ChasNote

From Business Week:

“Social networks have some of the lowest response rates on the Web, advertisers and ad placement firms say. Marketers say as few as 4 in 10,000 people who see their ads on social networking sites click on them, compared with 20 in 10,000 across the Web. Mark Seremet, president of video game publisher Green Screen, stopped advertising on MySpace last spring because of a 13-in-10,000 response rate. ‘It’s really hard to make money on that anemic click-through rate,’ says Seremet.”

Google admits they’re struggling with the same issue, and their stock got hammered on the news.

Meanwhile, advertisers who recognize that building awareness, preference and affinity with customers involves activities other than clicks alone are finding more success in social networks. Examples include Intel, Dell, Wacom and HP, to name a few.

My colleague Pete Spande responds to Adam Ostrow’s post at Mashable on the topic of Facebook applications and sponsorship dollars:

“I think the article misses the point and potential of Facebook apps as a business. There are supposedly 100 million blogs and most don’t make much money – even those with decent traction. Some however, and FM represents many of them, do very well and are seeing revenue growth that now rivals the audience growth they saw in previous years. I see a similar dynamic forming with FB applications. A handful of applications are making significant dollars through advertising, affiliate deals, etc. Others are seeing real promise. Most aren’t, and won’t, make much money ever.”

From the projects I’ve observed firsthand with Facebook apps affiliated with FM (Watercooler, Graffiti Wall and a few others), brands like Wacom, HP and Dell are finding large, high-quality audiences and significant marketing value. We’re only half a year into the era of Facebook applications, but I’m betting that marketers will do what they always do — send their advertising dollars in pursuit of their customers.

In November 2007, Wacom launched their first in a series of sponsored contests among users of the Graffiti Wall application in Facebook. Because certain participants in each contest take the extra step of becoming “fans” of Bamboo By Wacom (which gives Wacom permission to alert them to a new contest), each new contest is bigger than its predecessor.

These sponsored contests, it seems, are the marketing gifts that keep on giving. Now I’m seeing that forty-four people have posted to a Facebook discussion called Did you get a tablet for Christmas? My favorite entry:

Wacom’s second sponsored Graffiti contest, Objects Brought To Life, closes to submissions later this evening, but with 8300 entries it’s already bigger than the first (Graffiti Monster Contest) by nearly 50%.

(Artist credit: Jean-Sebastien Lajeunesse)

The paid promotional effort is the same as the previous contest. One explanation for the increased activity may be that 2000 participants in the first contest became “fans” of Bamboo By Wacom, allowing Wacom to send them notifications when the new contest opened for submissions.

Last month Wacom partnered with Graffiti Wall to sponsor a Draw A Monster contest. In addition to the 515,000 votes cast on the 5660 monster drawings submitted, the contest encouraged more than 2000 Facebook members to become “fans” of Bamboo By Wacom, the Facebook Profile page for Wacom’s tablet computing kit.

Each time someone joins the Bamboo By Wacom fan club, a headline like this shows up in his or her friends’ newsfeed.

If you apply ChasNote math (I have about 300 friends in Facebook), that’s 2000 times 300 — 600,000 news headlines from one friend to another plugging Bamboo By Wacom. Say two-thirds of those headlines get pushed down the newsfeed before someone sees them, that’s still 200,000 friend-to-friend endorsements of your brand.

We put out a press release announcing several new relationships with leading Facebook applications, such as Graffiti Wall, PROTRADE and Watercooler, and early sponsorships by HP and Wacom.

Some coverage at AllFacebook, the unofficial Facebook blog:

“This announcement provides legitimacy to the Facebook application advertising space and serves a massive blow to existing Facebook advertisers. One of the main issues facing large Facebook developers is the difficulty to connect with the companies (and brands) best fit to integrate advertising campaigns into applications. Federated Media will help bridge this gap for larger application developers and existing Federated Media partners. Federated Media is now the largest advertising network to join the Facebook platform. This is a monumental step that will surely legitimize the platform’s potential.”

I’ll accept that positioning!

Here’s more on Wacom’s Graffiti Monster Contest.

UPDATE: From WebProNews:

“A number of recent stories have noted rifts between Facebook and advertisers; the launch of Beacon was, all in all, a bad move. But Federated Media Publishing wasn’t scared away, and has actually partnered with the owners of some Facebook applications. Graffiti Wall and the ‘Addicted To…’ series aren’t the most popular apps in existence – I’ve been asked to become a zombie or vampire far more often than I’ve been bothered by anything having to do with them. Still, they boast some impressive user counts – there are 300,000 of the ‘daily active’ variety for Graffiti Wall alone, according to company stats – so the development is rather important.”

UPDATE 12/4: Here’s ClickZ and Mashable coverage.

Among the first brands to sponsor a third-party Facebook application in a manner that goes beyond pay-per-install or CPC programs, Wacom — maker of the Bamboo tablet for pen-based computing — sponsored a contest within Facebook’s Graffiti application, the “Graffiti Monster Contest.”

(Artist credit: Marissa Perma)

The first of three one-week contests just wrapped up, and 5660 animated illustrations were submitted and another 515,000 votes were cast by other Facebook members for their favorite — and least favorite — monsters. (Here are the Top 150 Monsters.) That’s an average of nearly 74,000 votes per day.

The motivation for voting (beyond the intrinsic fun of monster art) was a chance to win a $79 Bamboo pen-based tablet kit, a product that sells best among digital artists and digital doodlers — people like the 8,000,000-plus users of the Graffiti application. More than 1,000,000 of them use the service daily to jot notes to friends, sketch simple pictures, or create elaborate artwork. Among the 37,000,000 Graffitis created to date, a significant minority of users have spent more than 20 minutes per drawing. So there was a strong relevance match between the target audience and the sponsorship concept.

In addition to the integrated messaging on all pages of the Graffiti app within Facebook and ad banners targeted to Graffiti users, Wacom launched a program — a digital drawing contest that makes plain their product’s value proposition — that spread from friend to friend across the Facebook universe. Each time a contestant submitted a new monster image, his or her Facebook friends received on their Profile pages a news headline with a thumbnail of the monster art: “Chas drew on the Monster Contest Graffiti wall.”

The numbers then add up quick. Given my mature age (37) and relative new-comer status on Facebook, I’m guessing my network of 300 friends is, if anything, at the low end of the socialite spectrum. If we assume avid Graffiti artists each have 300 friends, on average, that means that 5660 monster drawings (times 300 friends each) generated nearly 1,700,000 personalized “impressions” in the shape of news alerts on Facebook Profile pages over seven days. These “impressions” weren’t graphical ads for Wacom, they were word-of-mouth notifications that encouraged behavior, creating graphical art, that drives sales for Wacom’s products.

Idea and execution credits: John Bistolas at Wacom; Mark Kantor, Ted and Tim Suzman at Graffiti Wall; and Lester Lee and Liam Boylan at Federated Media.

More monsters…..

(Artist credit: Matt Anderson)

(Artist credit: Jake Steward)

(Artist credit: Allan Carandang)

(Artist credit: Will Newton)