(By Preethi J & Nikhil Pahwa) Just as Facebook seems to be putting up catchy, event-related ads off late, competitor Orkut has announced a few changes in its advertising policies too. It has pushed up the position of ads to eye-level and is launching various advertising options to draw advertisers in the country and has set up a microsite to cater to this new launch.
For larger clients, it is promising animated ads and third party tagging to increase hits, but offering these entirely on a CPM basis. For smaller advertisers, text or image ads are being offered, on a CPC (pay per click) or CPM (impressions). An example would be a deal for a hotel room. Orkut is offering three types of advertisements to smaller advertisers: contextual advertisements on a CPC basis, either in image or text format, based on keywords on a page and the users age, gender and geographic location; keyword based advertisements related to search are on a CPM basis. There are also “Channel” advertisements, based on users interests, as well as age, gender and geographic location, but these are also available on a CPM or CPC basis.
Why Google Is Selling CPM On Orkut
Google, the flagbearer of CPC, knows that Social Networks such as Orkut struggle to provide clicks to advertisers. Last year, Eric Schmidt had said on a conference call that they’re disappointed with the monetization on Orkut and MySpace (with which Google had a partnership). Users log into social networks to communicate with their friends, and the ‘Intent’ to purchase isn’t there. This is quite unlike Search, where the intent is to find more information, say, about hotels or air tickets, and possibly the willingness to pay. By going down the CPM route on Orkut, Google is pitching the “branding” play to advertisers. Whether they buy CPM or CPC, advertisers will also internally compare CPM campaigns on the basis of clickthroughs as well.
Stats, Changes In Ads, Relevancy Vital
Currently, the ad section is only on the homepage. Now, Orkut will be enabling ads beside search results, too, a la Google. Facebook opted to create an entire ad section in a margin on the right hand side. Relevancy will be the most significant aspect of introducing ads. Orkut will offer targeted ads according to age, gender, user interests (on the profile), keywords and demography. Majority of Orkut users are male and below 25 years, it informs.
Orkut also plans to matches ads with communities to which the user belongs, but this would need to be filtered according to location for it to be more effective. Further, those with social actions attached to them such as events or deals would be most able to evoke interest from users.
India is a big market for Google and Orkut – the networking site claims to have 13 million active users, and 5 billion pageviews per month. The average Orkut user visits the site 10 times each month, spending over 13 minutes per visit. Please note that Orkut stats are based on Comscore, and industry executives have often told us that Comscores India stats are not accurate. We’re not aware of Comscores sampling methodology for India. However, it remains to be seen how relevant and interesting ads are made to ensure they are effective and maintain a healthy click through rate.