Real Value of Social Networks

Techcrunch has an interesting article analyzing the real value of a social network by the ad revenue potential of each user in their local countries.

TC has done a detailed analysis here http://spreadsheets.google.com/pub?key=pSnKg7M-DPfdEvcCrNoiETA

I agree in principle that the value of a social network comes down to monetizing its users and ad seems the plausible way today.

Hanging around Facebook and Facebook economy of developers a lot and my recent foray into Bebo, I see two main points missing:

1. Social Ads or monetizing users based on their social endorsement is being experimented by Facebook and is in infancy. That promise is the basis of its valuation and not standard ads alone.

2.  Even if we were to look at regular ads only, I as a user on facebook am more valuable to facebook than a new user who has a profile with 2 apps and 1 wall post. The page views a user produces by their activity level is important. So any measurement to find the percentage of engaged users for each platform will provide more realistic numbers on their revenue potential and valuation.

So based on this I would conclude Bebo’s valuation should be much higher than the $850Mil AOL paid for it.

Web2.0 Expo San Francisco Roundup

Silicon Valley was taken over last week by the Web2.0 Expo happening in San Francisco.

I attended the Keynotes, visited the Expo and Web2Open sessions on thurs and friday.

Web2.0 being the Social Web seems an accepted notion among everyone now. All focus was on how to build out real social web beyond the social networks.

Many announcements focused on opening developer APIs to create platforms. I personally think this is going to be the future in the coming year to create interoperable sites with exchange of data across the platforms.

Y! and AOL had announcements about opening up as a platform. AIM is now the most open platform on the Web now! If you are a developer anywhere in the world, you have to check it out!

Mitchel Baker of Mozilla Foundation spoke eloquontly about opening Firefox as a platform for mobile social.

Dan Lyons, aka Fake Steve Jobs was soooo funny but had nuggets of wisdom we cannot miss.

Social Ads and Endorsements

Social Media is becoming pervasive today without many of us stopping to realize how we are part of the change happening around us.

We as consumers lead online by sharing reviews online for every product like movies, restaurants, hotels, travel experiences and our perceived decision uncertainties of retail brands. Some of us are active writing reviews and comments in online sites like yelp, movie sites, travel sites etc, while others are making it a habit to consume this information as word-of-mouth referrals and contributing to brand perceptions by our innocent questions comparing brands and the real product match behind the brands.

Facebook has introduced the concept of Social Ads where they will embed the ads as part of a social action of a user. From a business standpoint what I like about Facebook’s Social Ads is that we can actually find out how many users are available who fit our targeted profile before we sign up for an Ad. The disadvantage is that it is not well entrenched like a Google Ad so we do not have any market support on whether to select a PPC or a CPM model and what price is appropriate.

Joshua Porter has an excellent post on why he thinks Social Ads do now work

Amy Jo Kim started me thinking differently on the difference between the Google and the Facebook models. Google attracts users who further in the product cycle looking for something eg travel, product search etc and wants super short time-per-visit while Facebook wants super long time-per-visit with users being exposed to Social endorsements from trusted circle of friends.

Surge in Social Networking Activity

Source eMarketer: The rate of affluent US Internet user participation in online social networks increased dramatically to 60% in January 2008, from 27% in January 2007, according to The Luxury Institute’s latest WealthSurvey “The Wealthy and Web 2.0.”

The study noted that, on average, affluent US Internet users are members of about three onlne social networks and have 110 online connections through these sites.

Online communities are likely to continue fragmenting into selective and specialized entities of like-minded members. This should make it easier to reach target markets, although luxury firms must jump some critical hurdles to get it right.

“The wealthy have a great deal to lose,” Mr. Pedraza said. “They will not tolerate behaviors exhibited recently by social networks that force opt-out techniques on member’s private purchase information, and make it difficult to exit.”

Nearly two-thirds of wealthy consumers say that giving out personal data without permission will cause them to disconnect; 63% have an interest in “do not track” lists.

“The Luxury Institute’s findings suggest that membership in social networks is one of the factors driving the growth in Internet usage among the affluent,” said Paul Verna, senior analyst at eMarketer.

This demographic segment – defined as people with annual household income of $100,000 or above — represents a large and growing percentage of the US Internet population. In 2007, an estimated 25% of US Internet users were affluent, up significantly from 16% in 2001. eMarketer projects that this percentage will increase to 27% in 2011.

Nielsen Online said last year that nearly 30% of Facebook’s users came from households with at least $100,000 in annual income. Comparatively, 22% of MySpace users were from similarly-affluent households.

While Nielsen’s numbers appear to contradict the Luxury Institute’s finding that MySpace commands a higher percentage of affluent Internet users than Facebook, there is no actual discrepancy when one considers that MySpace’s user base is considerably larger than Facebook’s. Hence, 30% of Facebook’s user base is actually a much smaller number than 22% of MySpace’s users.

YouTube Dominates Video (as usual)

comScore (NASDAQ: SCOR), a leader in measuring the digital world, today released January 2008 data from the comScore Video Metrix service, revealing that YouTube.com accounted for one-third of the 9.8 billion videos viewed online in the U.S. during the month. The total number of videos viewed in January was down slightly from the more than 10.1 billion viewed during a record-breaking December 2007.

Google Sites Extends Lead in Online Video Market Share

Google Sites once again ranked as the top U.S. video property in January with nearly 3.4 billion videos viewed (34.3 percent share of videos), gaining 1.7 share points versus the previous month. YouTube.com accounted for more than 96 percent of all videos viewed at the property. Fox Interactive Media ranked second with 584 million (6 percent), followed by Yahoo! Sites with 315 million (3.2 percent) and Microsoft Sites with 199 million (2 percent).

*Rankings based on video content sites; excludes video server networks.  Online video includes both streaming and progressive download video.

MySpace Down, Twitter and Ning Way Up

Source: Compete Blog

Earlier this week, Facebook founder Mark Zuckerburg made Forbes list of the World’s Richest Men. Facebook certainly had more ups than downs in 2007, but can the site continue its rapid growth into 2008? Where’s MySpace and what else is going in the social web? It appears that the real movers in and shakers in 2008 weren’t moving much in early 2007.

For the big players in the space, February represented a slight decrease in traffic, but the year- over-year growth rates seem to indicate that social networking (as an industry) has yet to peak. The table below shows the top social networks in February 2008, ranked by monthly visits. This ranking factors in both total audience size, and also intensity of use.

• Myspace was down slightly from February 2007 in terms of total US visits. However, the networking giant still holds a commanding traffic lead over all other Social sites.
• Facebook visits fell slightly from January 2008 to February 2008, but over the year the site has grown by over 75%. In terms of US visitors, it is now about one half the size of Myspace, but receives about 1/3rd as many visits.
• Niche markets are still attractive in terms of Social networking: Cafemom (a social network geared towards mothers), Linkedin (a networking site for professionals) and Fubar (“the first online bar”) all grew by 5X or more from February 2007 through February 2008. Fubar, in fact, exploded into the top 20 networks from relative obscurity one year ago.
• Innovative business models also had success in 2007: Communication platform Twitter, and white label social network Ning, both found a dramatically larger audience in the past year.

While fairly flat trend lines in MySpace traffic may provide an indication of the market reaching its peak, the rapid growth of some very new players in the space speaks to the opportunities in social networking that still exist… but only time will tell if Zuckerburg makes Forbe’s list next year.

Social Networks - A Localized Global Phenomenon

Facebook, and social networks in particular, are a medium to “Simply be you, online!”. It is essentially different from everything that is on the web because it brings a flow of real people with real identities and real interaction with their friends, families, fans, followers and future contacts.

When the web burst into the scenes with Netscape in 95, there was a famous saying “On the Internet you do not know if you are a dog” because it was new to create web sites for dogs and cats. But on social networks, I don’t think people create pages for their pets, instead they create real pages for themselves and brag about their pets.

We have looked at cumulative stats of market share of various social networks worldwide. So, we all agree it is a global phenomenon. But each of us are on one social network predominantly and are on couple more networks which we think are much smaller.

Valleywag got a world map of social networks in different acountries from Alexa (picture below, credits: valleywag.com)

 Why is this so? I am primarily on facebook, have accounts on Orkut and Myspace with overlapping social graph, but there are some relations which are never going to leave one network to another to be with me because the majority of their real social graphs are on that network.

The reason Facebook is my primary network is because it brings my real social network from real life onto facebook.  

This is a natural reason that will bring the entire world with all its diversity into diverse set of networks and hopefully provide creativity for new technologies to bridge across various networks according to the user’s choice.

Here is an interesting grouping of social networks marketshare per continent worldwide (source:lemonde.fr)

Facebook Growth Slowing Down?

Source: Techcrunch - The number of people who visit Facebook has been leveling off over the past few months in the U.S., and even dipped by about 800,000 individuals in January. According to the latest stats from comScore, Facebook attracted 33.9 million unique visitors in January, 2008, down 2 percent from 34.7 million in December, 2007. Maybe all that friend spam has something to do with the decline. Will the Facebook fatigue get worse, or is this just a temporary dip?

Worldwide, Facebook is still doing fine. It grew 3 percent in January over December, attracting 100.7 million unique visitors. (MySpace had 109.3 million visitors worldwide, up 2 percent month-over-month. And in the U.S., it was slightly down as well from 68.9 million visitors in December, 2007 to 68.6 million in January, 2008. Despite its larger size, though, MySpace lost fewer visitors in the U.S. than Facebook did).

MySpace Widgets Reach Largest U.S. Audience

In November 2007, nearly 148 million U.S. Internet users viewed widgets, representing 81 percent of the total audience. MySpace.com widgets had the widest audience, reaching more than 57 million Internet users, while Slide.com ranked second with 39.2 million viewers. Google.com has the sixth widest widget-viewing audience with more than 19 million viewers. Source: http://www.comscore.com/press/release.asp?press=2021

Social Network Market Share - MySpace Down