I believe if you ask Google and Microsoft what the biggest challenge they have with their advertising businesses, they would say, finding a scalable way to monetize the fastest growing segment of the internet.  Social Media.

CPMs have been dismal at best in the social media space.  However, I believe over time that social networks will evolve.  The communication layer will monetize similarly to hotmail.  But, the apps will become the verticals.  Like Autos, Dating and Movies (Flixster).  Essentially, social networks will become the next generation portal.  The verticals will provide opportunities for premium CPMs to endemic advertisers.

There are many companies working to figure this out.  Today, Appsavvy raised $3.1 million to go after this vertical strategy.  Best of luck to them.

This entry was posted on Tuesday, October 7th, 2008 at 9:45 am and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.