategic decision to stop courting major brand advertisers.  However, I do think they realize that the big brand advertisers want something more than banner ad inventory -- brands like Cocal-Cola want a truly interactive, customized presence on Facebook, like this www.facebook.com/cocacola, a page where people can go an interact with the brand on their own terms.  These big brand advertisers are increasingly uninterested in traditional banner ads.  They still buy traditional ads on Facebook, and pay the highest prices, but they're not buying up all the ad inventory, and that leaves a bunch of inventory unsold.  Making it easier for the little guys to make their own Facebook ads is the way to fill that inventory.  And then, third in line behind all the premium brand ads and house CPC ads, comes the Microsoft publisher network ads.  It just takes a lot of ads from a lot of different sources to fill up all the inventory on Facebook.

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