Though roughly two-thirds of all North American Internet users visit a social network at least once a month--and they spend four hours a month on these sites on average, according to ComScore, a Web-traffic research firm--most marketers have so far steered clear of social networks.

"The perception was that social networks were these crazy free-for-alls, basically an extended bar night," says Max Levchin, co-founder of PayPal and founder of Slide, a San Francisco--based widget developer. "But the fear of putting brands on social networks is starting to subside." (In the interest of full disclosure, Inc.'s parent company launched IncBizNet, a social network for the owners of private companies, last fall. Operators are standing by.)

Beyond the simple fact that social networks offer advertisers access to tens of millions of potential customers, they present two clear opportunities for more effective campaigns. First, they promise the ability to target customers with precision. If you want to reach baseball-loving twentysomethings who live in Seattle and have a college education, you can find social network groups that fill the bill. Second, social networks encourage your customers to recommend your company to others. Let's say your company has a Facebook profile, and another user signs on as a "fan" of yours. Facebook will then alert that person's friends, informing them of the connection. Voilà: textbook viral marketing for free.

That's the hope, anyway. But skepticism is in order, as social networks have a ways to go. Here's a rundown of the basics:

Are social networks right for my company?

Until recently, the answer would be "maybe" in terms of PR and "no way" in terms of advertising. The conventional wisdom is that social network users are less likely than other Web visitors to click on an ad. In an effort to make their sites more hospitable for advertisers (especially smaller companies), MySpace and Facebook have announced plans to develop self-service ad buying on their sites. Facebook's system lets users buy pay-per-click text ads--the minimum budget is $5 per day--that run on the left side of most pages on Facebook. MySpace's offering, which is set to debut this year, will sell display ads linked to profiles for $25 and up.

Besides advertising, how do I build a presence?

The easiest way is to build a page--for either yourself or your company--that will allow you to send messages and post pictures, all for free. It takes about five minutes, although you'll have to set aside time to update it. Once you've put up a page, you'll need to make friends. Enlist employees first, followed by customers.

Would I be crazy to create my own social network?

It depends on how you define social network and how you define crazy. E-mail newsletters, customer forums, and even blogs can function as de facto social networks, creating a sense of community among customers.

As far as creating your own version of MySpace, that is a little crazy, but it's not unheard of, thanks to Netscape co-founder Marc Andreessen. Ning, Andreessen's Silicon Valley start-up, allows anyone to quickly build his own private network.

So far, Ning is populated largely by lifestyle groups (firefighters, Irish setter owners, even pagans), but over the past year some companies have used Ning to set up networks for customers. Kent Nichols, co-founder of, is among those to experiment with the technology. Nichols's company, which generates $1.2 million in revenue by producing funny ninja-themed videos, created a Ning network last fall called Ask A Ninja Fans. The group has grown to 5,000 members, and Nichols figures it helps him increase his site's traffic, and therefore its ad revenue, between 5 percent and 10 percent. "We want to be the best place for our hard-core fans," he says, "rather than having MySpace own it."

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