by Matt Moore Associated Press - Jan. 28, 2010 12:00 AM
DAVOS, Switzerland - The leaders of Facebook and other social-media sites have long seen some grim writing on their wall. While spectacular popularity has turned them into household names, they haven't found a way to transform all those friends, fans and followers into profits.
On Wednesday, in a rare encounter of rivals, the chiefs of Twitter, MySpace, Facebook and LinkedIn met with industry experts at the World Economic Forum to strategize.
The common theme: developing social networks so they get beyond socializing to drive humanitarian causes or help businesses better communicate with customers to increase sales.
While participants touted social media's ability to reach out, form relationships and keep people and businesses linked together, they offered scant insight into how the companies can make money, cashing in on their enormous fan base.
"What's important for them is to become indispensable to consumers," said Augie Ray, a senior analyst for social computing with Forrester Research Inc.
"For Facebook, one of the interesting things is the value of advertising that is super relevant and also increasingly involves the preferences and actions of your friends," he said.
Facebook, which draws revenue from advertising posted down the right side of its site, has generated buzz about a possible initial public offering this year. The site created a dual-class stock structure in November, a move that is typically a precursor to going public.
If it does go public, Twitter and LinkedIn may be tempted to follow, he said.
Evan Williams, chief executive and co-founder of Twitter, the wildly popular micro-blogging tool, said more and more small businesses were listening to their customers via the site, capitalizing on the way individuals build relationships across social-media platforms.
"This is the heart of what a lot of social networks are about, they're about communicating ... but they're also about relationships of all types," he said.
"Some of the stuff we're excited about with Twitter is an individual will follow a local business, a coffee shop, and get their special of the day."
Experts see huge business opportunities remaining in social-media sites. More and more, though, sites are migrating to a business-oriented landscape with posts from friends seeking work, restaurant recommendations or the best places to buy cars or computers.
That, in turn, means that "social media is becoming the operating system of a business," said Don Tapscott, chairman of nGenera Insight, an information technology think tank.
