Advertisements based on interactive activities among social network users, in particular, have become the darling of some companies.

On renren.com, one of the largest social networking sites in China, more than 100 online activities have been held since last September. They range from product sample giveaways to entrepreneurship competitions to design contests, and there are more and more of them taking place everyday.

“We have been seeing an obvious increase in different kinds of interactive advertisements over the past two years,” said Jiang Zhiqiang, chief marketing officer of Oak Pacific Interactive, which owns renren.com.

According to research firm iResearch, the Internet advertising market value in China reached 20.6 billion yuan last year, up 21.2 percent from 2008, and new media, such as video and social networking sites, was one of the driving forces behind the increase due to its explosive growth.

The main reason for the popularity of social networking site advertising is it’s based on real relationships and can foster word-of-mouth marketing faster and cheaper than other forms of advertising.

Interactive advertisements “can create a domino effect and spread to many more people by itself”, said Gong Yu, brand supervisor of Lipton, Unilever China.

The consumer goods firm launched a greeting card activity with China’s biggest instant messaging service QQ earlier this year. Users could send a greeting to their friends in a video with Lipton’s brand image attached, and the more greetings users send, the more credits they receive, which can then be exchanged for virtual or actual gifts.

Gong said the event attracted 50 million users in two months’ time.

This is second online brand-building campaign Lipton has held since last year.

Lipton previously held an online hug-sending event on renren.com in which users receive credits for hugs sent to others and subsequently for hugs forwarded on to other users.

The commercial theme behind the event was that Lipton’s milk tea is as warm as a hug between friends.

At the same time, Lipton combined this online activity with its retail business by providing lucky numbers on Lipton milk tea packaging that could be exchanges for virtual credits.

In a follow-up questionnaire, 46 percent of the 50,000 participants polled said that they bought at least one box of milk tea because of the online activity.

In addition, Lipton’s brand awareness increased by one to two percentage points in Beijing, Shanghai and Guangzhou, according to Gong.

“Compared with traditional media, such as TV and print, social networking advertisements are cheaper, and they replace the one-way flow of information by creating interaction between users and advertisers,” said Li Zhi, an analyst with domestic research firm Analysys International.

“Compared with Internet advertisements, it reduces users’ rejection to advertisements because it blends advertising with social networking features.”

Unilever is not the only firm to take advantage of social networking sites to market their products.

Many household names, such as BMW, Adidas, Samsung and McDonald’s have carried out their marketing campaigns on social networking sites.

McDonald’s last year rolled out a social networking event that attracted 10 million people to make purchases at the fast-food chain, according to Nielsen research, and the brand’s favorable impression amongst consumers has improved by 33 percent.

One of China’s largest food manufacturers, China Oil & Foodstuffs Corporation (COFCO), introduced its 11 brands to young users through a social networking site farming game.

In collaboration with MSN and MediaCom, COFCO introduced the activity earlier this year where the company’s actual production process was simulated for users to try.

Activities included sewing, daily care, gathering, processing and transportation, and inviting friends to join in was required in order to finish the entire production process.

Teams that finished making all 11 brands of products could have the opportunity to be awarded real goods from COFCO.

COFCO’s message to users was to emphasize both the healthiness and safety of its products. In the first month users topped 300,000, and approximately five million users have taken part in the game through the end of February.

“If you ask the users who ‘produced’ COFCO goods about the company’s product lines, they can certainly tell you a lot, and this is more effective than traditional advertising,” said He Dan from COFCO’s innovation and brand department.

While social media marketing can help a company be well received by consumers, it can also be a risk if not handled appropriately.