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Social Media Future Bright, Challenging

What's the best way to market to a billion users?

Social media applications will attract over one billion broadband users within five years, according to Strategy Analytics' "The People's Revolution: Implications of Web 2.0 and Social Media Applications" report.

It is usually a great thing to be able to use the word "billion" in a forecast. Yet Strategy Analytics said that real pitfalls could ruin business prospects for some social networks.

"The long term financial viability of even the largest social media sites depends heavily on the ability to develop targeted advertising techniques that are as yet largely unproven, or may ultimately be thwarted by privacy regulations," said David Mercer, principal analyst at Strategy Analytics.

Social networks are attracting marketers' attention for a reason. eMarketer estimates that by the end of 2007, 38% of all US Internet users age 3 and older, or 72 million people, will have used social networking at least once a month.

By 2011, one-half of all Internet users, nearly 105 million people, will use social networking regularly, and that's just in the US.

eMarketer senior analyst Debra Aho Williamson said that marketers could also miss the mark by using a one-size-fits-all mentality with social networks.

"Though the temptation for some marketers may be to look at the large audience of a social networking site and launch a mass branding campaign, that strategy also fails to take advantage of the engagement possibilities," Ms. Williamson said.

This is a more immediate risk than outside regulation or business model uncertainties; a ham-fisted approach risks squandering opportunities for customer engagement.

"The opportunity is to find your brand fan or your most likely brand prospects and have some relevant communication with them," said Art Sindlinger, activation director for social media and gaming at Starcom Worldwide, in an interview with eMarketer.

"It's about engaging with people in your inner circle and trying to radiate out from there, rather than throwing a net out and fishing for folks," Mr. Sindlinger said.

Find out how to get the most out of your social media efforts. Read eMarketer's Social Network Marketing: Ad Spending and Usage report.

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