The best known social networking site MySpace, recently became the most visited website in America. Its acquisition last year by News Corporation for $580m now looks like a master-stroke. Many other media groups and investors are beeping around other such websites, which allow people to create their own pages with photos and blogs and make connections with other people. Takeover rumors have been swirling around two smaller sites, Facebook and Bebo. And a group of investors recently put $10m into Friendster, an early example of the genre that is trying to make a comeback. Similar investments are being made all-around involving seasoned wall street investors.

There is a growing rush to join social networks all around both highly popular websites and small niche and local sites (like IndiaCityPages.com), online consumers are moving towards establishing connections in some form or another. Networking trends has brought millions of advertising money to these networks. The ultimate sign of success is when you make it out via one of these sites – but keep sailing if you think you have a shot at the next exit.

The big question is, how to build a user base, when users join social networks only when their friends are already using them. Mike Speiser, who founded talent competition social network Bix and sold it to Yahoo. He said everyone at the start-up to send a link to the site to everyone in their address books. Sure, there is no silver bullet for overnight success.
Social networks brings a sense of connection for people online. I remember one of the things I loved to do when Yahoo first came out was chat. I would go into chat rooms all the time, and it was new and it was fun. Although the need for human interaction online has always been there, however, the realization of that need did not take place until emergence of many other players. They did not provide the type of social networking that you and I do today but it did provide a way for people to reconnect, email and chat with each other. The evolution of online social networking has reached its realization with sites like Facebook and MySpace breeding millions of users.

Who are these millions? Why are they gathering on such networks? Well..

1. They lack time and are getting busier. Such networks allow them to do it at their time.
2. Lack of face-to-face networking lowers ambitions and allows people to be more open, maybe.
3. Sharing with people and learning from each other in a fast paced environment.
4. Social networks that are user generated provides an entirely new way to find content.

As eager as online advertisers are to tap into the rich source of information that people freely offer about themselves on sites like Facebook and MySpace.com, there are nevertheless growing concerns about the privacy issues raised by such tactics. Facebook is allowing advertisers set up their own profile pages at no charge and encouraging companies like Coca-Cola and Pepsi to share information with Facebook about the actions of Facebook members on their sites. Ad Executives from consumer brand companies view ads on social networking sites as a priority in their ad spending. I heard they are now spending less on traditional broadcasting and print media!!

In business, appeal of social networking is limited largely to industries where workers are fairly isolated from their colleagues on a daily basis, like medicine, construction and sales. Online services are trying to promote a more personal type of business networking. Unlike relatively simple message boards that are open to all, these new sites for doctors and engineers have features such as profile pages showing professional credentials; personal blogs that function like a kind of online diary, links to friends online, invitations to real or online events, and instant-messaging.

Some social sites also charge a membership fee. For example, Reuters Group PLC is launching a new social-networking service (Reuters Space!), for fund managers, traders and analysts. They will be able to log on to create profiles with industry-relevant information like their asset class and instruments, check financial news feeds and ruminate about the industry on personal blogs. It also plans to allow companies to block certain features like blogging and to archive employees’ online activities for compliance purposes. No stopping here, though!

Sites like StumbleUpon.com, del.icio.us, newsvine.com and digg.com provide very unique content which, most likely, we would never find using Google. These reasons have brought the need for connecting online directly to the end user or consumer. The fact that many are now using social networks makes it clear why there is so much money being spent on social network advertising.