Social Networking- The revenue Generator

Thursday, January 10, 2008

While doing some research on social networking domain, found some interesting figures to share, which will surely drive the social network development companies.

Market at a glance-

The market for the internet and social networking communities is estimated at about USD 1500M this year.

Social network/Community development and enhancement individually by 2006 stood at USD 700M and is estimated to touch USD 4000M by 2010.

The top 3 player in the market are Myspace, Facebook and Bebo with market shares 80.74%, 10.32%, 1.18% respectively.( data is based on custom category of 20 of the leading social networking websites ranked by market share of visits, which is the percentage of traffic to the site, based on Hitwise sample of 10 million US Internet users. The percentages represent the market share of visits among the websites within the custom category.)

Growth Path-

Social networking sites are growing 47% year on year increasing from an audience of 46.8 million to 68.8 million in April 2006.

Social networking sites are the reality of the Internet; the content is relatively inexpensive for publishers to produce.

It will become more ingrained in mainstream sites, just as reality TV shows., the top Social Networking site of all in terms of number of registered users, saw a staggering 367% increase. The graph is still increasing with many more Social Networking players jumping in; the web scene seems set just right for Social Networking.

The social networking sites that are seeing strong growth have developed a unique online presence which is refreshed by user generated content. This promotes ongoing consumers interest and visitor loyalty. The market share of Internet visits to the top 20 social networking websites grew by 11.5 percent from January to February 2007, to account for 6.5 percent of all Internet visits in February 2007.

Mobile Social networking- The next Destination

Social networking is going mobile and is poised for spectacular growth over the next five years, mobile social communities will be attracting members in swarms, more than tripling in size from 50 millions to 174 millions by 2011.

For the moment, MySpace and Facebook are hot. News Corp. paid $580 million last year for MySpace as part of a $1.3 billion Internet acquisition spree. Facebook just received an additional $25 million in venture capital.

Both companies are planning to extend their reach beyond the computer screen to cell phones. Cingular Wireless, Sprint Nextel and Verizon Wireless are starting a service that will allow users to post messages on Facebook's home pages or search for other users' phone numbers and email addresses from a cell phone.

MySpace has a pact with Helio, a wireless joint venture between SK Telecom and Earthlink, which will allow users to send photos and update their blogs or profiles by cell phone.


Social networks are an integral part of the cultural fabric of the internet and their rapidly growing and demographically appealing audience has attracted the attention of advertisers.

According to the latest forecasts, marketers will pony up an estimated $280 M in the USA to advertise. By 2010, the online advertising spend will grow to $1.8 billion.

Marketer estimates that the social networking ad spend of the USA will rise to $260 million in 2007(up from $95 million in 2006), and by 2010 is expected to reach $665 million.

Advantages- Advertising on social networks will teach marketers important ways to reach newly-empowered consumers.

Social networks will have an incalculable influence on all advertising, both online and offline.

If companies can go even deeper to develop marketing efforts that fully embrace the "one-to-one-to-many nature of social networks, ad revenues will soar. This way of advertising will spill over into other channels. The underlying concept will influence the way advertising is done in all media, not just online.

Social Networking- The revenue Generator

Advertisers delight- Advertisers can target local as well as international market at one place. Social networks are becoming a good environment to sell products, especially if marketers want to cultivate a brand and get its loyal users to do the selling and evangelizing. That evangelism happens in a community.

Recruiters' Heaven- Now a day, top MNCs are hiring from professional social networking sites like Linkedin. They can also check the social index and compatibility of the candidate along with the background check, which is helping them to save a lot of money.

The cost of gaining new customers is practically nothing because users join voluntarily and provide their own content through their profiles.

The interactive nature of social networking sites keeps visitors coming back which helps the sites to retention rate high.

The cost of running the sites' web servers is relatively low. If a classic advertising or subscription revenue model is used, low cost social network sites could be highly profitable.

All the above information concretes our philosophy that social networking as a domain for business is going to stay and grow in a rapid rate.

GMI is one of the largest independent solution providers in social networking website development, web application development, web portal design & software development india. For details or business enquiries visit .