I read an interesting article today titled Web bubble 2.0 for social networks?

Firstly, I enjoyed the article and one of the main reasons for this is that I agreed with it! One of the things I notice about myself is that I like things that I agree with, or that make sense to me, far more than things I come across that I don’t agree with, or that simply don’t make all that much sense to me. I guess I am funny that way.As with just about everything I take the time to read, this article got me thinking about a few of the ideas raised and contemplating whether or not they are truly valid. Important note for the next few paragraphs; I am talking purely about advertising revenue, and the value gained from advertising on social networks, not the value of social networks themselves…that’s a whole different set of thoughts.

The young are our future, but…This train of thought goes something like this - tweens, teens and young adults seem to make up the bulk of the audience for social networks. Companies spend a huge amount of money advertising on social networks trying to firstly reach, and then convince, this audience to buy their products. Easy to follow so far, but here is the conundrum…the young don’t have disposable income…in fact many of the tweens and teens income derives solely from their elder living ATM machines (i.e. their parents!) So the young are our future, but only when they get older and can afford things for themselves…This of course begs the question…where does the older generation spend their internet time, and more importantly where do they spend their money? Where are the adult social networking sites and why aren’t advertisers falling over themselves to get to this audience with the disposable income? Logic tells me there must be sites out there catering for the older sect, which are not really hip and cool, so they don’t get a great deal of media attention. I am sure these sites offer some great advertising opportunities, we just need to find them before our competitors do.A quick trip to review US census data comparing income to age tells us:The highest income earners : 35 – 44Highest household income: 45 -54Lowest income: under 24This data points to the fact that 25 and over’s and specifically 35 – 54 are fairly decent advertising targets. 

The exceptions and the rule... So the immediate response of the young to the above section is that it’s the young people who are making a huge impact on the world. Look at Larry Page and Sergey Brin, Bill Gates and Paul Allen, Steve Jobs and Steven Wozniak, etc, etc. you could name a number of people who have proven to be exceptional in business and technology, however the key is they are the exception, not the rule.These people are the cream of the crop, the group that is measured in thousands rather than tens of millions like the rest of us. If you sell super yachts, sport cars, mansions in exotic locations, etc then advertising to the exception group makes sense. If on the other hand you are not the maker of super yachts, sports cars, mansions in exotic locations, etc then advertising to the rule group makes a lot more sense. And if you’re chasing the group with disposable income you’re targeting 35 – 54ish, and as a rule of thumb they probably are not at myspace.com…Another quick trip to the web to obtain population figures for developed countries (assuming people in developed countries can buy more products and services) shows the following:

So this reinforces the argument that not only do the under 24’s have less money, there are actually a lot fewer of them (less than 1/3 of the 35 – 54 age group). And in case you’re wondering, in 2025 the number of people in the over-54 age group exceeds the other two groups, so look for the retiree’s version of myspace and facebook to appear…

Building the audience of the future consumers... Another thought I had in terms of justifying advertising spend to the under 24’s is simply building brand awareness for the future. Again this implies waiting for the youth to get older before seeing a return. I then realized for the projections to 2025 that if you are purely chasing numbers (i.e. size of the audience) then the growth area is actually the over 54’s. Bearing in mind that the trend in developed countries is to not have children or to have fewer children than past generations, this should mean the over 54’s should have more disposable income in 2025 than the over 54’s in 2002 (assuming the next generation of over 54’s hasn’t blown all their savings on having fun!)So if this train of thought is accurate, trying to do something like build brand loyalty would be far more effective by targeting the 35–44 year olds of today, as opposed to the under 24 year olds.

NOTE TO READER: This document is by no means a conclusive study. It is based solely on initial thoughts about the aforementioned article, and a few web searches looking at census data.