Online advertisers and e-commerce companies increasingly use social media, such as Facebook, to reach consumers, revealing individual interests more efficiently and generally benefiting the Internet space, Social Media Analyst Lou Kerner of Wedbush Securities says.
“Certainly everybody is integrating with Facebook and deploying the Facebook Connect button on their Web sites, even MySpace, and they all want access to the information available in the social graph,” Kerner said. “Microsoft’s (MSFT) Bing, with its partnership with Facebook, is already leveraging the ‘like’ button information into its search results, and so that’s a good example of how the social graph is being leveraged for search today.”
Considering the impact of social media, investors should have exposure to both Internet advertising and e-commerce companies that are moving advertising dollars online to leverage social media, Kerner says. This includes companies like Amazon (AMZN) and Travelzoo (TZOO), and those using Facebook and Twitter to build a following, like Verizon (VZ), Coke (KO) and Kraft (KFT).
“The most important thing to realize about the social layer is that it’s going to broadly benefit the Internet in total,” Kerner said. “As a result of the social layer, advertising and e-commerce are both going to become more efficient online.”
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