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If You Build A Social Network, Will Advertisers Come?

Kim Hart

I took a break from the floor to listen to a panel discussion on social networks and user-generated content.

After the panelists waxed philosophical for a bit about how social networks are enabling our age-old desire to connect to other humans, they got down to the bottom line. Advertising is the bread and butter of such sites, but some big marketers are still a bit reluctant to pump money into sites like Facebook and MySpace, let alone the smaller niche sites like Dogster, for dog lovers, and BabyCenter, for new mothers.


So when will advertisers jump on board in a big way? Mike Gordon of Limelight Networks, which distributes online media, predicted there'd be a huge shift in 4 to 6 years. That's when media buyers will belong to the social networking generation, he said. Right now, the people in charge of buying ad space grew up with television, so they stick with that medium because it's familiar to them.

Matt Edelman, CEO and co-founder of a social network called PeopleJam, observed that TV ratings are plummeting, yet TV advertising revenue has gone up. "There's definitely a bubble there and hopefully we can be the beneficiaries when that bursts."

Reena Jadhav, founder and CEO of CareerHero.com, a site targeted at college students that lets them explore different careers, said the company is building a virtual world within the site where people can live the day-to-day life of a doctor or a lawyer so they can experience what different professions are like.

"There are companies out there trying to think of how to bring gaming and virtual worlds into their own networks," she said.

I wonder if advertising of the future will be product placements in these social-networking-virtual-worlds.

By Kim Hart  |  January 9, 2008; 5:47 PM ET  | Category:  CES 2008 , Kim Hart
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Hi,

I'm Ted Rheingold and I'm the founder and CEO of Dogster.com and Catster.com.

I do agree that advertisers are being very picky about which community-oriented sites the advertiser on and many are still stuck on the sidelines, but I do not agree that there is a lack of spending.

We're thriving right now on a primarily advertising model as I know BabyCenter and Facebook are. Brands from every sector have aggressively moved online and the rest will have to play catch-up in the years to come.

I do agree with your premise that simply building a community site does not guarantee advertisers will want to be there. Advertisers still need to see strong qualified presences of their target audiences engaging in a trust worthy environment.

Building community sites is easy, developing a thriving community that logs in every day year after year is the hard part.

Glad to see you're covering the industry. I've added you to my feed read.

Posted by: Ted Rheingold | January 9, 2008 9:32 PM

I think there will be a definite shift in ad spending on social networks and much sooner than 4 to 6 years.

Niche social networks allow users to connect with like-minded individuals and focus on particular interests, tastes and demographics. This kind of hyper-targeting is just what advertisers want.

Sites like Ning let anyone create a niche social network, aiding in their proliferation and variety while search engines such as http://findasocialnetwork.com allow users to easily find these networks and network owners to promote themselves.

Posted by: Fason | January 10, 2008 4:23 AM

I think it probably depends on the network--I belong to a group called Ravelry--targeted at knitters and needleworkers--and they seem to have plenty of yarn shops and online outlets advertising.

Posted by: Annapolis | January 10, 2008 11:38 AM

I am the VP of Creative & Predictive Marketing for GoRover.com. We have recently created a travel directory site geared toward the active traveler, with the latest focus on skiing, surfing, rafting, climbing, golfing, sailing, diving, and fishing.

As part of our site, we have incorporated a social networking arena so our visitors can gather the information they need to plan their adventure vacation and also visit with other travelers, find travel companions and create personal profiles.

I agree with several comments above stating the success of future social networking sites will be driven largely by the affinity the person has with the group on a particular site.

The more you "drill down" the target audience, the easier it will be to acquire advertisers seeking that customer.

The observation on the knitting site having no problem securing advertisers supports this thought.

Social Networking online will only increase, but those who have success will find a niche group of consumers and the advertisers will follow... sooner than any of us now believe.

Food for thought... in less than 100 years, we went from a man strapping wings on his back and flapping to fly - to walking on the moon and jumbo jets the size of ocean liners cruising through the sky.

And - FOR NOW - the internet is the "final frontier". Jump in for the wild ride!

Posted by: Angie Robinson | January 10, 2008 7:00 PM

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