Social Media Applications -- such as MySpace, Facebook, YouTube, and Flickr -- will attract over one billion broadband users within five years, according to market research from Strategy Analytics. The study recommends that media companies 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'etre”.

Strategy Analytics forecasts robust growth in the number of social media users over the next five years: from 373 million broadband users this year, to over 1 billion in 2012, representing 75% of all broadband users.

About this study

Strategy Analytics report, "The People's Revolution: Implications of Web 2.0 and Social Media Applications" (November 2007), examines the current state of play in Social Media and assesses its future impact.

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