TrendMarker A monthly brief for executives that highlights, explains, and discusses an idea, media innovation, market trend or invention that offers marketing and communications opportunities.
May 2006
The Social Butterfly Effect The Social Networking Web-World
Copyright速2006 Universal McCann
TrendMarker
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An Introduction to Social Networking
T
he ways that people socialize and connect with one another continue to become ever more digital. The elaborate social networks that exist on the web (notably Friendster, MySpace, Facebook) are critical pillars of this digitally socialized society. And new and improved social networks are appearing such as the Microsoft spin-off social network company called Wallop. Social networks provide a service to anyone looking to connect to people, make new friends or contact old ones, plan events and parties, talk about personal problems (and each other), and experiment with different identities, all without ever having to leave the keyboard. Although sites may seem broad in scope at first, upon becoming a member the user has the opportunity to seek out special interest groups and individuals who share their interests through use of tags; users are also free to express themselves by posting photos, songs, video clips, blogging, or posting comments on forums or a friends’ (or enemy’s) profile page. The first blast of social networking came in 2000 with Friendster, although it has since sunk in popularity as other faster and more feature filled refinements of the medium have emerged. MySpace.com, a site originally designed for new and alternative musicians, has become “a place for friends” as their tagline expresses, and the most popular site in terms of members from the US. And everyone is banking on its popularity; not only do everyday Joe’s and Jenny’s sign up for accounts, but so do restaurants, bands, celebrities, brands like Head & Shoulders, and TV and movie characters such as “The Carver” from the hit TV show “Nip Tuck.” MySpace has become a place where reality, music/
Copyright®2006 Universal McCann
Definition of social networks: “Technology and services that create unique personal profiles, map out relationships, and leverage those connections to accomplish a task.” Charlene Li, Forrester Research
TrendMarker film/TV celebrity, media fiction and marketing storytelling interact. The 12-24 year old demographic drives this social networking marketplace as the college networking site Facebook can attest to; Facebook was the number one website for 12-24 year olds in the month of March 2006 Comscore numbers. Entertainment and cool consumer technology companies such as Sony and Cingular that target this Gen Y demographic buy sponsorship deals and conduct research on social networks. The future for independent social networks appears bright and clouded at the same time. Leading social networking site MySpace boasts over 70 million registered users, twice as many as a year ago and revenue projections of over $200 million this year (Pali Capital). But questions remain about the stability and lasting popularity of social networks. Friendster was the place to be a couple of years ago and now its user traffic is negligible. Will the same fate befall MySpace or Facebook? And can the pressures on social networks to drive ad dollars co-exist with the Gen Y search for a cool, not overly commercialized community?
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Site Traffic US Internet Users* Visiting Select Social Networking Sites, November 2004 & November 2005 (in millions of unique visitors) November 2004
November 2005
MySpace.com
4.90
26.70
Facebook.com
-
11.10
Xanga.com
5.80
7.90
Bebo.com
-
1.50
Friendster.com
0.96
1.50
Tribe Networks Inc.
0.06
0.50
Linkedin.com
0.12
0.35
-
0.83
Orkut.com
Note: *includes home, work and university users Source: comScore Media Metrix, 2005; USA Today, January 2006 069456©2006 eMarketer, Inc.
comScore Report Geography
United States
Location
All Locations
Time Period
March 2006
Target
Persons: 12-24
Media
Top 100 Properties [Undup.]
Date
4/25/2006
Items 1 to 100
Total Internet Top 100 Properties
Copyright®2006 Universal McCann
Total Unique Visitors (000)
% Reach
% Composition Unique Visitors
36,773
100,0
21.5
N/A
N/A
N/A
1
[P]
FACEBOOK.COM
7,210
19.6
55.8
2
[P]
Photobucket.com LLC
3,954
10.8
42.4
3
[P]
ARTISTdirect network
5,119
13,9
39,8
4
[P]
MYSPACE.COM
16,342
44.4
39.0
5
[P]
ED.GOV
2,570
7.0
31.7
6
[P]
Lexico Publishing Group
3,051
8.3
31.3
7
[P]
Bolt Media
3,052
8.3
31.0
8
[P]
Apple Computer, Inc.
7,717
21.0
28.8
9
[P]
Gorilla Nation Media
6,441
17.5
28.1
10
[P]
Six Apart Sites
2,608
7.1
27.1
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Important Opportunities/Issues with Social Networks for Media and Marketing Executives There is a precarious but critical relationship Here is what students had to say about this relationship between advertising and social networks: between advertising and social networks For the most part, social networking sites were never clearly set up to be standalone, profitable businesses. As traffic on social network sites as well as the involvement of media conglomerates such as News International increases the pressure on social network owners to develop viable business models also heightens. Social network owners are turning to advertising as the critical revenue stream. On the surface there appear to be almost an endless number of ad opportunities on social networks (display ads, group sponsorships, streaming video, music giveaways, event invites, e-mail blasts, viral, buzz, etc..) but there is a question of how much of this stuff social network users will accept and interact with before they bolt and head to a less commercialized, edgier social network. Users weigh up the benefits (quality of social network, size, self-expression features, safety) versus the need to tolerate advertising. For this report IPG conducted an informal survey amongst NYU undergraduate and graduate students.
Copyright®2006 Universal McCann
Jackie Frankel, 22 “I tend not to notice advertisements and just get down to what I want to be doing. I would be irked if Facebook was giving out my profile info to advertising companies.”
Martin Giannini, 23 “It strikes me a bit unsavory that Rupert Murdoch is reading my mail, cataloguing my interests and plugging me into a demographic spreadsheet, but them’s the breaks, as they say. MySpace isn’t a service I pay to use, so I don’t feel that I (or anyone else for that matter) has a leg to stand on in terms of protesting advertising or the gathering of freely given personal information.” Bottom Line: Social Networking Sites need to carefully balance the need for ad revenue with the fact that social network members find the ad messages to be somewhere between an inconvenience and a necessary evil. While a wealth of marketing possibilities exist it is important that marketers do not get overzealous to interact and drive away the audience in the process. Look for opportunities that social network members can choose to be part of or take advantage of on their own volition. Do not bombard the community with ad messages.
TrendMarker Low CPM and a lot of inventory On the media side of the business, the average CPM rate paid for advertising is approximately a dime for 1000 impressions. Rates are low because of an overabundance of pages and low display click-through numbers. Clients in social networks like MySpace buy promotional packages that provide a mix of branded profiles, display (banner ads), pushed e-mail offers and branded groups that range in price between $50-200k. There is a lot of unclaimed display media inventory on social networks that is sold on by ad networks such advertising.com. Bottom Line: Social networks should be open to negotiating beneficial ad deals with clients. Display ads in the social networking world do not perform well, so it is important to explore other social network marketing opportunities.
Be somebody, not something in a Social Network Several Universal McCann digital specialists echoed a similar refrain on how to engage with consumers in a social network. Elias Plishner of Universal McCann LA stated, “If a brand wants to get involved in a social network one of the best things to do is be somebody not something.” TV shows such as, “Nip, Tuck” offer MySpace pages for lead characters such as “The Carver.” Record labels create pages for emerging and established artists, a highly referred to example of this idea being the Kevin Federline MySpace site. By becoming a part of the community, network users can enjoy the novelty of “friending” icons of popular culture. Bottom Line: Keep in mind that social network users expand their community in terms of people, not products. While this character seeding has worked well to date there is a thought that this practice may be past its past peak as a clever, cool communications ploy.
Group sponsorships offer a valuable social network entry point Many social networks offer a feature whereby individuals come together in a group structured around a common interest; that interest, at times, focuses around an existing product and its use. Founders of Facebook.com claim that “sponsorship of groups is at the center of our business model,” and have procured support from Victoria’s Secret, Electronic Arts, and Apple. Bottom Line: Groups offer a way to be involved in a straightforward way that is not too aggressive or too intrusive. The fact of the matter is that people do develop strong affinity or passion about brands and want to be connected to other people who are just as excited. In most cases the passion target brands are tech
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cool products like iPods or other young adult related services like student travel. Opportunities exist in these groups for marketers to create and collect survey info, and offer prizes and incentives to interact with new products.
The power of word of mouth In the world of social networking, peers have greater influence than corporate entities, and want to participate in the media they consume. It’s important to remember that users can and will provide comments on the products they encounter; marketers must be sensitive to the personal and potentially caustic nature of the community. Bottom Line: Be aware that your brand is entering a dialogue not a monologue. Some brands hire people to act as covert spokespeople. This approach seems riddled with risk. If one covert spokesperson is uncovered then the brand is blown. Be honest and authentic with your brand voice.
Social Networking with a purpose Notably, some of the more successful social network sites are ones that have been able to have a common purpose to generate content, such as gather.com. As Steve Smith from MediaPost put it “gather.com is MySpace for a literate audience...has 20,000 members (150,000 daily views) skews older and wiser than MySpace and is more interested in trading ideas than giving shout-outs to the 12th grade class at Oshkosh High.” This is a community that interacts online with an emphasis on creating content, such as articles that users link to or write themselves, tag, recommend, and comment on a full range of editorial topics. This is a new trend in customer-generated content. Whereas web 1.0 was about personal pages, in web 2.0 we see a trend towards publishing and sharing information. Bottom Line: The social networks that will stay the course are the ones that, apart from being an online destination to interact, also generate useful content. This is key for better performing, online advertising through behavioral targeting of consumers. Here there is a captive audience that is actually using these sites as a resource to research topics of interest.
Dude, where is my (recommended) restaurant! In the growing world of local search, pages like insiderpages.com, judysbook.com or yelp.com are becoming a force to reckon with as social networking is incorporated with local yellow pages at a city and neighborhood level. These sites can help users pick a good dentist in their area based on the reviews of friends or neighbors (this provides an excellent platform for advertisers to be specific
TrendMarker and on target with their messages). This type of service will also become more prevalent when it moves to mobile telephony, and we are able to use location based services (LBS). For example, you are on 6th and 42nd st and you want to use the local directory to find a Chinese restaurant. Typically you would be given 10 listings based solely on location. With the added power of social networking, users would be able to access the previous experience of their peers and make a more informed decision. Bottom Line: When local search becomes more mobile the key differentiator will be the one that incorporates consumer-generated content to sift through the morass of information. Make sure your brands follow this ethos and embrace customer engagement and opinion.
Is the Social Network Safe? Fears of sexual predators lurking and other deviant behavior occurring within social networks have made leading social network site players vigilant in protecting their sites. MySpace has over 100 employees solely dedicated to the task of making sure that the Site stay safe. Facebook requires a .edu address and also aggressively monitors behavior. Bottom Line: Social network sites have received the message that they need to closely monitor community behavior. MySpace and other social network sites do not want the negative publicity. Are the safeguards foolproof? Absolutely not, but this vigilance will make the social networking space a lot more inviting to marketers who want to steer clear of earlier social network controversy.
Copyright®2006 Universal McCann
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Developing the international market. Today, many popular networking sites gather most of their users from regions outside the US. The majority of Friendster members come from Southeast Asia; three quarters of the Orkut (Google based) community come from Brazil; and approximately one third of LinkedIn (a Business Networking site for the executive crowd) is European. Bottom Line: The next anticipated phase of social networking is a launch of country specific offerings, as the US online networking market may be reaching a saturation point. Marketers will find opportunity in integrated sponsorships once sites offer country specific features.
Research opportunities Social Networks act as a microcosm of Gen Y society, and researching tools have been developed to harvest and analyze the data inherent within the online networks. Applications include InterestMap, Ambient Semantics, and IdentityMirror. These systems give marketers the opportunity to more directly target their audience based on personal, specific identity information provided through the network. Mark Zuckerberg, founder of Facebook.com claims “We’re not producing media in a traditional sense; we’re data mining...We want to take an engineering approach.” Bottom Line: Social Networks are being utilized to conduct research studies and offer an opportunity for analysis of the youth target audience. Behavioral navigational patterns can be tracked by observing users’ utilization of the sites.
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Some Popular Social Networking Sites Site
Focus
Registration
Open
Cyworld
South Korea
15,000,000
Open to students
American College and High School students
7,000,000
Open
Friendster
General
27,000,000
Open
Hi5
Europe, Latin America, Caribbean
Unknown
Open
Business Relations
5,200,000
Open
MySpace
Social networks and music
70,758,487
Open
Orkut
Owned by Google
13,000,000
Invite Only
Sms.ac
Mobile phone community
50,000,000
Open
Xanga
Blogs and metro areas
40,000,000
Open
Some Popular Social Networking Sites Consumer
Description
Strengths & Weaknesses
Friendster
• General networking • 27 million members • $13 million from VC
Strength: First to market; advertising model leverages strong audience Weakness: Not as feature rich as other sites
Orkut
• Membership by invitation • 13 million members • Founded by a Google employee
Strength:: Shows the strength of user relationships; tools include discussion boards and events Weakness:: Prone to slow, unreliable services; limited searching
Tickle
• Personality testing and assessment • Charges $20 per month to connect with members more than 4 degrees away • Acquired by Monster 2004
Strength:: Uses test results to help find compatible people Weakness:: High cost of making connections
MySpace
• General networking and music site • More than 70 million members • Acquired by News Corp. 2005
Strength:: Traffic can draw up to 10% of all online advertisement viewing in a month Weakness:: Low age requirement (14) has caused speculation among parents regarding the safety of online networking.
Copyright®2006 Universal McCann