News Corp (NWS): Social Networks Try To Grow Up

News Corp’s (NWS) is launching a way for advertisers to target users at its huge social network, MySpace. The marketer’s knock against the site has been that users cannot be grouped into neat units that are easy for advertisers to reach. At Yahoo! (YHOO) and MSN, companies can place ads in content areas like finance, sports, or autos and have a good chance of hitting the consumers that they want.

According to Reuters, MySpace will release "details of how it is building discrete audiences out of nearly 110 million users worldwide in a format it calls HyperTargeting". The social network operation will begin by identifying audiences in 10 major categories, such as music, travel and sports, and is now creating 100 sub-categories within those groups. To do this, it will have to look at the web pages created by its users to be placed on the MySpace site.

Watch for the privacy police to begin to march on MySpace the way that they have on Google (GOOG). Taking and storing information about people’s habits or purchasing patterns is a "no, no" in the minds of those who wish to protect consumers from prying internet eyes.

MySpace could avoid collecting the data and go into a period of prolonged financial decline. Then, perhaps, the site could get to the point where it has so little in terms of resources that it will become useless to users. It happened that way with huge internet bubble sites like GeoCities. It’s just that no one remembers.

Douglas A. McIntyre