Aside from the big players in social media making money via advertisers and cutting deals with some of technologies biggest hitters, there are more social sites that do not make money then there are those that do. What do they do? How are they going to make money?
Obviously one of the ways to create a social networking site that actually makes money is to niche-ify it to the extent that is speaks to a specific type of brand user and all the products or services that can be wrapped around the user. Picture the hot dog . Thats right, you are the hot dog. Your social network, the hot dog. You are going to be interested in all things related to you.
Now the hot dog has the bun, the ketchup, the mustard, the relish,and the onions. All viable participants in the network. Including our friends chil and cheese. Couple with that will be napkins, something cold to drink and perhaps to go with the hot dog, a side of chips.
All of these mentioned make perfect sense. They are viable, channel driven, niche driven, complimentary, cross promotional products that speak to the center of the social network universe known as is…the hot dog, 
The problems arise when something that is totally irrelevant tries to crash the party. And interestingly enough, you would be surprised how often the following happens:
The best example of a lot of people trying to crash the party is perhaps the frenzy that is Myspace and Facebook. The frenzy of advertisers wanting to take advantage of million and millions of customers waiting(or are they?) to be pitched. Problems can arise from people who try and crash a party that they’re not invited to. Some great examples can be found in Jeremiah Owyangs post on brands that got punked by social media
As an advertiser, one just needs to know and it’s not like it’s that difficult. Are you the windshield, are you the bug? Are you the louisville slugger, are you the ball? Are you the hot dog? are you the bun? Or are you window cleaner that is the upsell to a box of triscuits?
Direct Marketing Observations 
I like your ‘ot dog’ analogy very much!! It perfectly sums up the dilemma facing advertisers and it will be very good if they can identify which part of they are playing in social media world. It’ really proving to be a challenge to monetize social media and i think the rush madness by advertisers to do that because of the millions of people in it makes it even more problematic and countyer productive. I think they need to be more cautious and innovative. Simply relying on old traditional ad methods will not work for them in social media. As one other blog aptly pointed out, monetizing social media is still up fro grabs: http://www.internetevolution.com/author.asp?section_id=466&doc_id=155826&F_src=flftwo
Abdul or Paul, I agree and what astounds is the amount of money being pumped into tryying to monetize and advertise on these SN’s amazingly the advertisers, some not all, are all using the old traditional models of trying to reach customers. The shotgun approach. Thanks for the link, good stuff.
Marc
Marc,
Came across your blog through a comment you left on Diva.
Amazing post. The square peg / round hole had me rolling.
Keep it coming.
Brandon
@Brandon I appreciate it. I’m just trying to simplify something that is not overtly complicated but…there always seems to be an engineer type or two that will want us and the N00bs to think that it’s too difficult a concept to wrap our arms around. Ha, I say to them…pass the salt!
Focus and niche are very important. But how do you keep out scammers and spammers without lowering quantity of traffic?