Social networks challenged to remain relevant

There are a couple of reasons advertisers have not been able to take full advantage of targeted advertising on social networks, according to Jang. One is that people have been putting user-generated content into three buckets -- "one that is not that great or interesting to the user or advertiser, one that is mildly interesting, and one that is universally well-received," Jang said. He said advertisers and social-networking companies should broaden their preconceived notions of user-generated content to find new ways to create the right kind of advertising for their communities.

Another reason it's been difficult to target ads is the "creepy" factor, said Alex Blum, CEO, of KickApps, which provides software for building online communities and social networks. He cited the controversy surrounding Facebook's Beacon online advertising engine, which reported users' online behavior back to the company even when they weren't logged into the site .

But there are other ways advertisers can glean information from social-networking sites and leverage "a tremendous opportunity that isn't viewed as creepy" to target users with ads, Blum said. By knowing what people like to do by viewing their publicly available tastes in books, music, and films, companies can tailor ads related to those interests without making users feel as if their online behavior is being tracked, he said.

Some factors that will contribute to the successful evolution of social networks are out of the control of the companies running those sites, said Leonard Brody, CEO and co-founder of NowPublic.com.

Brody's organization collects information from citizen journalists and redistributes it on the Web, and has used Facebook as a way to gather information about news as it happens from people in online communities. Many people have not realized the power of online communities beyond their mere social aspects, he said, but once that changes those networks eventually will affect other areas of culture, such as the way people report and receive news.

"We look at these social networks the same way we look at Miami, London, and Dubai," he said. "(Facebook) is a city, and an incredible vehicle for people to create micro niches around news that is important to them."