I believe that most of the problem with the social network sites is that they do not offer too much value besides vanity. For example, how many friends I have, how many comments were sent to me, etc. The dilemma is that even though you may receive word-of-mouth recommendations, more than half of the people recommending are not someone you would ‘trust’. In fact, why should you, do they actually know so much about you to the point of having proper suggestions to your purchasing habits?
I believe that the power of the people comes as was mentioned “the right targeting and the right location/timing”. If allowed, I will add a third…which is “inherent value”. We have to actually see a value proposed by the others (with the correct target and timing). It does not help me for someone of my friend’s list to recommend something, that does not provide me actual value.

Joost mentioned: “it should be able to make money even as it shows you fewer ads than on TV. The ads it does show you, however, are likely to be ones that either you want to see or that some advertiser is willing to pay a lot to show you.” This supposedly will give the users more value.
May be read entirely at: http://money.cnn.com/2007/06/07/magazines/fortune/fastforward_joost.fortune/index.htm?section=money_fastforward
[I am new to blogs/comments/posts, if I am not allowed to provide outside links, please let me know. But please do not bar me from future commenting]

Thanks,

Eran

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That is, word-of-mouth recommendations are so effective because people are not bombarded by them on a perpetual basis.
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The reason standard advertising (TV, direct mail, radio, etc.) is losing its luster is that we’re tired of it. We see it all the time. We’re bombarded with marketing messages. This is why word-of-mouth works. Once every 3rd person is being paid to recommend something to you or sending you 100 invites to join their online social shopping network, you’ll get annoyed and say “F- it, I’m tired of this S(#@”.

If you have ideas on how to promote an individual item in a trackable way through social networks, that is actually reasonable and not annoying, I’d be quite impressed.

Over the long haul, advertisers will need to see tangible results that their initiatives on social networks are helping them achieve their goals, whatever they may be. Social networks need to make sure that they’re invested in the success of their advertisers and can help them measure success.

Official groups. Working in-band within the social network’s platform does precisely what you’re talking about with those 2 criteria. The people that come to the group are obviously the right target since they’re seeking you out, and it’s definitely the right time since again, they’re seeking you out on their network of choice. The marketing becomes the very social interaction that the site is about.

Companies are already doing this, and I imagine its actually pretty successful for the ones that are doing it properly. As for Facebook and MySpace the way they could monetize off of it is by offering premium sponsorship. I know that Facebook has specified sponsored groups that get

That said, I think advertisers can’t and won’t look at social networks and say “They may be ineffective, but it’s no different than our print advertising campaigns.” At some point, advertisers will need to see results, so social networks that can come up with better ways to leverage the strengths of social networking as a marketing platform will be better able to ensure the growth and success of their businesses. Right now I think most advertisers understand that a lot of consumers are using these services and they’re experimenting with social network advertising, but long-term they will need to be satisfied that they’re not just throwing money away. New advertising platforms get a little bit of leeway while everybody looks for effective models, but if those models can’t be found, it will be problematic for the MySpace and Facebooks of the world down the road.