Social climbing on the internet

In February 2006, Facebook added a virtual gift service to its site, allowing its 50 million members worldwide to pay $1 (48p) to send each other animated icons of novelty items such as cakes, teddy bears or bottles of beer. Whatever the questionable material value of these 'gifts', the service has become one of the social network's most popular activities, with more than 24 million of these virtual presents exchanging hands via the site so far.

Runaway success

Improvements in internet technology and the public's increasing acceptance of the medium, have helped create an environment in which social networking sites could flourish. Facebook and other sites like it have been a runaway success since they appeared in 2001. With no sign that interest is waning, brands are starting to realise the value of creating virtual incentives along the lines of Facebook's gift service.

US retail giant Wal-Mart recently made 300,000 sponsored ghost icons available on Facebook's gift shop. The initiative was billed as a great way for Facebook users to "scare up some fun at Halloween" in return for visiting Wal-Mart's online shop. Unilever recently designed a Facebook gift to help promote its US deodorant brand Axe to the social network's core youth audience. The branded gift was a hit among Facebook users, with all 250,000 items snapped up in days.

"This is the most instantly appealing of all the Facebook advertising opportunities, as it wholeheartedly relies on user initiation and interaction," says Guy Phillipson, chief executive of the Internet Advertising Bureau.However, despite the limited number of branded gifts on offer, a backlash against the increasing commercialisation of Facebook has begun, with a hardcore of users campaigning to have all branded messages removed from the social networking site.

Facebook appears to be taking little notice of the dissenters. It recently opened its platform to third-party advertisers and developers, inviting them to create branded applications, sometimes called widgets, to encourage users to spend time with their brands via the social networking site.

"Traditional marketing is becoming less effective every day," says Owen Van Natta, chief operating officer of Facebook. "The next generation of advertising requires that brands give something that allows them to become part of the consumer conversation."

Online travel company Trip Advisor was one of the first advertisers to take this approach, launching a branded world maps service allowing Facebook users to highlight the countries they have visited. Similarly, Facebook Causes, the social networking-meets-philanthropy offshoot, has introduced a series of gifts that are tied to 20 charities. In a partnership with not-for-profit organisation One Laptop Per Child, for instance, Facebook users can pay $200 (£97) to receive a virtual laptop, while donating a real laptop to a child in a developing nation.

New set of rules

"Marketers are playing by an entirely new set of rules in the web 2.0 landscape," says Josh Spear, founder of digital think tank Undercurrent. "You have to use incentives to add value to the online experience to avoid becoming a laughing stock," he says.

At social networking site MySpace, brands are being encouraged to invest in the creation of sponsored communities on the website offering internet users a combination of branded skins, wallpapers and other widgets that they can use to enhance their own profile pages. The initiative is striking a chord with a growing number of advertisers, including Adidas, EasyJet and Vodafone.

The social networking giant also recently gave marketers access to the building blocks behind the site, clearing the way for the creation of more branded gifts and widgets.

"Gifting on Facebook is a really cool way of allowing brands to be a part of the conversations that go on between friends on the site," says Jamie Kantrowitz, senior vice president of marketing and content for MySpace in Europe. "There is huge potential for us to build on the concept of virtual gifting."

O2 MAKES THE GRADE WITH STUDENT FACEBOOK GROUP

O2 recently made its first foray into social networking, with the launch of a branded Facebook group giving university students the chance to win a £50,000 on-campus party.

The initiative was designed to support the launch of O2's Favourite Place tariff, which offers free calls to UK landlines and O2 mobiles from registered postcodes. The tariff is aimed at students, allowing them to register their halls of residence address and take advantage of free calls to home.

As well as giving UK students the chance to win an O2-branded party for their campus, the scheme also incentivised youth consumers to join the Facebook group by offering them four free O2 Favourite Place SIM cards and 500 minutes of free calls per month.

Over a six-week period, 'The Battle for the UK's Favourite University' Facebook group, developed by Agency Republic, attracted 109,977 members, who uploaded 56,448 photos, posted 89,259 comments and took part in 2,739 discussion groups. The site allowed UK students to switch to the Favourite Place tariff by texting their postcode to a special number. It also encouraged them to visit a dedicated website for more information.

Sally Cowdry, O2 marketing director, says: "The key to this project, and its subsequent success, was that we tapped into existing behaviours."