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For Social Networks, Generating Revenue a Struggle

Social networks need to start generating revenue now or bow out of the race, according to a new report from In-Stat (via MedaPost). "In order for a social networking site to be successful, it must attain a critical mass, and competition is fierce to attract new members," said In-Stat analyst Jill Meyers.

Ad spending on social networks this year is expected to total $865 million, according to eMarketer. MySpace is promised the bulk of that spend to the tune of $525, while its many rivals - Facebook, Bebo, Friendster - are being left fighting over about $200 million.

One rather controversial possibility for networks trying to generate revenue is the selling of user data, according to In-Stat.

The report also stated that despite an increasingly older MySpace community, Baby Boomers are frequently overlooked when it comes to social networks. "So far, sites have focused their attention on a younger demographic, which is finite, fickle and limited in expendable income."

eMarketer said that the tactic of marketers maintaining a social networking profile is becoming less effective in 2007.

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