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The Honolulu Advertiser
Posted on: Sunday, November 26, 2006

Can social networking sites lure shoppers?

By BRUCE HOROVITZ
USA Today

Many who go to MySpace or Facebook to network with friends also would go there to buy stuff. But for the most part, they can't.

And that means there may be billions of dollars being left on the table by the major social-networking Web sites, according to an eye-opening survey to be released today by the American Marketing Association.

In a survey commissioned by the association, 47 percent of consumers said they would visit these sites to search out and discuss holiday gift ideas, and 29 percent said they would buy products there.

The networking sites "provide some of the most powerful word-of-mouth-marketing opportunities there have ever been," says Nancy Costopulos, chief marketing officer at the American Marketing Association. "It's past the fad zone and into the reality zone."

The dollars available: $211.4 billion will be spent for online purchases this year, including travel, according to Shop.org, part of the National Retail Federation. More than one-third of all U.S. households shop online. The big social-networking sites now rely on ad revenue for most of their income. But they're popular with younger consumers, a huge e-tailing revenue base, who now frequent hip fashion and electronics sites or even Amazon.com to buy online.

People who go to them would buy things, but none offers the option in a major way, says Brian Kardon, chief strategy officer at Forrester. Revenue from sales on the sites could be worth billions of dollars, Kardon says — potentially more than ad revenue. Ad spending on social-networking sites is now about $350 million a year and could grow to $2.5 billion by 2010, projects researcher eMarketer.

Some 51 percent of respondents to the survey said they'd be willing to go to a social-networking site this holiday season to find out about store sales — or download coupons. The online survey of 1,098 consumers was done earlier this month by Opinion Research.

Executives at MySpace and Facebook declined to comment. A spokeswoman at LinkedIn, however, was not enthusiastic about sales on the social-networking site for business professionals.

"It would be a stretch to say that people are checking LinkedIn before buying gifts," spokeswoman Kay Luo says. However, many people list their hobbies in their profiles, which could trigger gift ideas, she says.