Sunday, December 07, 2008
Social Networking User Base - Millions of Dollars on Table
If you are wondering, how big this Social Networking is in terms of its user base and the business scope, the stats are here:

Social Networking User Base

I was thrilled by the enormity of this user base and added to my thrill, the recently released IDC report on U.S. Consumer Online Attitudes Survey Results Part III (IDC #214899). This report examines Social Networking Sites (SNS) audience reach compared to mainstream services, such as Google and Yahoo!, the demographics of SNS users, and consumer tolerance for SNS advertising compared to online advertising in general.

However, taking a deep dive into this business model of Online Advertising to this SNS segment, the results are not pretty encouraging, unless there comes an innovative way of capturing the target set.

The Myth: "Several companies are thinking that the popularity of SNS will attract a big audience and generate a lot of traffic, which in turn will produce enormous amounts of user-generated content (UGC) and therefore advertising inventory, without any expenses for editorial staff or content distribution deals”.

Consumers are spending ever-greater amounts of time on SNS, a fact that has advertisers drooling over the opportunity represented by SNS; however the biggest challenge is to hard sell the advertising space (inventory). Advertising does not factor into consumer motivations. In fact, users are less tolerant of SNA advertising than the best tolerated forms of online advertising.

Some Important Facts:

  1. > 50% of U.S. consumers with Internet access use social networking services (SNS), such as Facebook and MySpace, and penetration will continue to increase.
  2. Consumers who use SNS also tend to visit the services often and spend a lot of time per visit.
  3. >75% of SNS users visit at least once a week, and > 57% visit at least once a day.
  4. During each session:
  • ~61% of SNS users spend at least 30 minutes on the respective site or stay logged in permanently
  • ~38% spend at least one full hour per session (or stay logged in).
Four Major reasons why consumers use SNS:
  1. To connect and communicate
  2. In response to peer-pressure
  3. For entertainment
  4. For work-related purposes
Stats on SNS Advertising:

  1. Ads on SNS have lower click-through rates (CTR) than traditional online ads
  2. On an average Web Search, 79% of all users clicked on at least one ad in the past year, whereas only 57% of SNS users did
  3. Purchase: Web: 23%; SNS 11%
One of the potential benefits of SNS that the advertising industry has discussed is whether peoples' connections (i.e., whom a user knows or is linked to) could be used for advertising. For instance, publishers could show a car manufacturer's ads to a user's contacts because that user's online behavior has indicated that she is interested in a particular brand of cars. Anecdotally, there has been some indication that this "social advertising" might be more effective than behavioral targeting.

However, that idea is stillborn!!!!

Source & Credits: IDC report on U.S. Consumer Online Attitudes Survey
Posted by Kishore at 11:51 PM | Permalink |


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