Social Networking, how advertising is bringing in the profits

A report from eMarketer outlined the predicted increase in advertising revenue generated by social networking websites such as MySpace and Facebook.  MySpace recorded an annual profit of $440 million for the year ending on June 30th.

The success of social networking websites lies in its ability to continually to attract and engage users to return, this in turn increases the number of page views and increases the advertising dollars that are generated. On last update Facebook moved 40 billion page views a month.

Many may be skeptical as to how long this social networking bubble (if it is one) can last. Emarketer predicts that the advertising revenue generated from social networking websites, in particular MySpace will continue to increase. Factors that will contribute to the continual increase in online advertising revenue for MySpace include the following:

• The beta testing of a new targeted advertising tool
• The partnership with Google to provide search technology for the MySpace website
• The continual increase in MySpace’s international business

Furthermore, it is not only the ability to generate advertising dollars that make social networking sites so successful and valuable. It is important to remember the detailed personal information these websites hold of individuals which have yet to be truly monetized.

If you would like further information on social networking, we encourage you to visit the newly launched Facebook page on the Wiliam website.