Blog: David Loshin

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More on Tween Networks...

In my article this month, "Connected Communication and Establishing Communities – Tween-Style," I talked about the growth of social networks aimed at pre-teenage children. One of the questions I asked regarded their business model - how do these companies make money? Well, I did a little investigation of one site, Neopets.com. The site features fantasy creatures interacting, with lots of games for younger kids. One of their main approaches to revenue is through product tie-ins: dolls, figures, hand-held games, all featuring the same set of creatures from the web site.

However, I found this interesting tidbit on their press kit web site:

"Because participation on Neopets.com is free, Neopets generates revenue through family-appropriate screened banner ads (shown primarily to users age 13+), as well as through user-initiated brand integrated advertising, which incorporates a sponsor's message into existing or customized activities and games within the website."

Basically, the site embeds brand advertising within the activities and games in a way that is customized to the user. The CEO of the company, Doug Dohring, is reported to have started a firm that within five years "became a top-100 market research firm in the United States, and the largest provider of custom market research to the retail automotive industry."

In other words a market research executive drives the growth of an online gaming community into a multi-million dollar concern through directed, embedded advertising. Would it be safe to conjecture that data analytics and business intelligence is supporting this process? Then you probably also wouldn't be surprised that the company was bought by Viacom in 2005 for $160 Million. Not bad...

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