How important is data-mining to your social network?

Ross Fadner of Online Media Daily's "Around the Net" is one of the best online news editors around. I say this because he's good, but also because he seems to always direct me to news that I need when I need it.

Today he pointed us to an article on how a person's buying habits can reflect the buying habits of those connected to them in a social network.

...data mined from social networks--like chat or email conversations between friends--allows companies to find more likely targets for their products and services. Who you associate with is a great indicator of what kinds of products you're likely to buy: No form of advertising is more powerful than word of mouth.

Ross goes on to point out that "data belongs to the social networks, which aren't ad brokers."

But, many of us Social Network builders must be. Advertising and sponsorships play into our multiple revenue streams.

Should we add Data-mining to the Todo list?

If you're building social networks and intend to sell advertising, you have to consider data mining. If you have the data, it becomes easier to sell advertising. The flip side of this is that, today, demographic data is enough for highly prized market segments.

I recommend that you consider the following:

1. If you are going to attract a desirable audience--say, 18-34 year old college students--advertisers won't need any more data than that. They know they want in.
2. If you're drawing 'everyone and anyone' then you may want to invest in some data mining to help segment your visitors.
3. In either case, make sure that your privacy policy and traditions reflect that you intend to share aggregated data with advertisers. I still don't recommend sharing personal data with advertisers. You have to admit it and it will kill your audience.