How much are your friends worth?


News Corp. chief operating officer Peter Chernin told analysts: "It's still difficult to quantify the economic value of a friend in the social networking space," compared to the tried and tested metrics of old media.
At the same time he is keen to point out that compared to rival Facebook, MySpace users spend more time on the site, displaying a greater level of engagement. If page views alone aren't cutting it with advertisers, Chernin and co. are hoping to promote "engagement" as the new online currency.
Also see: Can AOL solve the UGC and advertising problem?
Presuming that advertisers buy into the notion that users are more engaged on MySpace, then they'll need to know what they are engaged with. That's where MySpace's new "hyper-targeting" ad system comes into play. The technology mines users' interests as revealed on their profiles and site activity, and matches that data to advertisers. On the surface it's easy to be seduced into thinking that this type of system will be as lucrative as Google AdWords. In reality, it's probably far cruder and much less profitable.Many social networking cheerleaders see this type of business as their own AdWords goldmine, while failing to appreciate that a general ongoing interest in "sports" is nowhere near as valuable to marketeers as a Google search on a particular day for "Adidas football boots".
When considering MySpace's Hyper-Targeting in the context of AdWords, it's highly unlikely that lightening will strike twice.
Related: Report: MySpace turning News Corp. stock toxic; advertisers shy of UGC