Abstract
2007 was the year that social networking became the norm for many Internet
users, as initial strong growth pushed the user base into the multiple
millions. But it was also the year that sounded warning bells for those who
believe social networking represents the next frontier in online advertising
revenues. A sobering slowdown in growth, combined with a more worrying drop in
usage of social networking sites, has highlighted the significant challenges
that the big established players, in particular, face in keeping users engaged.
This could well sway the odds in favour of some of the more specialised sites,
who are able to focus on catering to the needs of different audiences. In the
short term, all players will be aggressively developing new ways of making
sites stickier (and more profitable) and forging new partnerships with third
parties, ranging from mobile operators to application developers.
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