Social Networks Don't Work For Advertisers: Web 2.0 Is A Bust (GOOG)(TWX)(NWS)

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Perhaps someone could have figured this out a year ago, Social networks like MySpace, owned by News Corp (NWS) and Facebook are poor targets for marketers.

No wonder. A social network is a patch work of millions of largely unrelated people posting private and uninteresting things about themselves. Shut-ins who put up their own web presences on the networks are probably the only ones who look at those listings.

Unlike web portals ala AOL, owned by Time Warner (TWX), where content is organized into neat groups, there is no way to find discrete demographic or content sections at social networks. Search advertising, led by Google (GOOG) is even more targeted, matching advertisers with search results.

According to The New York Post "Advertisers in the US will spend $1.4 billion to place ads on social-networking sites this year, down from an earlier estimate of $1.6 billion, eMarketer said." The research firm also revised down its revenue estimates for MySpace and Facebook.

The news is another indication that the largest sites in the Web 2.0 world are a failure. The other huge category in this part of the online industry is video, with YouTube, owned by Google (GOOG) as the leader in visitors. Even management at the search company says it is still working on a way to make money on the website. Given that most of the content is low resolution and posted by amateurs, that is not going to happen.

Web 2.0 is a bust.

Douglas A. McIntyre