According to Jill Meyers of In-Stat:
In order for a social networking site to be successful, it must attain a critical mass, and competition is fierce to attract new members . . . So far, sites have focused their attention on a younger demographic, which is finite, fickle and limited in expendable incomeIn-Stat's Social Networking: Finding Friends Online report raises an important question: How can social networks best monetize their memberships? eMarketer estimates that 2007 ad spending on MySpace will outstrip spending on all other social networks combined.
One possibility is selling user data:
Each social networking site collects a plethora of personal and demographic data on each member . . . and while selling these data to target marketing groups may be unappealing to site members, it may be the best route to profitability for site operators.
Even Microsoft is offering advice on how to increase social networking ad revenue. The Microsoft Digital Advertising Solutions Group commissioned a Metrix Lab study of how social networkers use the sites. The study concluded that creating brand profiles (spaces) that can be forwarded to friends is effective, with a quarter of social networkers posting views on specific ads and a third forwarding spaces, ads or links.
Sounds like Microsoft. Yeah, get a profile, add your picture or avatar. Let us paste our ads all over your profile and then you can send it to your friends. They are so 20th century!