Social Networking, as seen by The Economist

February 2, 2010

The current issue of The Economist (January 30 -February 5 2010) features a 15-page special report on social networking.  Typically thorough, the report covers history, the differences between major players (Facebook, Twitter, and MySpace), benefits for small businesses, potential sources of profit for social networking sites, and some of the “peripheral” issues–such as the impact on office productivity and privacy concerns.  For any marketers who’ve been caught by surprise by the emergence of social media and social networking as marketing forces or been watching out of the corner of their eye, this special report might be especially informative.

The potential for making money from social networking services–that is, for the owners of Facebook and other sites–lies in selling advertising.  The Economist points out that the unanswered question is whether the social networking industry can find something as successful as search-based advertising.  More important from my perspective is whether either the social networking industry or the customer knowledge industry will come up with a way to exploit the information contained in the behavior of social networks.