MySpace has data-mining plans

Social networking site MySpace has launched an initiative to capture personal information from the profile pages and blogs of its 110 million active users, and then use that to target ads. This news was announced to investors on September 18 during the quarterly investor conference, a company spokesperson confirmed. According to the spokesman the company has not issued a statement about this news to press and would not comment further. Other MySpace representatives also did not return calls.

This has not stopped others in the industry from speculating on what this change could mean for MySpace and online advertising at large. According to Perry Solomon, vice president of business development and general manager of data mining services provider Media Solutions, FAST Searchá& Transfer, MySpace may be able to almost double its revenue, from $40 million a month to $70 million a month, thanks to the data mining solution.

“We’ve moved from the æbuild it and they will come’ stage to the æthey are here, let’s understand what they like and deliver it while making money’ stage,” Solomon said.

He said that MySpace may use targeting tools to add value to the user experience, suggesting that allowing users who don’t want to participate the choice to opt out would be important to maintaining a level of user control and privacy.

“Members of MySpace communities won’t have a problem with this,” Solomon predicted. “In fact, they will probably benefit. If they are willing to be marketed to, provided the marketing is relevant, this all becomes part of their conversations and adds value to the experience.”

There is a tremendous amount of insight from the collective user data on social networking sites, such as MySpace. The information users post about themselves, their likes and dislikes and how and where they spend their time and money, can all be mined and used for improved targeting, according to Solomon.

“MySpace’s strategy, along with the other social networking sites, is to move from being a content-aggregation site – which is what the social networking sites are – to a hub of content, community and commerce,” he told DM News. “Today, they provide tools and environments to build community and aggregate content. Now the challenge is to mine that community and add value to the experience by adding information to help members do more.”

For media companies with a loyal user base and great content, there is a great opportunity to build stronger communities around users, and then monetize those communities by delivering relevant, targeted advertising, content promotions and offers, upsells to subscriptions or premium offers and related e-commerce offers. Solomon said there should be no challenges, provided the social networking operators deliver messages that are relevant.

A key requirement for these social networking sites is to have a strong technology foundation that can draw insight from these community members’ feedback, their aggregate behavior across the community, and deliver targeted, relevant advertising, offers and introductions.

“Users will benefit if they receive information which is relevant and addresses their needs,” Solomon said. “If the targeting is effective, users will see messages that address what they like, messages with which they can engage.” n

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