Renren, one of the largest social networking sites in China, recently reported a $13.6 million loss for Q1 2012, citing weaker advertising revenues. This loss is up from $2.6 million for the same period last year, even as the number of users increased 9 million over the previous year. This news, coming on the heels of Facebook's less than stellar IPO, should serve as a warning of the volatility of social media business models. Perhaps these companies haven't quite figured out the value proposition and how to generate a more robust revenue stream rather than simply relying primarily on advertising sales. The good news is Renren, Facebook, Twitter and other social media juggernauts have strong brands and products, now they just need to figure out how to successfully monetize them.
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