by: Idris Mootee

I have so many responses from my last post, I wanted to explore that subject more next week so for those who sent me emails or posted here plese bear with me and I will get back to you on those discussions. For now, I want to share some thoughts on social networks. We are all wondering how social networking is likely to evolve once we get past the current hype cycle. It is always good to start from the motivations of these social networks.

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I see five distinct types of motivation:

1/ I want to stay in touch with the cool people that I know and trust
2/ I want to meet new people for shared interest or expand business contacts
3/ I want to increase my online presence and publicize my persona
4/ I want to provide knowledge or share stories to help others
5/ I want to get some help

A recent pool shows that 87% respondents (Prospectiv surveyed nearly 3,000 users of social networking sites such as Facebook, MySpace, Friendster, Hi5 and others) feel that very few (58%) or none (29%) of the ads and offers they see on social networking sites match their specific interests and preferences. These results clarify that members of social networking sites are open to ads as long as they are properly targeted to their interests. Of those surveyed, 58% said that very few ads match consumers' interests and preferences, while 29% said that none of the ads match consumers' interests and preferences. Only13% said most ads match consumers' interests and preferences. As a result 54% of consumers never click on ads on social networks, while 39% occasionally will respond to ads.

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Ad model-based social networks is not a problem, 85% of consumers said they are more likely to join a free social networking site supported by advertisements and offers targeted to their interests rather than a paid social networking site without ads. Social networks are more sensitive to ads. Unethical marketing practices on social media websites usually backfire. The relevance and context is particularly sensitive and any non-targeted, spam marketing will create more damage to the site and its advertisers. I know many industries including pharma are dying to figure out how to use SN to market their products. On the other hand, their lawyers are struggling with liability issues.

Ad spending on social-networking sites will reach $2.15 billion in 2010 (this year forecast at $14 bil), according to eMarketer. MySpace will continue to dominate, accounting for 60% of total U.S. online social-network ad spend this year but it might change. Worldwide, social-network ad spending is forecast to $2.8 billion, that’s a lot of money. Social networks must put adequate ROI measures in place if the flow of ad dollars is to continue, says Debra Williamson, eMarketer analyst and author of the report. An updated report estimates $40 mil for Facebook widget and application ad spending in 2008, up from $15 million last year. I believe the are under pressure to develop an adequate ROI metrics to accommodate how to measure “engagement” and not “eyeballs”. Currently Facebook and MySpace together account for 72% of social network ad dollars.

Facebook and MySpace just announced their plans to make your social networking data portable and Google has announced “Friend Connect,” a similar service that will officially this week. Friend Connect is a tool which enables any website owner to add some code to their site and get a number of social features. All that stuff you usually can’t be bothered to install plugins for: user registration, invites, members gallery, reviews, message posting, and - most importantly - third party OpenSocial apps.

What does that mean? In practice, this is an intrastate to create common connection which means that anyone will be able to log in, for example, with their OpenID on some blog, and converse with their Gtalk, Facbeook or Linkedin etc.

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Remember the first local social network Dodgeball which got bought by Google and threw away? Then there was Twitter. It’s evolved so much more that “what are you doing now?” which I still don’t understand the value. Yahoo! launched its own play FireEagle in private beta which is starting the location-craze again — with plans to have multiple input/output methods looming across the web and devices. So another “where are you" application.

The desire to network is as old as humanity and online social networking sites is now part of our life. The question remains will these communities will eventually be gated and what will be the implications? However, the trust issue for companies remains very real. You cannot simply allow everybody to see everything. The question follow is around data portability, that is allowing users to share their list with other websites. Let’s say if I visit a site as a member of a particular group I will receive special group treatments. That is a very powerful concept. It is like every site will have the power to personalize based on the information that this person carries and marketers can negotiate with these groups for permissions to market to. The Data Portability Project is a grass-roots advocacy group pushing the idea for users to be able choose to share some of their data between the services and being able to do so with peace of mind, security and safety.

What about Facebook and Google sharing information with each other (not that this will happen soon as they are about to go to war) -- why would anyone want that to happen? Google has all your search data, but they don't know about your friends. And conversely, Facebook knows who are friends are but nothing about your searches. You can imagine the power of the two.

Let me know if you like this scenario. Pls share your thoughts.

Original Post:  http://mootee.typepad.com/innovation_playground/2008/05/social-networks.html

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