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Making Money Out Of Social Networking

Rod Munday | Tuesday May 05, 2009

Categories: Other Topics, Social Networking, Making Money

Social Networks are hugely popular and venture capitalists have invested in them to the tune of many millions of dollars. However, in order to justify this investment, social network sites clearly have to produce a return on this investment, in other words they have to make money – vast amounts of it! The problem is that is it not clear how they are going to do this, especially given the fact that much of the content of social network sites is produced by their users and circulated without any money changing hands. 

One approach is to embed advertising into the content of social network sites. This solution has already been adopted by YouTube. In an extension of Google’s successful Adsense initiative, adverts are embedded into a YouTube video that are appropriate for the subject matter of the video (Rowse 2007). For example the picture above shows an advert for an online dating site that has been embedded into a video about social networking. Facebook’s advertising does something similar with its technology. Facebook allows advertisers to choose which sort of customer will see their adverts by giving them access to the demographic information supplied with that person’s profile (Wray 2009).

Another strategy is to use some kind of viral marketing. This has been a successful way of promoting bands on MySpace. The site made headlines in 2006 when an unknown Scottish singer called Sandi Thom had a No 1 single with I Wish I Was a Punk Rocker (With Flowers in My Hair). At the time, it was reported that Thom was an unsigned singer who had broadcast a series of concerts from her basement flat in South London. It later emerged that a Cambridge-based PR company had been working with her for months to boost her profile ahead of the release of her single. The PR company has instigated an email marketing campaign in which a million virtual flyers were sent out to would-be fans informing them of the online gigs (Gibson 2006). This...

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