A little more on social networking sites





I think the social networking sites will face a day of reckoning in the not too distant future when it becomes obvious that their users do not respond to the ads. A Jupiter analyst told me a few months ago that MySpace had some of the cheapest/least desirable real estate on the Web.



Investors take note. In response to the Digg item this morning, a plugged-in friend who runs this spirited, sometimes goofy blog writes:Investors take note.

Social Networking Sites Fuel E-Commerce Traffic

by Mark Walsh, Thursday, Dec 7, 2006 6:00 AM ET



SOCIAL NETWORKING SITES INCLUDING MYSPACE and Facebook are driving a bigger portion of traffic to retail sites than a year ago, according to new research by Hitwise. Social sites are driving more than 6% of retail traffic, up from 2.9% in 2005. MySpace alone accounted for about one-third of that traffic. The increase in retail traffic reflects social sites increasingly becoming a starting point for Web users. "What we're seeing is a trend among social networking sites, particularly MySpace, becoming a home base for Internet users," said Bill Tancer, general manager of global research at Hitwise. That trend in turn generates more traffic from social sites to online retailers.



Posted By : 1:23 PM

Those are interesting figures you cite from Hitwise, Iti, but I'd like to know a bit more. For example, which genres of Web sites are responsible for driving the remaining 94 percent? Or, more to the point: if you are part of the fastest growing segment of Web sites, would you be satisfied with single-digit traffic generation? Don't get me wrong. I find the growth of social media sites fascinating, and I believe there is more growth yet to come -- particularly overseas. (Still, it must be noted, Facebook is a complete unknown entity outside of the U.S., thus from this side of the Atlantic I find an $8 billion -- or 6 billion euro -- valuation little more than hot air.) But as we learned in 1999 and 2000, there's a big difference between surging traffic and ad revenue potential. Discussing pie-in-the-sky valuations publicly is dangerous territory, for all but the lucky few who can take the cash and run.



And, on a final point, I should elaborate on the Jupiter analysis cited earlier. As of August, MySpace was carrying a CPM of 10 U.S. cents, primarily because there is such a vast ghetto of uninteresting user-generated pages that attract barely a blip of interest. For more details the story is here: http://technology.timesonline.co.uk/article/0,,20411-2303371,00.html

