Social networking revenues disappoint

Social networking firms are failing to capitalise on the data they collect

Revenue generated from social networking businesses in the US continues to be disappointing, new research reports.

In-Stat said that US social networking firms have not delivered predicted revenues despite operating for more than 13 years.

The analyst firm blames this shortfall on a failure to find and exploit different models that capitalise on the data such sites collect.

Affiliate advertising, the selling of virtual goods, micro-payments, site merchandising and data mining are all viable alternatives to traditional revenue models, according to the analyst.

"Development of niche social networking sites is an essential piece of the monetisation puzzle," said In-Stat analyst Jill Meyers.

"The more specific a social networking site is to a select group of users, the more targeted the advertising can become, the more loyal the membership will be because it caters to specific interests, and the more opportunities the site will have to be profitable."

In-Stat forecasts 92.2 million social networking users in the US by 2012. However, two-thirds of respondents to an In-Stat US consumer survey do not pay for premium services or features.

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• Topics
• Web
• Social Networking