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With a $15 billion valuation for Facebook, it seems that social networking is destined for huge monetization opportunities. Yet, a variety of venture capitalists have expressed some skepticism lately. Basically, it's not easy advertising to the social networking crowd (as seen with Facebook's Beacon initiative).
This week, eMarketer published a study that forecasts that social networking advertising is expected to reach $4 billion by 2011 (on a global basis).
Keep in mind, though, that research firms don't have clear-cut crystal balls. It's not uncommon for them to get too aggressive on these estimates. Also, in the realm of the frothy Internet, the $4 billion figure does seem a bit muted -- especially in light of some of the recent valuations.
Something else: eMarketer thinks that about half of all online adults will be on social networks by 2011. Really?
I can certainly understand that teens will remain avid. But, adults have other things to do besides social networking (such as making a living, taking care of kids, and so on). In other words, if eMarketer is counting on adults for social networking riches, it might want to think again.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
12-16-2007 @ 5:01PM
Jonathan Trenn said...
Tom
By now you should realize that social networking TODAY goes far, far beyond teens.
And the Beacon episode wasn't about the advertising difficulties of social networks, it was the very structure of marketing model. Facebook and its partner sites joined together and allow a third party, namely Facebook, into a person's private purchases. And then broadcasting it to one's "friends". This wasn't about data hidden in the background.
That being said, I agree with you that one often has to take these type of predictions with a grain of salt. Often they are off wildly.
My guess is that if social networks reach half of the online adults by 2011 - and it may well might - is because these networks will be niche driven toward lifestyle, toward demographics, toward industry. They will be worth it to the segment of the population that is concerned about making a living and raising kids.
12-22-2007 @ 12:15AM
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