Despite the economic downturn, the exponential growth of social network giants such as MySpace, Facebook and Classmates Online is strengthening our belief that the social media phenomenon will continue to bear new business ideas, social contracts and connections. Recent ComScore data (May 2008) was showing year over year growth of 34 percent for Facebook and 23 percent for Classmates.com.

Their success is inspiring companies to start their own social networks. They range from branded private communities that give product-related feedback to public groups that grow organically, branching into discussions driven by consumers. Whether for large commercial players or brand communities, social networks’ paths to success share the same fundamental characteristics:

o Ease of access
o Ease of connectivity
o Ease of sharing

Social network users are already bombarded with information and many have multiple profiles to manage. Therefore, an emerging social network needs to have low barriers to entry and a significant benefit to lure new members.

The vanity in spreading personal stories, the voyeuristic appeal of sifting through other people’s posts and the satisfaction from connecting with old time friends represent the first phase of these Web 2.0 platforms. Next generation social networks will need to help transform virtual experiences into reality.

For instance, members will join a community to help fundraising efforts, give and receive recommendations for product purchases, organize for offline meetings/demonstrations or train for a new role in a company or community. Their membership and time spent online will have tangible benefits.

There are some social networks with goal-driven membership structures. Social Vibe gets its members to match brands with non-profits, care2 enables its users to sign online petitions and take green actions and SheSpeaks brings consumers’ opinions about new products to companies. Yet in general, social networkers spend their time on entertainment and knowledge sharing. Going forward, marketers’ challenge will be to build and sustain networks around social or commercial goals.

* Gretchen Krieg contributed to this post with her research and analysis.

Last week AdAge called to interview me about a story that ran in the NYTimes about local television newscasts promoting products on-air. The example they used focused on anchors at KVVU, the Fox affiliate in Las Vegas, who had glasses of McDonald’s new iced coffee featured prominently on their desks during their morning show. According to the article, this is part of a broader promotion arranged by McDonald’s ad agency with a number of local stations.

As expected the article pointed out that there is a growing concern from consumer groups and journalists about this type of pay-for-play endorsement on television, especially during the news. And that skepticism may be justified given the church and state relationship that has traditionally existed between editorial and advertising divisions within all print and broadcast outlets.

Despite that concern, I think we are going to see a lot more of this kind of thing in the future -- simply for economic reasons. Traditional media are losing traditional advertising revenue and they are being forced to find new ways to monetize their content. Movies have done it for years and so have the sitcoms and reality programs. The apprentice basically sold every episode to a major corporation looking for visibility with their once large audience. Advertisers spent 2.9 billion in 2007 to place their products in TV shows and movies. Up 33.7% from 2006. This year that figure is projected to hit $3.6 billion. So why not the news?

The other factor driving this trend is advertising agencies. Because traditional advertising is not having the same impact it once did, clients are demanding new ways to get their messages out. In response, advertising agencies are looking at all kinds of opportunities to place products in editorial content, which has long been the purview of PR. For decades, PR people have worked with news programs to get them to sample and talk about their new products and interview the people who make and use them. This is nothing new. What is new is the idea that the news media are being paid to do it.

As long as media and ad agencies need revenue (which I think is forever), we are going to see all kinds of paid product placement on the air. As PR people, we will continue to publicize our client’s products in every creative way we can. It is up to the consumer to understand why Stephen Colbert eats Doritos all the time and why Simon Cowell drinks Coke.