Social Media users to exceed 1B by 2012.

Social Media Applications, such as MySpace, Facebook, YouTube and Flickr, will attract over one billion broadband users within five years, according to the latest research from Strategy Analytics. This report, “The People’s Revolution: Implications of Web 2.0 and Social Media Applications,” notes that media companies must view social media both as a tremendous opportunity and a competitive threat. The report also concludes that the ability to develop successful targeted advertising techniques will be the key to long term financial viability for social media sites.

“It is clear that user generated media will increasingly compete with professional media when it comes to the attention and free time of users,” comments Martin Olausson, Director of Digital Media Research at Strategy Analytics. “However, if professional media companies choose to embrace social media applications it will enable a more direct and positive relationship with consumers, which will in turn drive increased engagement and loyalty.”

“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,” adds David Mercer, Principal Analyst at Strategy Analytics. “The next 12-18 months will be pivotal for many of today’s leading social media sites, as they must prove their financial raisons d’être”.

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