Professional Documents
Culture Documents
A guide to making friends and making money
Karen L. Webster
October 20, 2008
© 2008 Market Platform Dynamics
© 2008 Market Platform Dynamics
Social networking is not a new concept.
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It's incorporation on the web, however, is.
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Social networks are growing at record pace.
In the U.S., 57% of all web
Social Networking Growth by Region, Ages 15+
users aged 13+ have used a
600 25% social networking site
Unique Visitors (millions)
Source: The NPD Group, September 2008
500
400
300
23%
200 35%
9%
100 33% Social media will extend
66%
0 from its 489 million users
Worldwide Asia Pacific Europe North Latin Middle East ‐ today to over 1 billion
America America Africa
users in 2012, 75% of all
Jun‐07 Jun‐08
Source: comScore, August 2008 broadband Internet users.
Source: Strategy Analytics, December 2007
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Ning has enabled the creation of 500,000 micro‐
social networks
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And, these sites are not just for kids.
U.S. Social Network Penetration & Visits, by Age
Average Visits per Month (#) Penetration, Past 3 Months (%)
55+ 5.7
27%
45‐54 8.7
46%
35‐44 14.2
63%
25‐34 15.1
73%
18‐24 21.0
89%
13‐17 19.7
80%
Source: NPD Group, September 2008
A third of MySpace and Facebook users are 25+.
Women between the ages of 35 and 50 is the fastest growing
social networking segment, especially on MySpace.c
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Boomers have officially invaded their once
hallowed halls in social networks.
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Facebook and MySpace are the clear leaders.
The MySpace unique audience was over 2x that of Facebook in mid‐2007.
Facebook has experienced explosive growth since then, and is now the
leading social network site. In the last year, it has averaged adding 200,000
members each day.
Global Social Network Growth by Site, Ages 15+
150
153%
Unique Visitors (millions)
125 3%
100
75
100%
50
50% 41%
32% 19%
25
0
Facebook MySpace Hi5 Friendster Orkut Bebo Skyrock
Network
Jun‐07 Jun‐08 Source: comScore, August 2008
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Apps on Facebook keep users "sticky."
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MySpace is now a "social portal."
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A new crop of social networks have emerged
that cater exclusively to tweens and teens.
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Successful social networks are incredibly sticky.
Social networkers spend 3x more time on social networks than they do on news
and media sites. Traffic to these sites accounts for 10% of time spent on the web.
Unique Audience (000) Time Spent (hh:mm:ss)
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LinkedIn is a result of professional networking.
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These sites fill an important information gap.
People visit and spend time on social
Extremely or
Source networks in order to make friends,
Very Credible
but also to share and receive
Business magazines 62%
information from credible sources.
Wikipedia 55%
Radio news 53%
• 59% of social networkers use these outlets
Analyst reports 51%
to “vent” about customer care experiences
Friends, peers 51%
Newspaper articles 48% • 72% research companies’ customer care
TV news 46% online prior to purchasing products and
services at least sometimes
TV talk shows 45%
Company communications 43% • 74% choose companies/brands based on
Online message boards, forums, newsgroups 38% others’ customer care experiences shared
online
Company’s Web site 37%
Blogs 29% • 81% believe blogs, online rating systems,
YouTube 28% and discussion forums can give consumers a
MySpace, Facebook 23% greater voice regarding customer care, but
less than a third of these believe that
Corporate or product advertising 22%
businesses take their opinions seriously
Source: Edelman Trust Barometer, 2008
Society for New Communications Research, April 2008
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Marketing and social networks are converging.
Social Media Tactics Used by Organizations Social Network Ad Spending, 2006‐2012
Multiplayer Games
Social network $2,610
Music Sharing
ad spending
Other (millions)
Virtual Worlds $2,360
Total online ad
Instant Messaging spending
$2,085
Social Bookmarking (millions)
$1,815
Wikis
$1,430
Newsgroups/Forums
$920
Photo Sharing
$350
Podcasting
Social Networks
Online Video
Blogs $16,900 $21,100 $25,900 $30,000 $35,000 $41,000 $51,000
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But, questions remain about its effectiveness.
Social media as a marketing tool is often difficult to measure and control –
particularly with awareness and engagement factors. This makes it a complex,
challenging, and often risky marketing tactic to implement.
Most Effective Social Media Tactics
1= not at all effectives, 5 = very effective
Virtual Worlds
Music Sharing
Instant Messaging
Social Bookmarking
Wikis
Photo Sharing
Podcasting
Social Networks
Newsgroups/Forums
Blogs
Online Video
‐ 1 2 3 4 5
Source: Paul Gillin, Society for New Communications Research, 2008
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So, “show me the money” (on social networks)!
“How do we make money on Facebook? I don’t think we know yet.”
–Sheryl Sandburg, COO Facebook, April 2008
Average Advertising Network CPMs for US Websites in Select
Industries
Q1 2008 Q2 2008 Q3 2008
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
Business / Technology Gaming News Entertainment Sports Social
finance networking
Source: PubMatic, October 2008
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MPD’s approach leverages five key drivers.
We believe that five major forces will shape
the social networking landscape over the next 2‐3 years.
Me‐driven
Cause‐driven Peer‐driven
Time‐driven Trust‐driven
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Me‐driven: The user decides.
The idea of reciprocity drives
these communities.
It is this reciprocity that has
contributed to the rise of the
leading social networks,
creating community on the
users terms.
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Me‐driven: The implications for marketers?
Making communities is all about the
community, and not about you.
Traditional advertising
has been all about the
advertiser.
If you do this in social
networks – trying to
disguise yourself as a
fellow member – you
will most certainly be
found out.
You have to be invited in. It is harder and
it is different, but in the end, you’ll be
more successful.
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Peer‐driven: The influence of friends and family.
Relationships that users form through social networks keeps them sticky.
Peer‐engagement, even those connections with several degrees of separation,
are stronger than connections with advertisers.
Advertising Types Trusted by Internet Users
Recommendations from consumers 78%
Newspapers 63%
Consumer opinions posted online 61%
Brand websites 60%
TV 56%
Magazines 56%
Radio 54%
Brand sponsorships 49%
E‐mail signed‐up for 49%
Ads before movies 38%
Search engine ads 34%
Online banner ads 26%
Text ads on mobile phones 18%
% of Respondents (Global)
Source: The Nielsen Company, October 2007
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Peer‐driven: The implications for marketers?
Connections with
peers, even those
with several degrees
of separation, are
stronger than
connections with
advertisers. Knowing who has the influence in
social networks is critical.
Otherwise, you are likely to find that
efforts to engage the community will
be as effective as mass mailings, with
the added risk of a bad viral reaction.
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Trust‐driven: The fuel of social networks.
“A person like me” is considered the most credible source of information about a
product or company. Social media platforms make those referrals not only easily
available, but richer and more robust.
% Who Believe Sources are Credible Sources, Ages 35‐64
Blogger 14%
Entertainer/athlete 15%
Regular employee 39%
Peer‐to‐peer
Non‐profit rep 49%
A Person Like Me 58%
Govt official 32%
CEO 36%
Doctor 55% Top‐Down
Academic 56%
Financial/industry analyst 57%
Source: Edelman Trust Barometer, 2008
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Trust‐driven: The implications for marketers?
Social networks can be an
efficient way to reduce customer
acquisition costs and to create a
loyal group of evangelists.
However, the viral
nature of the network
can befriend or
bedevil you.
Commercial relationships will not get you very far, but
forging a trusted relationship with each member will.
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Time‐driven: Visiting sites that are relevant.
Employees in the U.S. are working more hours than ever before. Over three‐quarters
suggest that they don’t believe companies tell the truth in ads. It’s not hard to fathom
why people seek out social networks for advice and information.
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Time‐driven: The implications for marketers?
Competing for time and
attention means changing
your approach.
The age of marketing that
pushes down to consumers
based on what marketers
think consumers want is
nearing its end.
Consumers now have the
power and technology to
become publishers
themselves.
Creating the perfect blend of
value‐added, on demand services
means defining the community
you want to reach, and building
those services to it with discipline
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Cause‐driven: Sharing and engaging members.
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Cause‐driven: The implications for marketers?
Getting the
community
interested in you
begins by showing
interest in what the
community cares But the interest needs
about. to be genuine and
credible.
Consumers are smart
enough to sniff out a
commercial pitch
disguised as a cause‐
oriented campaign
faster than you can say
“bad PR.”
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How are these vast networks being monetized?
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Thank you, Google & Microsoft!
Google’s deal with
NewsCorporation for advertising
inventory on MySpace was for
$900 million.
Microsoft had a similar deal with
Facebook, which resulted in millions
of dollars in advertising inventory
(not to mention the $241 million cash
infusion last year).
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MySpace's MyAds are based on the cost per
click revenue model.
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Engagement advertising tactics work to interact
with the social networker, within his network.
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A variety of revenue strategies are emerging.
Users pay one Euro to move their profiles up
The Vanity in the site’s search rankings. Pay often
enough and can be featured on the Badoo
Play home page.
Subscription Charges members a subscription fee of six
Euros . More than 500,000 members pay this.
Fees
Patent pending technology that ranks the
“Influence most influential people in social networks.
Could allow companies to intimately enhance
Tracking” their marketing techniques.
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Other streams are based on trust and sharing.
• A promising revenue streams for
Gifting Facebook is “Gifts.” For $1, a user can
send a “gift” (aka icon for display on the
page). More than $24 million in gifts
were sent in 2007.
Social • Merchants whose products are featured
shopping on users’ pages share transaction fees
with social networks when users buy.
Sponsored • Sponsored stories which can be shared
stories with friends who are part of their social
network.
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Visa: Building trust via a business network.
• Access to a branded section
designed for small
businesses with a resource
center, a business finder,
and a messaging center
• The first 20,000 U.S. based
small businesses to sign up
received a $100 ad credit
• Facebook is banking on the
ad credit as the “foot in the
door” to increasing small
business advertising
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FreeCause: Leveraging the power and passion
of people in a network.
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You may be asking, “So what?”
• Social networks are an efficient
channel that can reduce customer
acquisition costs and create
evangelists, virally.
• These ecosystems aren’t yours to
control — they are already vibrant
communities.
• The key to accessing these networks
successfully means reshaping your
thinking and approach.
• It’s imperative that you be willing to
cede control in return for credibility
and authenticity.
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A few key topics already on the horizon…
Make vs.
buy
User‐
generated
content
Mobile
social
networks
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Accessing social networks requires an acute
understanding of what drives them.
Reaching communities successfully
means making your pitch all about the
individual, and not about you.
Me‐driven
Getting the community Connections with peers,
interested in you begins even those with several
by showing interest in degrees of separation, are
what the community Cause‐driven Peer‐driven stronger than connections
cares about. with advertisers.
Competing for time and Commercial
attention means changing Time‐driven Trust‐driven relationships will not
the communication get you very far, but
method and message – forging a trusted
the emergence of relationship with each
niche networks. member will.
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Thank you!
KAREN L. WEBSTER
karen.webster@marketplatforms.com
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