Location-based social networking is projected to generate worldwide revenues of $3.3 billion by 2013, according to ABI Research. But the business model may not be advertising driven.
“Location-based mobile social networking revenues will reach $3.3 billion by 2013, but successful business models may differ from what many observers expect,” says ABI Research principal analyst Dominique Bonte. “While location-based advertising integrated with sophisticated algorithms holds a lot of promise, the current reality rather points to licensing and revenue-sharing models as the way forward for social networking start-ups to grow their customer base and reach profitability. Recent evidence: the agreements between GyPSii and both Garmin and Samsung. Similarly, Loopt has established partnerships with all major US cellular carriers.”
This brand of social media has already started to take off with the recent release of the new iPhone platform. Users are now allowed to download applications designed specifically for the device. This has generated a slew of location-based social networks (as well as search apps).