Social Media advertising is a term that is used to describe a form of Online advertising that focuses on social networking sites. One of the major benefits of advertising on a social networking site (facebook, myspace, friendster, bebo, orkut...and many others) is that advertisers can take advantage of the user's demographic information and target their ads appropriately. Social Media Advertising represents ad formats that engage the social context of the user viewing the ad. Whereas in traditional, non-social, advertising the ad is targeted based on what it knows about the individual person or the individual page, in social advertising the ad is targeted based on what it knows about the individual user's social network.

Social Advertising is the first form of advertising that systematically leverages historically "offline" dynamics, such as peer-pressure, friend recommendations, and other forms of social influence.

• Direct Advertising that is based on your network of friends - This can be the most effective format but also causes the most controversy. An example is the Facebook beacon project. Based on an action your friend has taken, you might see a message in your news feed saying 'Bob has just bought a 'Radiohead CD from MusicWorld'. This can be an extremely effective mode as often people make decisions to purchase something or do something based on their close group of friends. However, there is also a lot of controversy surrounding this as it can be considered exploiting the personal relationships you have with your friends and also raises privacy concerns.
  
  
• Direct Advertising placed on your social networking site - This is a more traditional form of web advertising that is minimally effective. Just like you see banner ads on many other sites, this is a similar concept, except on a social networking site. You can see these - for example - as a brick in the top right of MySpace pages, or as a banner on the left of Facebook profiles and so on. There are two differences however - One is that these social networks can take advantage of demographic data on your profile and hence target the ad directly to you. Secondly, these types of ads can also be placed by individual developers on their application pages through ad networks such as SponsorPay, AdParlor, Twtbuck or Offerpal. They have access to the same data and can generate income for application developers giving them further motivation to create apps and giving advertisers a more engaging way to reach out to these social networking users.
  
  
• Indirect Advertising by creating 'groups' or 'pages' - This is an innovative marketing technique in which a company will create a 'page' or 'group' that users can choose to join. They will use this to build up 'subscribers' or 'fans' and use this to market a contest, a new product, or simply just to increase brand awareness. These groups can quickly grow in numbers of subscribers which can become a very effective marketing tool.

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