Here Come the Social Network Ads, Part II: The Local Angle

To follow up on Kevin Newcomb’s post earlier this week, there are some interesting local search and small business advertising implications to Facebook’s and MySpace’s new ad platforms.

First to reiterate, both platforms will seek to utilize users’ level of engagement, combined with the amount of information they make known about themselves through their profiles, interaction with friends and behavior.

But a key part of both ad platforms will also allow advertisers to target users by location. This will mostly be utilized by national advertisers that want to target users in certain geographies, but it could also have implications for small-business advertisers.

Some of these local advertising possibilities for Facebook have already been developed around classifieds, while MySpace has seen some activity around SMBs creating profiles to gain exposure through viral marketing. The new ad platform could create a channel for these businesses to more meaningfully market themselves on MySpace, similar to the way artists and bands have historically done.

One of Facebook’s new ad products, Facebook Pages will similarly let small businesses build a profile — just like an individual would — which can develop a network of “fans” that connect to the business. Connecting to a business, writing on its “wall” and other activities will be very much the same as individual user profiles. The only difference is that the business has the option to promote that page within the Facebook network by buying demographic, geographic and keyword based targeting.

A newly opened tavern in San Francisco, for example, could target Facebook users between the ages of 25 and 40 that live in the city and have shown through their profile content, a behavioral affinity towards night life, microbrews and “gastropub” fare.

As part of its announcement, MySpace underscored that only 1 million of the 23 million SMBs in the U.S. advertise online, and most of that is search based advertising. Meanwhile MySpace has about 10 million companies of all sizes that have developed profiles on the network. The company is hoping the location-based targeting and other viral marketing capabilities baked into its platform will close the gap on the untapped SMB segment.

For both social networks, this however meets the traditional challenge (explored in an SEW expert column last month) of relying on small businesses to sign up on their own.

It’s yet to be seen if this self provisioning challenge — made apparent through SEM — applies to social networking. There is a good chance it will, although it does have the baked in advantage of spreading itself virally as different small businesses get social and connect to one another. At least for MySpace, it won’t just be “a place for friends” anymore.