Web 2.0 Companies Forging New Territory

Social media has already changed the way we communicate, organize, and reflect on our relationships, however, the full expanse of social networks’ potential impact on marketing and business models has not been realized. As companies such as Twitter, Facebook, LinkedIn (NYSE:LNKD), and others are making IPOs or working towards plans to do so, they will likely change gears in terms of operating strategies and become more concerned with bottom lines on financial statements than fostering social connectivity. Already, we’ve seen innovations with young companies such as Pandora (NYSE:P), Groupon, and others working through social media channels to help distribute their business, and in light of what’s reportedly brewing up at Facebook headquarters, we’ve yet to see the least of it.

Last year Facebook held a creative advertising competition among marketing firms it works with, and the winning idea from last year’s tournament, “Comment ad” will soon be popping up on users’ profile pages and changing the way people interact with advertisements. The comment ad uses a format known as “crowdsourced” whereby the ad-display to users will appear in the format of a chat box. Advertisers will pose a question or make a statement to prompt responses, allowing users to respond or comment freely in the ad space, and view their friends interactions within the comment “storyline.” According to FastCompany, “Facebook sees its value as being able to create connections and relationships between consumers and brands. Conversations are one way to do that, and the “Comment” ad format is a way to jumpstart conversations.”

Comment Ad is just one of the many novel designs advertiser are planning to build on social media platforms. American Express (NYSE:AXP) will also jump into the fray, offering a cash-back rewards program to customers through Foursquare, a social network featuring over 10 million registered users that’s goal is to “foster loyalty between merchants and customers.” AMEX will partner with restaurants and retailers to offer rewards points and savings to users who register their credit cards on their Foursquare accounts, and give automatic discounts to eligible customers on billing statements. According to one FourSquare spokesman, “We can start to show merchants the value of their advertising. You can start to see a really bright future in that regard, where we can truly measure the ROI of offline advertising.”

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