Monetisation of social networking boom ‘eagerly anticipated’

The latest research from the US shows that social networking has continued its meteoric rise, with the total minutes spent on Facebook rising by 700 per cent and Twitter use jumping 3,712 per cent year-on-year.

Numerous reports have shown the engagement with social networking is on the increase, both in the UK and abroad, but there remain questions over whether the platform is profitable for businesses.

Nielsen’s latest figures show that Facebook and Twitter are the biggest sites, while the popularity of MySpace has dropped off, with the number of minutes spent on the channel falling by 31 per cent in April compared to the same month last year.

Overall, use of social networking sites in the US has risen by 83 per cent, with the Twitterati spending almost 300 million minutes on the site in April and Facebook users updating statuses and the like for a total of 13.9 billion minutes, making it the number one website.

Analysts recently estimated Facebook’s worth at $10 billion (£6.1 billion), although theories as to the actual value of social networking sites continue to circulate.

Jon Gibs, vice president of online media and agency insights at Nielsen, warns of the promiscuity of users when it comes to social networking.

“The one thing that is clear about social networking is that regardless of how fast a site is growing or how big it is, it can quickly fall out of favour with consumers,” he says.

“Consumers have shown that they are willing to pick up their networks and move them to another platform, seemingly at a moment’s notice,” Mr Gibs adds.

Rachel Hawkes, co-founder and editor of the Social Media Portal, said the online marketing industry is watching closely to see how social networks will go about profiting from the popularity of this trend.

“Social media and networks have as yet not been able to demonstrate a long-term, sound financial model and generate a profit. We all understand and appreciate the value and potential they hold, and are eagerly waiting to see the first true success of monetisation,” she commented.

“In order to be viable long-term, it’s vital that social networks such as Twitter develop a solid business model that brings money through the doors off its own back, outside of venture capitalists and/or selling to a media giant, which seems to be the sole business goal of many start-up social networks today,” she added.

Meanwhile, a survey by Deloitte has revealed that US companies see social networking as an important element of branding, but have also expressed concerns about the potentially negative effects of sites.

Almost a third of the firms surveyed said they see the platform as part of their operations strategy, while a smaller but still significant number said they used Web 2.0 tools to build their brand, communicate with their employees and recruit staff.

However, they highlighted the danger of the company’s reputation and brand being damaged by social networking, with almost three-quarters saying it was easy for this to happen.

“With the explosive growth of online social networks, such as Facebook and Twitter rapidly blurring the lines between professional and private lives, these virtual communities have increased the potential of reputational risk for many organisations and their brands,” said Sharon Allen, chairman of the board at Deloitte.