A new report from In-Stat says that although social networks have been experiencing massive growth in recent years, their future remains uncertain.
The high tech market research firm says that key issues for social networking sites are membership and monetisation and only sites that can dominate these issues will survive.
Jill Meyers, In-Stat analyst, said: “In order for a social networking site to be successful, it must attain a critical mass, and competition is fierce to attract new members.
“So far, sites have focused their attention on a younger demographic, which is finite, fickle and limited in expendable income.”
In-Stat says that site operators are still struggling to find profitable business models. Meyers said: “While many sites are struggling to attract advertisers, others are seeking to attain profit through nominal monthly fees.
“It seems as if the most important asset the site operators possess is constantly overlooked – data. Each social networking site collects a plethora of personal and demographic data on each member, 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.”
Recent research and a survey by In-Stat found that 30% of survey respondents pay for premium services or features on social networking sites, whilst respondents who indicated no future plans to purchase premium services on social networking websites cited expense and lack of desired services and features as the main reasons for lack of purchase.
Less than 13% of survey respondents use mobile social networking services. The overwhelming response was that the use of mobile devices for social networking simply was not of interest to them.
The recent MediaTel Group seminar on the future of digital examined the social networking phenomenon and what it means for advertisers wanting to exploit the medium (see Seminar Examines Social Networking Phenomenon).
Meanwhile, the IAB said that social networking was one of the key drivers of the growth experienced by internet advertising in 2006 (see UK Internet Advertising Spend Grows 41%)
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