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April 23, 2006


Jay Baldwin

In response to "...The search companies did not want to dilute their networks with so many ads for MySpace users, whom they said were not the best prospects for most marketing because they use MySpace for socializing, not buying."

Brands are correct. Users are not on MySpace with the intent to purchase. However, I would argue that brands should realize that selling to these people are the best prospects for marketing efforts. First reason, you're building a direct relationship with individuals. This helps with long-term brand recognition and repeat customers. Second, with respect to the low CPM, MySpace users engage in the most powerful marketing: Peer-to-Peer. This demo. is an elusive, finicky, sometimes hard to reach group. If you have even a tiny percent of the 70+ million users telling their friends about your product or service that is invaluable.

Any company that remains a skeptic or a cynic will only be left behind by forward thinking companies who utilize the MySpace phenomenon.

Steve Mansfield

Really interesting post and statistics. It also seems to beg the question about extending these social networks into pure search. If these huge and established social networks can add a search component that contains primarily user-generated content organized by their communities and sub-communities, the possibility is there for these social networking sites to offer more traditional (and higher-performing) sponsored links as revenue generators in addition to what they are doing now. Since all the social networks know what sub-communities (areas of interest) that any particular user is participating in, sponsored links could be targeted by keyword and sub-community demographic. This could be an even more targeted method than we've seen before in online advertising and a path around the nagging problems discussed here.

Yann N

Very cool article. There is an interesting insight for web2.0 startups and all companies drinking the search/banner marketing cool aid (including GYM): there is an onslaught of page supply that is artificially kept off the market to keep prices high. This supply is rising with blogs, podcasts, video sharing, social networking sites, etc. This supply WILL eventually come to market when people will need to monetize, and prices will adjust downward, and we will see search and banner revenues top and reverse direction. This is exactly what happened to telecoms in late 1990's: technology increased bandwidth and international call supply at a much faster rate than demand grew, and prices plumetted: Lucent stock went from $60 to $2 until getting acquired... AT&T was acquired for the brand, and the rest of it is well known history...

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