Skip to main content

A Puzzle to Monetize Social Networking Sites

Few U.S. consumers are willing to pay a modest monthly fee to use social networking sites, according to "Digital Media Habits II" -- a market study by Parks Associates.

This online survey of Internet users found 72 percent of social networking users would stop using a site if required to pay a $2 monthly fee. Likewise, nearly 40 percent would stop if a site contains too many advertisements.

These findings clearly present a puzzling challenge to the companies competing in the social networking space.

Parks Associates found 80 percent of broadband users ages 18-25 use these sites on a monthly basis; however, monetizing these users is proving to be difficult, with even category leaders such as MySpace struggling to create significant profits.

"Having a big base of loyal users is not enough," said John Barrett, director of research at Parks Associates.

To really succeed, social networking sites must consistently deliver to advertisers a desirable consumer demographic -- preferably when they are about to make a purchase decision. For example, a site devoted to car buyers presents obvious advertising opportunities while sites with broad appeal are too watered down to command a premium.

"Sites aren't able to sell a hodgepodge mix of consumers for very much," Barrett said. "It's one size fits nobody." Therefore, perhaps segmentation and targeting strategies are the key to this monetization puzzle.

Popular posts from this blog

The AI Application Integration Challenge

Artificial intelligence (AI) has rapidly become the defining force in business technology development, but integrating AI into applications remains a formidable challenge. According to a recent Gartner survey, 77 percent of engineering leaders identify AI integration in apps as a major hurdle for their organizations. As demand for AI-powered solutions accelerates across every industry, understanding the tools, the barriers, and the opportunities is essential for business and technology leaders seeking to evolve. The Gartner survey highlights a key trend: while AI’s potential is widely recognized, the path to useful integration is anything but straightforward. IT leaders cite complexities in embedding AI models into existing software, managing data pipelines, ensuring security, and maintaining compliance as persistent obstacles. These challenges are compounded by a shortage of skilled AI engineers and the rapid evolution of AI technologies, which can outpace organizational readiness and...