Is social networking the first step or the next

Networking leads to referrals either to you or for you. Think about it, usually when you are looking for a salesman you ask someone you know who they used or know that sells widgets….seldom do you just blindly select someone out of the phone book. The web is working more and more the same way.

Word of mouth advertising is spreading to the web to be sure. The power of online networking is becoming more and more staggering every day. Although the user today is a search based user, the teen users are networking with staggering results, take a look at myspace and its counter parts for proof. This is the next generations of buyers and they are accustomed to networking.

In his article published on Webpronews.com, Jason Lee Miller says,

Search is already a market cornered and MySpace is the early leader for that prize in social networking. But watch out for Second Life, World of Warcraft, EverQuest and other more interactive otherworlds as they evolve. The addictive quality of these sites is compelling enough, but when the numbers start coming in as to their impact on peripheral sales, people will begin to take notice.

Let’s use mothers as a case study. Did you know that mothers represent a $1.7 trillion market? Moms account for 55 percent of consumer electronic spending; 51 percent of food spending; 49 percent of health and beauty spending; 48 percent of home furnishings spending; and 47 percent of apparel spending.

That’s a powerful grouping. And 95 percent of them are online at least once day – 85 percent of them clicking on an advertisement – 86 percent of them buying something. And only 20 percent of them say that advertisers really know how to connect with them.

Recent research shows that moms don’t really care what celebrities are selling, though celebrity endorsement has been a staple of advertising since the beginning. Part of this, you could say is due to a concept called “demystification,” which applies to political leaders too.

Consumers know celebrities are paid handsomely to recommend a product and have learned not to trust them. They ultimately turn back to those they trust before buying anything. Sixty-seven percent said they’d rather get information from a peer rather than a celebrity.”

Blogs mirror this. When you look at sites like Digg and their affect on some blogs you can easily see networking at its finest. If Digg links to a blog its likely to see a marked increase in traffic.

What does all of this mean? There is an emerging pattern that shows online journeys begin with social networks or search, move on to visiting blogger friends, who direct them to good places to spend money.

Miller goes on to say,

Over six percent of those leaving blogs head off to shopping and classified sites. The majority repeat the cycle by going back to search and social networks, while others are trickling over to other blogs, to their email accounts, or to news and media sites.

That’s a lot of opportunity to reach people along the way. Like in the outside world, the most important part of having an online business becomes the business location, and then relying on word of mouth.

In the US, Hitwise says those numbers are slightly different. Net communities and chat drive nearly 60 percent of blog traffic, followed by search engines at 9.5 percent, and email with 8.4 percent.

Where people go after that is more evenly split, first among social networks (17%), entertainment sites (15%), email (11%) and lifestyle sites (9.8%), and then among search engines (6.2%), news sites (6.1%), blogs (5.9%), photography sites (5.2%), portals (4.5%), and shopping sites (4%).

Don’t lost in those numbers, just remember is that people leave blogs and, often upon the recommendation of a trusted blogger, go to places where money is spent or products are considered.

What you should really pay attention to then, is how the big players understand this traffic flow situation as well they understand the power of the peers and how that will affect your site and your revenues.