MySpace Slices Audience for Ad Targeting and Higher CPMs

When it purchased ad tech firm Strategic Data Corporation in February, MySpace publisher Fox Interactive Media promised to capitalize on the mountains of data from user profiles to better segment its audience and refine ad targeting. The firm appears to be on the way to achieving that goal with the expansion of its HyperTargeting platform for display ads. In addition to adding several new audience segments, MySpace plans to launch a self-serve display ad creation and targeting tool for small advertisers soon.

The company expects refined audience segmentation will result in higher CPM rates for display ads. MySpace admits those rates are often low because the social networking site has so much inventory. According to MySpace, the site attracts 60 billion page views each month.

The HyperTargeting system launched in July, allowing 50 trial advertisers such as Procter & Gamble and Ford to target ads to 10 macro-level interest-based user categories such as Personal Finance, Consumer Electronics and Travel, segmented according to information users add to their profiles. Now MySpace is slicing audience interest categories into more than 100 smaller “hyper” segments. Top level segments include about three million users each while sub-segments have around 100,000 users, the company said in a statement.

MySpace analyzes non-personally identifiable information posted by users on their profiles to serve ads only to those users. “The information used for our targeting program is freely-expressed, public, viewable information that users have voluntarily put on their profiles,” said the firm in a statement provided to press outlets. In the future, the company expects to develop segments based on preferred MySpace activities and “life stages.” The HyperTargeting offering will be made available for targeting non-U.S. users next year.

As information gleaned through social media and from online user behavior is increasingly employed to target advertising, consumer advocates have expressed concern about data security and privacy. A Federal Trade Commission conference last week explored online data tracking and collection, specifically as it relates to the impact of behavioral targeting technologies on consumers. To appease privacy watchdogs and concerned users, MySpace will allow users to opt-out of its ad targeting system by the end of the year.

The social networking site sought to distinguish its interest-based targeting system from behavioral technologies that target ads based on prior online behavior. “Users may visit sites for the purpose of shopping for someone else, work or other reasons, so it is relatively difficult to predict accurately on behavior vs. on self disclosure,” the company stated. No MySpace representative was available for further comment.

According to MySpace, its SDC acquisition enabled development of the new targeting system, which was built in-house by Fox Interactive Media’s monetization technology group. When it acquired SDC early this year, FIM Chief Revenue Officer Michael Barrett told ClickZ News, “I don’t think we would have done this acquisition if we didn’t have MySpace.” FIM bought SDC to handle the ad management back end for a portion of the display ads on its sites including IGN Entertainment, Rotten Tomatoes and Fox.com.

In conjunction with an online ad industry trade marketing effort, MySpace today also touted its upcoming SelfServe display ad creation tool and targeting platform, intended for small business advertisers. The platform will let users build ads, select geographic, demographic and interest category targets, and pay for CPC-based placements on MySpace. It will also provide ad performance tracking and analytics tools. The system is set to launch by the end of the year.

MySpace said neither of the new display ad offerings will affect FIM’s deal with Google, its exclusive provider of text-based advertising and search partner.