Friday, October 26, 2007

Few people would pay to use social networking sites

Over 70% of social networking users would stop using a site

Few U.S. consumers are willing to pay a monthly fee to use social networking sites, according to Digital Media Habits II, a new survey from market research firm Parks Associates. This online survey of Internet users found 72% of social networking users would stop using a site if required to pay a $2 monthly fee. Likewise, nearly 40% would stop if a site contains too many advertisements.

These findings present a challenge to the companies competing in the social networking space. Parks Associates found 80% of broadband users ages 18-25 use these sites on a monthly basis; however, monetizing these users is proving to be difficult, with even category leaders such as MySpace struggling to turn big profits.

“Having a big base of loyal users is not enough,” said John Barrett, director of research at Parks Associates. To really succeed, he pointed out, social networking sites must consistently deliver to advertisers a desirable consumer demographic, preferably when they are about to make a purchase decision. For example, a site devoted to car buyers presents obvious advertising opportunities while sites with broad appeal are too watered down to command a premium. “Sites aren’t able to sell a hodgepodge mix of consumers for very much,” Barrett said. “It’s one size fits nobody.”



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