Posted April 20, 2007 4:08 pm by with 7 comments

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MediaPost reports on an In-Stat report that says the honeymoon is over for social networks. It’s time to root, hog, or die: “They need to start generating revenue now or bow out of the race, according to a new report from In-Stat. ‘In order for a social networking site to be successful, it must attain a critical mass, and competition is fierce to attract new members,’ said In-Stat analyst Jill Meyers.”

She encouraged social networks to get down to business by using the demographic information they’ve already collected to attract advertisers looking for a particular target:

“Each social networking site collects a plethora of personal and demographic data on each member,” said Meyers, “and while selling these data to target marketing groups may be unappealing to site members, it may be the best route to profitability for site operators.”

Some networks are already capitalizing on this information:

Ad spending on social networks this year is expected to total $865 million, according to eMarketer. MySpace is promised the bulk of that spend to the tune of $525, while its myriad rivals — Facebook, Bebo, Friendster — are being left fighting over about $200 million.

At the same time, MySpace is apparently on the outs:

But, while the trend is likely to persist, the days of every brand maintaining its own MySpace profile page are over, according to eMarketer senior analyst Debra Aho Williamson.

“The notion of creating a MySpace ad profile page and collecting friends was popular in 2006 but will likely give way this year, as users tire of collecting ‘friends,'” said Williamson.

I doubt that high schoolers are going to tire of the MySpace popularity contest (though they may eventually grow out of it), and since MySpace is adding nearly a quarter-million new accounts each day, there will always be a fresh crop of users looking to fill up their friend wall. But was maintaining a brand profile on MySpace ever really that useful to marketers or was it just something you “had to do”?

Meanwhile, there’s at least one not-for-(very-much-)profit use of social networks that’s coming to the forefront: schools. Wired reports that schools are embracing social networks and not just for the latest popularity contest since Homecoming Queen elections.

Outmoding older online education software packages like Blackboard (aw, that takes me back!), social networks are becoming analogous to online classrooms and lounges for students to congregate, discuss and learn. Whether using established networks like MySpace and Facebook or fully customizable networks, like Elgg used by the University of Brighton specifically for education applications.

Of course, many schools are still struggling with allowing access to social networks over their Internet connections. To fully embrace social networking as part of the educational curriculum will require a major shift in mindset and probably a little time. I think it could happen, at least on a university level.

  • Yes, the point you raised totally valid and I agree to it.
    The competition is now fierce for networking sites, and they will have to sell demographic data if they want to be profitable.
    But will genre will come when everybody will find it essential to have more than one account for social networking?

  • In a highly competitive environment, Educators and administrators are realizing what business has just gotten the hang of: you have to take your message to the people in terms they understand and accept as credible. If education is going to be seen as relevant to a growing population of young people, it is going to be in the best interests of schools to make sure that they can participate in the way they know best. Increasingly, web-based applications which include social networking are not only accepted and embraced, but seen as a way to take education out of the classroom and into the unserved population of people who lack the ability to physically attend in scheduled, brick and mortar classrooms. The other major advantage is allowing an extended conversation at much less cost than traditional education. The only problem I found (and it’s a major one, a deal-breaker) is that educational social networks are often taken over by individual agendas: when you have to read all other posts as a requirement for a class, it is annoying and time consuming to plow through comments made by people pushing their own ideology. I dropped a literature class because Born-Again Christians insisted on framing the conversation in terms of salvation, and it just got too frustrating to deal with all that. Otherwise, social networking provides an effective, interactive way to make all of us lifelong learners, and that is a GOOD thing.

  • This is an interesting article, and one reason why we are trying a different approach with our provision of an open source social networking platform. One small point:

    “like Elgg created by the University of Brighton”

    This was something that the journalist on Wired got wrong. Elgg is not a product of Brighton University – they are one of our clients.


  • Jordan McCollum

    Dave–So sorry to repeat their error. I’ve updated the article to reflect this!

  • Thanks Jordan!

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