This is the second part in our ongoing series comparing online advertising, with a focus on social media. Last time we received a prompt reply from the Sydney Morning Herald, this time round we have spoken to StumbleUpon.com.

StumbleUpon uses ratings from its users to create opinions on website quality. When a user “stumbles”, they see pages that other stumblers have recommended and they can either like or dislike the content. This helps users discover great content not normally found with a search engine, with a view that poor content will be sifted out.

StumbleUpon users can find other each other and content by searching tags, such as “marketing”. Advertisers can capitalise on these “personal” search recommendations by including their content with the normally submitted content. Advertising on StumbleUpon is equivalent to purchasing traffic within your chosen demographic.

Outside of the US, StumbleUpon is relatively unused. However, StumbleUpon is one of the older social news websites, with over 10 million active users, and depending on who you listen to, they either make up 25% of share content, or just over 10%. These are some impressive stats for any media, with 5.4 billion website recommendations a year and 118% growth in users since 2009. The average Stumbler views 25 websites per day, which is a higher level of engagement than most traditional news websites.

Advertisers on StumbleUpon can expect everything that is standard in online advertising. The cost per click is low, at $.05, the starting cost is virtually zero, there is no CPM because you only pay for clicks, and segmentation is easy, using tags and user demographics. Some advertisers have bought 100 clicks for just $5, others 1150 clicks for $20, which makes it far cheaper CPC than most Google keywords.

What makes StumbleUpon stand out, is also what makes it a less than perfect fit for  most advertisers. The volume of users and the number of views/clicks each advertiser can expect make it great for publishers or news websites aiming to sell advertising or rope in new readers. One publisher claimed a 3% conversion rate from one StumbleUpon campaign, which is still higher than a lot of other advertising options. However, as opposed to Google, where you can segment by search terms like “Cheap Hairdryers”, it is hard to see how stumblers looking for hair styling tips will linger on a website selling hairdryers, unless they are spectacular hairdryers.

In order to maximise the impact of advertising on StumbleUpon, businesses should focus on unique and interesting stories that are part of their business. Promoting a new, hot, interesting product with a great story is going to go a lot further than trying to sell directly to the stumblers. In that way, StumbleUpon should be viewed as a tool to help build community, promote a brand and be a part of your PR package.

The analytics side of advertising is again as sophisticated as any other media. Advertisers can see what the results of the campaign have been and how the website has been spread “organically” to other stumblers.

We asked the following questions to Katie Gray, Marketing Communications Manager at StumbleUpon, and we received the following answers, which are here unedited.

CD:Why should someone run an advertising campaign with StumbleUpon?

SU: Because we drive so much traffic online, StumbleUpon is, hands down, the most efficient way to get your content directly in front of the targeted audience you’re looking for. Because StumbleUpon and its ads platform are both so unique, here’s a brief overview of the StumbleUpon product experience:

StumbleUpon is a one-click recommendation engine. When a user signs up for our service, they tell us what they’re interested in by choosing from a list of 500+ topics. As users click the Stumble! Button, we take them to new and interesting web sites that they can then rate positively (thumb-up) or negatively (thumb-down). We take this feedback as well as ratings from like-minded users in our community into account as we take users to more sites that we predict they’ll like. Over time, we develop a deep profile of each user’s likes and dislikes and our sophisticated recommendation technology serves up content that is directly personalized towards them and their interests.

StumbleUpon ads look just like any of the pages served to a user – we send our users directly to these sponsored landing pages, so there’s no “click-through” required. Since an advertiser is targeting potential customers by their interest in a relevant topic area, our users see advertising content they want to see. Advertisers don’t need any banner creative, they aren’t restricted by character limits or size requirements, and they can let their content speak for itself. No additional effort beyond having a web site is required to advertise with StumbleUpon, and virtually any page with rich and engaging information can be a potential StumbleUpon ad. And because the advertised content is so seamlessly integrated into the rest of the stumbling experience, our users tend to be highly engaged with sponsored content they like.

We also offer extensive analytics showing advertisers the total number of unique visitors resulting from an advertising campaign, including any additional organic uplift gained as a result of users sharing the advertiser’s page with others and making it go viral within our community. Advertisers can also view users’ ratings of their sites over time, see which pieces of content most resonate with site visitors, and adjust their campaigns accordingly.

What is the lowest amount someone can expect to spend?

We currently charge a flat $.05 cost per view (CPV) and we do not have a minimum spend requirement. Advertisers will find that if our users like their content, their pages will get additional organic uplift for a couple reasons. First, users often share content they’ve stumbled upon to their friends inside and outside of StumbleUpon. Second, our recommendation algorithms take into account users’ positive ratings of paid content, which surfaces this content to more and more users beyond the traffic an advertiser has paid for. We do not charge for the additional views from positive user ratings or sharing, so advertisers with popular content are rewarded with free traffic that brings down their eCPV below $.05. We have clients who spend just $5 per day, while others spend as much as $5,000 per day. Advertisers have the control to adjust the amount they want to spend per day and the flexibility to pay through either PayPal or any major credit card.

Which industry would gain, or has gained the most from advertising with StumbleUpon?

Our advertising platform is a great fit for anyone creating or driving traffic to compelling content online. The best performing content on StumbleUpon is info-rich, entertaining and informative. We work most extensively with publishers, advertising agencies and bloggers, as well as businesses in the entertainment, online retail, and service industries.

Some of our most successful advertisers promote everyday products or services, but in an entertaining way. For example, the Wisconsin Milk Marketing Board ran a StumbleUpon ad campaign for GrilledCheeseAcademy.com, an interactive site showcasing grilled cheese sandwich recipes with different kinds of Wisconsin cheese. The campaign quickly went viral, and user engagement was double the level they expected. In addition, the organic traffic they received was more than double the amount of their paid traffic.

For an average campaign, or an example campaign, what would be the cost, number of impressions, and click through rate of the campaign?

We’re a unique platform, so a lot of these metrics don’t apply to us in the same way they do with more traditional online media providers. Instead of serving a banner or a text ad and hoping that people will find and click on the ad, advertisers choose how many visitors they would like to receive and we send highly qualified leads to the advertisers’ sites directly.

To illustrate the cost-effectiveness of StumbleUpon advertising compared to other forms of online advertising, imagine that you’ve created a site with a useful and engaging personal finance management tool. If you created a banner ad for placement on a popular finance site, you may pay a $50 CPM and receive, at best, a .02% CTR. With StumbleUpon, you would pay the same CPM (as every page view on StumbleUpon costs $.05) but with 100% CTR and a guarantee that users interested in your topic area would see your content. Plus, if users like your ad content, you could receive additional page views at no cost, driving your effective CPV even lower.

How closely can you target a campaign, e.g. by keywords, by articles, by categories?

You target users by topic, and then you can further narrow that field of “Stumblers” by age, gender, and location.

How do you compare to other online advertising, such as newspapers or social networking?

Our advertising model is quite unique. We don’t serve traditional advertising like banners or search links. Instead, 5% of the web pages – or “stumbles” – we show to users are paid placements. An advertiser identifies the URL they want to promote and selects relevant topics from our list. Then we insert that entire page into the “StumbleStream,” or sequence of sites the user sees when they stumble. The user lands directly on your site without having to click on a banner ad or text link. This direct serving of ads to users who are looking for cool sites relevant to their interests also makes it more likely that advertisers will engage users longer than with print advertising, especially if they develop a content-rich site as part of their advertising campaigns.

We have over 10 million registered users total, and users click the Stumble button over 20 million times each day. StumbleUpon drives the most online traffic of all social media in the U.S. and we’re 2nd globally.

Where do you see your online advertising platform going in the next year? Will you be introducing any new features?

We’re constantly innovating on our advertising platform. Our current focus is offering advertisers more targeting options to better enable them to reach more customers. Soon our advertisers will be able to either widen their targeting reach or get more granular. We’re also enhancing our data representation and analytics, giving advertisers more visibility into their campaign performance.

Creative Development is a marketing and web design agency based in Sydney.

If there are any other websites or advertising platforms you would like to see here, leave a comment below and we will see what we can do. All our comments are do-follow, so enjoy the link-love.