Is Social Networks Profitable Business?

Social networks in the face of its growing popularity faced with the complexity of monetization or profit from their services.

The problem is named in the main report In-Stat "Social Networks: finding friends online".

"In order for social networking sites have become successful, it must to attain a critical mass, but the competition to attract new members being very badly," says Jill Meyers of In-Stat. Moreover, the site focused on a younger audience, which finite and limited in income," said Miss Meyers. In her observation, baby boomers most often in social networks are frequently overlooked. Although they have their own social network, for example, Eons.com.

eMarketer estimated, in 2007 the cost of advertising on MySpace outweigh the cost of advertising in other social networks together.

One of possibility opportunities to earn is sale users data: the huge number of resources have comprehensive demographic data. While this may not like members of the site, it may be the best way to reach profitability.

While social networks have become a popular phenomenon, individually enjoyed varying popularity from growth 1177% (Sconex.com) to -40% (LiveJournal.com), according to comScore Media Metrix.

Microsoft offers tips on increasing revenue from advertising in social networks. Group digital advertising solutions to the Microsoft ordered Metrix Lab study on how members of the social networking sites use. It was found that advantageous in terms of advertising can be a creation of the so-called profile brands, which can be added to the list of friends. A quarter of members of social networks are made on any advertising, a one third is forwards it to friends.

But according to eMarketer senior analyst Debra Aho Williamson, the time of branded profiles are probably already passed. The idea of advertising - creation of advertising profiles and collection of friends - was popular in 2006, but had to decline because users are tired of collecting friends.

Some companies are developing special software that uses sophisticated modeling techniques to identify the context of what are written by members of social networks to show them the most appropriate advertising.

There is a risk that innovative models will not be accepted, and advertisers want to use something more commonplace. For instance, the Roadblocks which sells at MySpace pages.