Tuesday, 1 July 2008

Developing a Niche Will Be a Key to Social Networking Success

Social networking is an integral part of the Internet and will not be going away, however revenue generation via this technology is not what it was once predicted to become.

According to a report from high-tech market research firm In-Stat, the answer is to find different models—innovative methods—to capitalize on the wealth of data social networking sites.

Affiliate advertising, the selling of virtual goods, micropayments, social network site merchandising, and data mining are all viable alternatives to traditional revenue models.

"Development of niche social networking sites is an essential piece of the monetization puzzle," says Jill Meyers, In-Stat analyst.

"The more specific a social networking site is to a select group of users, the more targeted the advertising can become; the more loyal the membership will be because it caters to specific interests; and the more opportunities the site will have to be profitable."

Recent research by In-Stat found the following:

• In-Stat forecasts 92.2 million social networking users in the US by 2012.

• 66.6% of respondents to an In-Stat US consumer survey do not pay for premium services or features.

• 16.7% of survey respondents use a mobile phone to participate in online social networking or video content sites.