Social networking an interesting business opportunity on the climb 12 August, 2008 By Liam Lahey

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Dotster is an Internet business services provider offering customized social networking platforms for companies of all walks. Dotster Connect (www.dotster.com/connect) is the company's suite of social networking and media sharing capabilities that allows any company, small or large, to engage users via community forums, blogs, polls, real-time interaction and more.

Recent statistics from Forrester Research were cited that stated 48 percent of marketers would increase spending on social networks if the economy enters a recession in the next six months; the total media ad spending is predicted to grow by 3.3 percent in 2008.

Businesses of all sizes are starting to harness the power of social media and networking with many key spending drivers including: ads targeted to expressed interests, local advertising, niche social networks and marketer-sponsored social networks, said Catherine Brown, director of enterprise social networking, for Vancouver, Wash.-based Dotster.

"Social networking started with the teenage market but as the technology matures and more people get involved businesses have started to notice the advantage to advertising on the larger networks with creating business networks of their own," she said. "Advertising goes where the people are . . . one thing that's nice about a social network, the content is being updated regularly and people tend to stay on the sites longer than they would on a static Website."

Social networking sites geared towards businesses could be used to connect with new customers, hire new employees, or to find strategic partners and investors while building brand awareness, Brown continued.

"These are sites that are more targeted to their particular users and (businesses are exposed to) a captive audience, talking about the needs and issues of this audience versus an all-encompassing site and that's what Dotster Connect provides," she said.

Meanwhile, ABI Research said the recent emergence of location-based mobile social networking services offered by providers such as GyPSii, Pelago and Loopt is revolutionizing social networking by allowing users to share real-life experiences via geo-tagged user-generated multimedia content, exchange recommendations about places, identify nearby friends and set up ad hoc face to face meetings.

"Location-based mobile social networking revenues will reach $3.3 billion by 2013, but successful business models may differ from what many observers expect," said principal analyst Dominique Bonte of ABI Research. "While location-based advertising integrated with sophisticated algorithms holds a lot of promise, the current reality rather points to licensing and revenue-sharing models as the way forward for social networking start-ups to grow their customer base and reach profitability. Recent evidence: the agreements between GyPSii and both Garmin and Samsung. Similarly, Loopt has established partnerships with all major U.S. cellular carriers."

Many social sites are powered by open location-based platforms. However, several factors are hindering mass market adoption of location-based mobile social networking, the ABI Research report read. Privacy concerns are still a major issue. Many small players are struggling to create sufficient brand awareness in a fragmented market. And the traditional concerns about the cost of data plans also cast their shadow over social networking.

Brown said mobile is expanding from a social networking perspective. She acknowledged there are a lot of players offering differing platforms adding the business social networking space would be an interesting one to watch.

"People are interested in having social networking, the Internet is people, so this space is going to grow it's just working through some of its technical challenges," she added.

FYI, a list of major social networking sites can be found at http://en.wikipedia.org/wiki/List_of_social_networking_websites.