Facebook reckoning part 3: horizontal versus vertical

What’s better for advertisers - a blanket social network campaign with a high click-through rate or targeting your campaign to a niche, vertical social network?

Vertical networks are usually organised around a specific interest or theme. They’re usually either fan sites, are age/interest specific or for professional purposes.

LinkedIn is one such example of a vertical network that’s used for a very specific purpose. Marcom is another one and it’s marketed towards those working in the PR industry. These sites focus on community rather than hiking up the user numbers. In the process they’ve created some priceless networking and recruitment opportunities.

In theory passion-centric networks should work well. You’ve got a smaller user base to begin with but the audience are more engaged and have a common bond uniting them. Social network sites set up around music are changing the way we consume the media. Music sharing sites like MOG, iLike or Last.fm bring together users with custom filters and personalized suggestions.

According to figures from eMarketer, last year advertisers spent $920 million on advertising on social networks and of that amount 8.2% went into niche networks. This year the spending is set to increase to $2.1 billion with investment in vertical sites rising to 10%. With ad spend likely to increase in the future, niche networks are achieving ROI levels that the blanket networks can’t manage.

From an advertising perspective campaigns can be directly aimed at knowledgable and specific audiences. Although the click-through rate may be lower in volume, on the vertical sites they are more valuable.

A company looking to sell a sports car, for example, who are after the best place to invest in social media wouldn’t place their ads in Myspace to debt ridden students. A niche site would make much more economic sense, one like ASMALLWORLD for example, a private social network that connects a wealthier audience with similar interests.

That’s not to say the days of Facebook are numbered - far from it. Most people still have a general social portal. The majority of the time, Facebook is still the template of choice of their vertical equivalents. Is it any wonder when the interface is so easy to use and clutter free.

Sites like Socialurl, Friendfeed and confluence commons that aggregate your different social network sites to create unique content, are tackling the social media smorgasboard. Confluence Commons for one, lets you reply to twitter feeds, auto-embeds feeds from digg and ping.fm and allows you to use different networks without having to visit each one individually.

When the social network market becomes chock full of every concievable special interest network, the future, I’d wager, is in RSS delivery. Dogster, Catster, KylieKonnect, The David Hasselhoff network, whatever they come up with next... as people get more content than they can cope with, off-site widgets will reign as the way to manage them all.

Read Facebook reckoning part 1: global expansion route

Read Facebook reckoning part 2: the revenue race