As you guys can imagine, I get invited to speak at some amazing events, and I try to share my biz building expertise and strategies for success as often as I can. You may wonder why I make this a priority in my busy schedule – it’s because we are honestly going to have to create our OWN bailouts if we’re to achieve the next level of global prosperity.
One of my favorite events recently was the Stanford Entrepreneur Trek in late March on “The Future of Social Networks – What They’ll Look Like and Where the Revenue Will Come From.” My esteemed panel hailed from MySpace (Jen Weedn, Director of Business Development), Facebook (Josh Elman, Senior Platform Manager) and Hi5 (Michael Trigg, VP Marketing).
What I want you ALL to completely understand is this: There’s a difference between a social portal, a social context for discovery of content, a place to hang out (like MySpace) and a social network, which is a utility for connecting with friends and building relationships (like Facebook). In fact, they serve very different purposes. I don’t know about you, but I’m kinda sick of the MySpace / Facebook battle that the media keeps trying to create. It’s apples and oranges, friends! Get it and move on!
At the start of the event, I polled the audience, asking: “How often do you use social networks?” The answer was that 20% of them use them daily (mostly made up of business school students and local entrepreneurs), and another 40% use them weekly. BTW, about 10% were friends with their mom on a social network!
It’s worth noting that a whopping SEVENTY PERCENT were on at least one social network, and a full FIFTY PERCENT were on three or more. In fact, one fifth of the audience was on five or more networks. (My personal recommendation, by the way, is to keep it to three. If you don’t have the time to build and maintain relationships through these platforms, what’s the point?) If you’re going to have six or seven, you better plan to either make it your career or hire a networking agent to help you keep up.Some other interesting results? About 5% of the audience had built or written a business plan for a social startup.
… Then it was time for the panelists to fess up. I asked the following questions: “What’s the state of the social networking ecosystem today: what’s working, what’s not?” And, “What are the business models and in what context do they work — why do some applications soar and some fail?”
The net-net was this: 1) We are just now really starting to be able to hyper-target ads, to serve up truly contextual ads to the right people at the right time – those who are far more emotionally engaged than a visitor to a non-social site would be. Hmmmmm…. 2) And content is king. Papa John’s put together a killer campaigns that ramped up the excitement for March Madness. It brilliantly forged the brain link between pizza (from them, of course) and basketball. Pass the pepperoni, yum!
Quick break for factoids: Online advertising growth is expected to decline from 17.5% in 2008 to 8.9% this year. But heck, 8.9% is still growth…. and how much of that ad spend will be directed to social networks vs. more established revenue-yielding sites? (Answer: don’t know, BUT with hyper-targeting, a helluva lot more than we might think.) And just wait till the Gen Xers are controlling the ad budgets… then we’ll really see this arena start to rock.
Another factoid: 20-25% of Fortune 1000 budgets are being moved to content-based marketing. Content builds credibility, rapport, and trust. Content delivered frequently builds rapport. More rapport, more trust. The more trust, the more likely they’ll buy.
A few more for you:
1) Banner ads on social networks sell for as little as 15 cents per 1,000 clicks—so these “ads” are much more like branding vehicles;
2) Facebook: 5 yrs old, adding 5 million new users/week, about 180 million users now. 2008 revenue was $280 million (yet it didn’t break even).
3) MySpace: 63 million users, also in the red. 40% of online moms are on MySpace!!!
4) Twitter: over 5 million visitors/month, not profitable either.
5) QQ is the top social network in
Here’s QQ’s revenue breakdown:
83% virtual goods and gaming
55% net margin
Users are from 13 yrs old to mid 40’s
The free games on QQ hook users in, then they buy. Heck, if you’re in a virtual gunfight and everyone has a Colt .45, what would you pay to have an Uzi?
So these are the REAL questions for biz builders to create strategies for success. How can “social” platforming help to transform a business? How can start-ups leverage social networking technologies to transform/promote themselves? How is “social” changing given the current economic climate? How have businesses based on social networks been successful?
I am still wondering at what point does more successful = less relevant? Everyone’s on it, so it’s no longer exclusive. It’s become crowded and commonplace… like 500 channels on TV and nothing to watch. Hmmm… But it’s also true that sometimes it is a numbers game. And more importantly, potential clients and business allies will be looking for you on MySpace, Linkedin, Facebook, Hi5, etc., etc. And there’s on thing I do know, absolutely … and that is this: Everything’s better with friends!
Christine Comaford, Biz Accelerator
CEO of Mighty Ventures, Inc.
NY Times Best Selling Author