Its a good article, and well written. Personally i think you summed up the entire article when you wrote “This is a no brainer.”
We all know that social networks are great for the ‘viral buzz’ they can potentially create about commercial products. And that is precisely the reason Facebook’s estimated value is $15 mil (probably more by now), and that also the reason why Microsoft bought a chunk of it for $240 mil. But that was in October.
So this whole article is a no-brainer. It was only a matter of time before someone came up with a program that could analyze the data on a different level than traditional means of advertising.

Great post, Naumi. Social networks should start considering their data as a valuable resource, versus purely looking for ways to make money off of their users directly. People have been ignoring ads for a long time now.

I generally agree with you here Naumi but have to take exception to the completely negative tone around advertising. There is nothing wrong with advertising when it is well targetted and brings value. In my facebook profile I indicate that I’m an avid mountain biker. A couple of weeks ago I was presented a facebook ad for a Mountain Bike tour company called “Sacred Rides”. The timing was perfect, the ad was well targetted, and I liked the offer. I purchased a trip. The experience was not intrusive. Happy customer….happy advertiser. I agree with your comments about the value of the data but don’t discount other value components in the total package. My two cents.

Thanks for the comments. Incidentally, PatientsLikeMe expands on their business model in a response to my post on their blog:
http://blog.patientslikeme.com/2008/04/30/wikinomics-blog-praises-patientslikeme-business-model/

Paul I agree, advertising is not totally doomed, but I do think a lot users are resistent to having ads on their communications platforms. I don’t know, maybe its the expectation of privacy and the need for productivity that drives it, but for me advertising via phone, e-mail, or in this case social network just seems more intrusive. The example you give of a very targeted biking ad is great, and if all ads were that bang-on we wouldn’t care – as you say; happy customer, happy advertiser. Unfortunatley, I think there’s a ways to go in terms of optimizing delivery because it seems to me that for every useful tip and well-targeted online ad, there is still a great deal of spam.

[...] Although Facebook hasn’t said so explicitly, the idea of linking partner content into Facebook sounds like the beginnings of an ad-based revenue stream, or at the very least a more expansive view of consumer behaviour that they can sell as anonymized relationship data in aggregate. [...]

I also promote some of my affiliate links on Facebook by making Facebook fan pages and also by advertising on Facebook.`;’

Right on target. Social media sites make crazy money most especially Facebook. People hate Facebook because of its growing popularity and I don’t blame them. Other social networking sites pale in comparison so they build these anti-FB campaigns in a poor attempt to bring the site down. But guess what, subscribers stay loyal. It’s human nature to want to be famous and popular, and if you can’t make it on TV, why not flaunt your particulars on a social networking site that has millions of subscribers that may be your potential fans? and it’s FREE! But guess what? You, yourself can make money from Facebook. So it’s a win-win situation. So rather than join the FB haters club, invest your time learning how to make money from it and it will be a time well spent.

[...] the idea that online social networks will make money selling eyeballs (advertising) or products is missing the entire value proposition of a social network. The real opportunity is in harnessing the rich data that is created by those participating in [...]