Can Social-Networking Sites Make Money?

Most of the industry members at EconSM liked Beacon, wished it had worked better, and felt it would work eventually; Goldstein called it a "sign of things to come." But maintaining the user's trust in how data is used is paramount, says Roger McNamee, a venture capitalist who made early bets on companies like Electronic Arts and Intuit. "Facebook is so much more personal than Google," says McNamee, who invested in Facebook and is a confidant of Zuckerberg. "It really matters to people how their information is used."

Not every attempt at targeting has aroused as much protest as Beacon. In 2007, MySpace launched its HyperTargeting system, which scans users' profiles for information about their interests and demographics. It sorts the profiles into 10 rough categories--such as sports and entertainment--that are subdivided into more than 1,000 narrower categories, such as baseball or a specific film. (E-mail and personal messages are currently not scanned at either Facebook or MySpace.) Says Adam Bain, president of the Fox Interactive Media Audience Network, "People are essentially hand-raising every single day on MySpace and other social-media sites. What we want to do is take that and put it into easy-to-buy segments."

Bain says MySpace did extensive research before the launch. "The users said, 'I understand I have to live with ads, and I don't mind them,'" he says. "The concept of relevance really resonated with users." The algorithm is constantly modified by a 150-person team; it is already on its 12th revision. Although the program has not yet led to riches, "it has led to an unprecedented amount of advertisers coming to MySpace," Bain says. "We're getting blue-chip brand names like Adidas, Schwab, and Electronic Arts, Frito-Lay, Kraft, General Mills, and McDonald's."

Are those advertisers as excited as Bain is? "We've bought a little bit," says Marc Ruxin, director of digital strategy and innovation at the advertising firm McCann. "It's been okay." Well, that's better than nothing. Still, it doesn't exactly settle the question of whether targeting, even if it avoids the worst of users' privacy concerns, will ever be able to punch through the attention barrier.

Bryant Urstadt has written for Rolling Stone and Harper's.

-- This embed didnt make it to copy for story id = 5229625. -- This embed didnt make it to copy for story id = 5229625.
Page
Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...
See It, Share It
PHOTO: Firefighters rescue a woman who got stuck in a chimney in Thousand Oaks, Calif.
Ventura County Fire Department
PHOTO: Apple Pay is demonstrated at Apple headquarters on Oct. 16, 2014 in Cupertino, Calif.
Marcio Jose Sanchez/AP Photo
PHOTO: Up in Ash: Mount Sinabung Erupting
Tibt Nangin/Anadolu Agency/Getty Images
PHOTO: Defendant Jodi Arias testifies about killing Travis Alexander in 2008 during her murder trial in Phoenix, Feb. 20, 2013.
Charlie Leight/The Arizona Republic/AP Photo
PHOTO: Kim Kardashian, Kanye West, their daughter North West and Delphine Arnault attend the Givenchy show as part of the Paris Fashion Week Womenswear Spring/Summer 2015, Sept. 28, 2014 in Paris.
Bertrand Rindoff Petroff/French Select/Getty Images