Social networking sites reach 'inflection point'

Online social networks have experienced stellar growth in recent years, but market researchers warn that these communities have reached an "inflection point " and face an uncertain future.

Membership and monetisation are key issues for social networking sites, according to In-Stat, and only sites that can overcome these issues will survive. 

"In order for a social networking site to be successful it must attain a critical mass, and competition is fierce to attract new members," said Jill Meyers, an analyst with In-Stat.

"So far, sites have focused their attention on a younger demographic, which is finite, fickle and limited in expendable income."

Recent In-Stat research noted that the biggest American generation, the baby boomers, is frequently overlooked.

In a recent survey, when asked if they had plans to purchase premium services online, the majority of respondents who do not currently purchase these services indicated they had no future plans to do so.

"While many sites are struggling to attract advertisers, others are seeking to attain profit through nominal monthly fees," explained Meyers.

"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.

"While selling this data to target marketing groups may be unappealing to site members, it may be the best route to profitability for site operators."