Social Networks And Brand Advertising

    September 4, 2007

U.S. social networking sites may generate revenue that could reach $1 billion in 2007, and increase from $400 million in 2006, according to IDC’s "Social Networking Services in the US-Popular, Yes, But how To Monetize Them?" report.

IDC found that only advertising scaled well enough to make social networks attractive for portals and major media companies. In contrast, subscriptions and ecommerce were not likely to contribute much to social network revenue.

"Social networks cannot guarantee a brand-safe environment," said IDC program director Karsten Weide. "Advertisers don’t want to see their ads displayed alongside illicit content, for example.

"The dilemma for social networks is if they start to control what content users can post, they will lose popularity, which is what attracted advertisers in the first place."

The report said that underlying slow ad sales may be solved, some social networking services might never be able to attract brand advertisers on a large scale.