Two factors are going on. That result in the current social media gold rush.

# Factor 1

The first is the fact that the people who have disposable income already own more tangible items than the ultra wealthy of our cave dwelling ancestors did. In terms of value.

# Factor 2

Since people already own most of the tangible things needed to live a comfortable life, consumer focused companies need methods to find the specific consumers that are currently interested in buying tangible things, or who can be convinced to be interested. They then need to profile these people and then present them with messages engineered to elicit feelings of hope for fulfillment (I say hope, because often the fulfillment does not come). This is describing classic consumer research and classic advertising. This is currently a costly process*.

U.S. ad spending grew 6.5% in 2010 to $131.1 billion, according to new data from Kantar Media.

# The Result

A huge market has been created. A very real market. As an aggregate our private information and attention (market research & advertising) is quite valuable. Not to say this market is so vast it eclipses all others. Facebook is valued at over 100 Billion according to some. Selling tangible goods like oil or Apple products seem to still be larger than this market. So a few individual markets are larger than social networking market?

We live in a world where the ability to line people up, study then and then use psychological tactics to hook into their desires and wants, on an aggregate, is worth more than the products on an individual case are worth.

# An Analogy

If this is hard to wrap your brain around, think of this analogy. Imagine a world where the automobile, plane, boat etc were never invented and no roads exist. However a few Rail Road companies exist. The FB RR, the Twitter RR, Instagraam RR and the Pinterest RR company. The FB RR just bought Instagram RR. Companies like Coca-Cola sell tangible products (sugar water) And before the 4 mentioned Rail Roads existed Coca-Cola did quite well selling its sugar water. It has become a billion dollar business. By way of Pony Express (Television, magazines, research groups) many people have chosen to buy Coca-Cola. However, from its point of view it could sell more and hiring men to carry large sums of sugar water long distances on horseback is expensive. And worse now that Rail Roads are popping up in small towns competing companies such as Pepsi, Jones soda, etc are delivering their sugar water for cheaper.

The truth is if no Rail Road existed and no Pony express, you or I would be fine. We would drink water, we would tend our farm and trade carrots for apples. Which we would use to make apple juice. Evolutionary speaking we don't need Coca-Cola. And the heads of Coca-Cola know this. If they don't start paying the FB, Twitter, Instagram and Pinterest RR to ship their sugar water to local towns people will stop buying Coca-Cola. A billion dollar business is at the mercy of these 4 Rail Roads. But it’s not just Coca-Cola. There are millions of businesses in the same boat.

So yes, social networks provide intangible goods to you and I, however, to consumer focused companies they are essential for Sugar Water Co to be a billion dollar company in today's economy.

The result is a gold rush, and though you may feel morally against this gold rush, you can’t deny it’s not real money, real value being created. A better mouse trap has been built. It creates wealth. In this case this mouse trap tracks you, analyzes you and convinces you to spend your money on Sugar Water. This is a tanigable, valuable and desirable good to many rich people.