madcomments

Are Web 2.0 companies set to fail?

Posted in Advertising, Marketing, Digital, Mel Varley, Latest reporters' blogs January 3rd, 2008 by Melinda Varley

An expert has warned that most Web 2.0 companies, including social networking sites such as Facebook and Bebo, will fail this year in the face of a “users revolt” - just as advertisers look set to spend a massive £156 million on the sites this year.

Mark Anderson, chief executive of Strategic News Service, has predicted that users will grow tired of online adverts intruding into private online conversations with family and friends.

Just over a month ago, Facebook founder Mark Zuckerberg apologised to users for the “bad job” his company made of implementing Beacon, a controversial new advertising system that exploits the power of ‘word of mouth’ marketing.

Users protested that the website was invading their privacy, as the new technology exposed the details of their online shopping habits on their news feed - which can be viewed by their users’ Facebook friends.

In an embarrassing U-turn, Facebook now offers users the chance to switch off Beacon entirely.

Cashing in on the massive growth of social networking sites such as Facebook - which boosted its number of users from around 14 million to around 52 million in just over a year - has become the latest gold mine.

However, Web 2.0 companies are still trying to gauge how much online advertising is worth.

The majority of teens and nearly 40 per cent of adults visit social network sites on a day-to-day basis. But is it really just a fad that we will grow out of?

Social networks MySpace and Facebook are now targeting ads based on members’ interests, a technique that continues to evolve as users become increasingly worried about their online privacy. 

In coming years we should expect to see more advertising appear not only on social networking sites but also within other internet activities, such as online shopping, email or search, which will take on social networking attributes.

The real question is – how much does the general public pay attention to online ads and will they really find the ads so annoying that would stop using certain sites or the essential internet all together?