Brands Bearing Gifts:

How social gifting delivers

marketing results

Advertising People Appreciate.

Executive Summary
The explosion of social media usage has presented todays marketers with tremendous
opportunities to create brand awareness and purchase intent among this engaged and growing
audience. To date, however, traditional online advertising methods have failed to deliver on the
promise that social networks offer.
Advertising through social gifting changes the game. Social gifts are an entertaining and widelyadopted means of interaction on social networks; their popularity and in game characteristics
make them an attractive and unique advertising format. AdNectars research shows that
advertising through social gifts both enhances the user experience and creates tangible benefits
for brands. Users overwhelmingly prefer sending branded social gifts to generic social gifts.
And because social gifts allow brands to be part of the conversation, consumers engage and
promote the branding messages.
The results weve driven for clients are compelling. For a consumer packaged goods client,
advertising through our social gifting network drove a 65% increase in purchase intent.
Clickthrough rates across AdNectar-deployed campaigns have been up to 20 times better than
the average of other social media advertising campaigns.
No longer do brands need to remain on the social media sidelines. By placing brand messages
inside social media experiences, AdNectar provides the solution to reaching audiences in a way
both marketers and users love.

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Despite its growth, marketers have been unable to

capitalize on social media.
Social media has become more than
a cultural phenomenon it has firmly
embedded itself as a standard medium for
communication. Every day, hundreds of
millions of consumers worldwide use social
media networks to coordinate their activities,
play games, or just connect with friends.
According to eMarketer, 37% of U.S. adults
and 70% of teens use social networking sites
on a frequent basis.
And the wave of new users is not expected to
slow in the medium term: Jupiter estimates
that social media users will grow at 46% per
year over the next 3 years to 105M users in
the US.

At the same time, marketers have found that

the standard online advertising rules do not
necessarily apply on social networks. Banner
advertisements have proven less effective,
email marketing campaigns are difficult, and
lead generation placements are awkward and
out of place. Users complain that social media
advertising is like being on the phone with a
friend and having an operator interrupt and
try to sell you a hamburger. This attitude has
resulted in low engagement and interaction.
Despite over a billion dollars of social media
advertising in 2008, marketers continue to
search for answers. Advertising through social
gifting changes the game.

Jupiter estimates that

social media users will
grow at 46% per year
over the next 3 years to
105M users in the US.

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AdNectar creates effective advertising that consumers appreciate.

Branded social gifts address powerful consumer preferences while satisfying marketers needs.
AdNectar and third party research show this medium drives increased purchase intent, high
awareness and engagement while actually improving the user experience.
Our research suggests three distinct reasons why social gifting is the right medium for advertising on
social networks:

1. Social gifting is a widely adopted form of embedded communication on social media

2. Consumers prefer sending AdNectar deployed branded social gifts over generic social gifts

3. Consumers prefer advertising that is embedded into their conversation to advertising that

occurs on the sidelines such as traditional banner ads
The confluence of these findings makes social gifting a powerful medium for effective advertising in
social media.
First, social gifts have become a widely adopted form of communicating between social media users.
They provide an entertaining and engaging means of interaction. According to industry estimates,
Facebook users send 5 million social gifts every day. Globally, the social gifting business grosses
approximately $2 billion annually.
This movie looks great!

This Beers for you bud

Be My
Valentine

Social gifts provide

an entertaining and
engaging means
of interacting with
brand messages.

Hi, sweetie!
Have a JellyBelly

Anatomy of a gift
AdNectars unique offering of virtual goods advertising
enables the viral spread of a branded impression
coupled with a linkable object. Each gift has an image
and a tagline with a hypertext link. This hypertext link
can redirect users to the sponsors desired destination
whether it be within social media (e.g. a fanpage),
or outside the social network (e.g. the advertisers
homepage, a seasonal campaign, a new product page).
The unit itself can accomodate rich-media functionality,
making it flexible and expandable to fit each advertisers
needs.

The popularity and flexibility of a social gift

make it a ripe and unique advertising format.

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Users enjoy and appreciate branded virtual goods.

Our research suggests that consumers vastly prefer sending gifts that have branding
associations to those that are generic. In a study involving 650 social networking users,
consumers were presented with a series of AdNectar deployed branded gifts and generic
social gifts. Over a 6 day period, these users were given the option to send these gifts to their
friends. However, users were only able to send either the branded or generic gift so that we
could assess their preference. Across all categories tested, consumers favored gifts with brand
associations.
While it comes as no surprise to marketers that brands carry value, the extent of the value
within this context was stark: 97% of consumers preferred to send branded purses than nonbranded purses. Even in lower priced categories such as lip balm, consumers were four times
more likely to send a branded gift than a generic one. In addition, all branded gifts came preendorsed from a friend with an implied message of support for that brand.

Clearly, consumers readily engage with brands in a social gifting context.

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Consumers prefer advertising that is embedded in their social

media conversation.
In a separate study, we asked 250 social networking users to evaluate several advertising
formats against a series of behavioral and usage dimensions. We arrayed the results from least
social to most social, with the banner ad representing the least social advertising format, and
social gifts representing the most social advertising format.
The newsfeed format the name for the homepage profile on Facebook represented a
middleground because it is a more passive page from which the user cannot do much social
networking. To evaluate relative attitudes and behaviors, we indexed the responses using the
banner advertising format as the base.
The results further emphasize the power of the social gift as an advertising format. It is
more useful, more likely to be clicked on, and less annoying than the other formats tested.
The differences between the newsfeed and the social gift are particularly relevant: users
found advertising in the newsfeed more annoying and less useful than the standard banner
format, most likely because the newsfeed is used to digest information quickly, and therefore
advertising becomes particularly intrusive.

Consumers perceive
social gifts to be more
useful, more engaging,
and less annoying than
other formats.

Social gifts also provide marketers with the benefits of a user-generated setting without the
associated risks. Marketers are keen to place their brands where consumers are open to
engaging with them; however, many CMOs continue to be wary of user-generated contexts
because they fear they will lose control. With social gifting, marketers no longer need to make
this tradeoff. Every user who sends a social gift is implicitly endorsing the gift and therefore
the brand associated with it. At the very least, they are brand advocates; more likely, they are
brand evangelists.

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AdNectar has put these insights into practice, with

compelling results for advertisers.
Over the past months, AdNectar has run
several social gifting campaigns for major
brands. Our campaigns have driven dramatic
increases in purchases intent, awareness and
engagement.
For example, a major consumer products
company sought to improve purchase intent
among social media users for its brand of
household cleaning product. AdNectar
designed several custom social gifts for
our client and deployed them on leading
Facebook applications.
To test the increase in purchase intent,
AdNectar worked with Vizu, a leading 3rd
patry digital brand advertising measurement
and validation company. Vizu asked
consumers who had seen the branded gifts
how likely they were to purchase the product
in the next 6 months. Vizu reported a 65%
increase in purchase intent among those
consumers who had seen the branded gift,
even if they had not sent or received it.
Vizu also reported that even a single
exposure to this form of advertising can drive
brand lift, and that this left is amplified when
users pass on the ad to their friends.

Along with a 3rd party measurement

company, we gauged increases in
purchase intent through an online
survey. Social gifting drives tangible
marketing benefits and ROI.

Vizu reported a 65% increase in purchase intent among those consumers

who had seen the branded social gift,
even if they had not sent or received it.

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AdNectar has put these insights into practice, with

compelling results for advertisers.
To track engagement with the social gifts themselves, AdNectar tracked click-through rates of its
social gifts across several sponsored campaigns. Click-through rates are defined as the number
of times a viewer is redirected from the hypertext link to the sponsors site or content of choice.
Typically clients link to a website, video or fanpage from the link below the vitrual item. Again,
the results were compelling and highlight the high level of consumer engagement with social
gifting. In particular, we found that across a 22 Million impression sample click-through
rates on AdNectar deployed gifts averaged 0.8%, with one campaign topping click-through rates
of 8.4%.
These levels of engagement are several times higher than the aggregate click-through rates of
traditional advertising on major social networks sucsh as MySpace and Facebook. It is notable
that our observed click-through rate does not include the rate of gift pass-along, which typically
exceeds 1%. This is a significant additional benefit in that users voluntarily promote their brand
affiliation to their friends.

20 X better
click-through
with AdNectar
deployed gifts.

In short, social gifting provides an advertising medium that consumers appreciate. For the
first time, advertisers can tap into the vast social media audience effectively and drive high
engagement and awareness. By placing clients messages inside social media experiences,
AdNectar provides the solution to reaching audiences in a way both marketers and users love.

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More about
While most marketers struggle to find an effective
way to reach social media users, AdNectars
clients have found their answer. By placing clients
messages inside social media experiences, AdNectar
provides the solution to reaching audiences in a way
both marketers and users love.
AdNectar delivers high-impact, effective marketing
by leveraging the power of peer-to-peer advertising:
Branded virtual goods Branded e-gifts
Branded greeting cards Branded prize tickets
and other game-play content that increases users
enjoyment and time spent with your message.

AdNectar has what you need

Access over 102 million monthly users
Integrate your brand within a network of top
social media properties
Be inside the application experience
Empower your brand ambassadors
Drive users to destination sites, fanpages, etc.
Optimize performance with real-time monitoring
Take a break! Well handle all the custom creatives

About us
AdNectar provides an integrated advertising platform
that is more enjoyable for users, more effective for
advertisers and more profitable for publishers. The
founding team has years of experience building
online services used by tens of millions of consumers
as well as starting and selling a company. Founded
in April of 2008, and headquartered in Palo Alto,
AdNectar is backed by highly regarded private and
institutional investors including Battery Ventures and
the founders of Adify and RightMedia.

Julie Li, VP of Brand Solutions

julie@adnectar.com
917.279.8579

AdNectar, Inc.

425 Sherman Ave., Suite 110

Palo Alto, CA 94306