Social networking sites are emerging as a hotspot not just for teenagers, but also for advertisers who target these youngsters to build brands and sell products.

However, only 13 per cent of the total Internet advertisement budget has been spent on social media initiatives for the year 2008-09, according to a recent study Webchutney.

But the advertisement spend on digital media by the top 500 marketers is likely to grow 44 per cent to Rs 400 crore (Rs 4 billion) in FY 2009-10.

Google, which has the largest network of users in India, is working with advertisers to aggressively target the youth with innovative strategies on Orkut and You Tube.

Orkut gives marketers the ability to find audiences that they want to target and create an interactive advertising experience that seeks to understand them better and offer products that they need.

Mr. Parminder Singh, Business Head (Technology & Media), Google India, is bullish on the growth of advertising from social networking platforms. He tells why social networking sites are turning out to be a money spinner for advertisers.

How effective are the social networking sites for advertising? Why is it getting more popular?

A social networking site is a great medium to advertise as lakhs (hundreds of thousands) of people use these sites to interact with others. It is a growing community. There is a great interest among clients to advertise more on these platforms. People like to connect with brands and advertisers want to connect with people so this is an ideal platform. After a recent survey by a telecom company, it was found that about 75 per cent of the people identify the brand better. The brand found high favourability among the users.

How many active users do you have on Orkut?

Orkut has 15 million users in India, making it the largest and fastest growing social networking site. The site has over 5 billion page views in India. So India is a very strong market and we hope to continue with this pace of growth.

How difficult is it to retain users? How do you attract more users?

We try to offer a variety of features, which includes photo sharing, innovation in terms of content as we have a good understanding of what the user wants. We offer a variety of apps on various topics, which are of interest to them.

Bollywood is a hot topic in India so we offer a lot of apps based on that. We constant innovate to give content and features relevant for users. We make sure what we add features according to the users’ needs and preferences.

How have revenues from advertising grown? Which sectors advertise the most?

I cannot disclose exact figures but revenues have been growing substantially. Financial services, telecom companies, automobile and travel companies are upbeat on the response they have received. We educate our clients on what people would like to see, create better brand awareness and tell them how to get better brand impact.

How will advertising on social networking sites rise in the coming years?

The networking sites are getting more popular. Advertising across all sections are set to register high growth. We offer advertisers four main target criteria, like the age, gender, geography and interest of the person. This gives them a clear idea about who the audience is, this helps them make the best judgment and offer products to suit their interest.

How do you plan to garner more revenues from online advertisements?

We plan to constantly innovate and offer what our readers want. The social networking sites require intellectual investment, besides monetary investment. We have to be in tune with their demands.

We have this program called, IFPFB for advertisers. This stands for interest, feedback, pride, bonding and fun. The advertisements should generate an interest, get a feedback from people, people should get a sense of pride associating with the product, offer people an opportunity for fun, bond with others. If it’s an insurance product or a loan, people can discuss it and decide which is the best product.

How has the recession hit advertising?

We have not been immune to the recession. It has affected advertising but we continue to focus on return on investment.

What kind of growth do you expect in terms of users, advertisement revenues?

We see substantial growth from India in the years to come. Many of our clients have good success stories after running advertisement campaigns. The advertisements of an online trading company saw a conversion rate of 13.5 per cent which is quite impressive. The advertisers have seen a significant increase in purchase after advertising on these sites.

Social networking sites are booming. How do you plan to fight competition?

We bank on innovation and a strong user base to fight competition.

What are the different methods of advertising? Which method works the best?

We have various formats like banner, text, image, and flash ads. We have also started video format now. It works very well as users get to see the commercial. It also helps companies get a feedback about who is watching it and for how long. This gives a good idea about what clicks and what does not. It helps us understand their preferences better. The advertising method work well depending on the content.

Thanks to Rediff.com