Profiting from friendship. The Economist on social networks and how brands are working with them.
A much discussed story on The Economist on social networks and their approach of growing big, before thinking of generating any meaningful revenue. How despite Facebook user numbers being bigger than that of any TV network ever, the company is unable to generate too much revenue. According to eMarketer, in 2009, social networks generated a mere $ 1.2 billion dollars. Social networks in a way are the promised land for precision marketing, where advertisers can, with laser like precision, target advertising. Yet the click-through rates on these ads have been anything but encouraging. Ford’s head of social media, Scott Monty sums up the marketer’s view “We spend the majority of our time engaging with people on these networks, not advertising on them,” One good example of engagement was Toyota’s Rock the Band work with Myspace. Despite losing its No 1 position to Facebook, Myspace is the place to go to for music. And the Toyota effort fitted perfectly into the mind space of the Myspace audience. In Asia, some of the leading networks are making money selling virtual goods and many believe that this is a business that will continue to grow. Twitter, on the other hand has signed up with Google and Bing to include tweets into their search results. The Economist article is timely, considering that 2010 is being spoken of as the year when social media marketing will go mainstream. Read more.