The advertising arms race in social networks

The Stampede For Social Network Dollars Intensifies writes Diane Mermigas

The race to monetize and leverage the power of social networks is turning into a stampede, as evidenced by Microsoft’s recently renewed efforts to acquire Facebook in the wake of its failed bid for Yahoo.Many of the biggest and most intriguing niche social networks are in play as a result of the Microsoft-Yahoo merger battle, which is fundamentally about potentially lucrative but unrealized advertising and e-commerce gains. Both companies have limited exposure to social networking–the most prominent being Microsoft’s 1.6% stake in Facebook, for which it paid $240 million.

And

The mighty Google has brought a new sense of urgency to the social-network mining game by leveraging the iGoogle home page into a convenient aggregation of user-selected links to social sites and friends’ personal pages.

Think about this 25% of all media will be created by us in 2012. So will we have consumer created advertising too?

Consumer-created advertising will have all the appeal of anything crafted by the agencies, and will be ‘co-opted’ by the brands themselves.

Mermigas has a point of view on this

The lessons learned about how to make online social networks more constructive and profitable will have far-reaching ramifications for all digital media’s community-driven business–from the players of “Grand Auto Theft IV” to the kids and families of Walt Disney to the Dow Jones business constituency. Eventually, the economics of most Web sites will be secured by social networking and community elements. If the business minds don’t crack the monetization codes, chances are that tech-empowered consumers will.

Ning, a do-it-yourself social network company already valued at $500 million, has aided the development of more than 100,000 social network sites. That’s the beauty of the digital interactive age: The answers lie within

So what does that mean for traditional media? and this debate hardly touches mobile yet and we did ask whether traditional TV advertising was moving the deck chairs on the Titanic and we did post about the data flow wars because when we leave digital footprints in the digital age, we can recount the audience, we can develop universal profiles and certain companies will transform advertising effectiveness by harnessing a refining digital shadows and that data flows that will reach 988 billion gb's by 2010 from 161 gb's in 2006. Social networks play a key role in this development and this is a battle between the experts and the amateurs?

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