Digital Marketing and Technological Insight

We all know the story of how Friendster, one of the original stars of Social Networking, had a meteoric rise and then watched MySpace and Facebook steal all of their thunder…and traffic. However, even though Friendster has been relegated to the “2nd tier” of social networks they are still one of the top traffic generating websites online (see charts below) and are dominant in the highly coveted Asian marketplace - a region where MySpace and Facebook have yet to gain serious traction. So is Friendster poised for a comeback and ready to take on the giants of Social Networking? I wouldn’t go that far, but some interesting news came out today that might give some insight into their future plans.

First, IDG Ventures announced they will be investing $20 million into the 6 year old social network - a good chunk of change that will help Friendster continue to improve their product, infrastructure, traffic and staffing…which leads me to the next bit of news. Friendster  announced the hiring of former Google Managing Director of Sales and Operation for South Eastern Asia, Richard Kimber, as their new CEO. Kimber obviously brings two skill-sets to the table, the ability to manage a large work force (he had around 1,000 people in his group at Google) and extreme familiarity with the Asian business and operational environment.

With money in the bank, a new leader but flat traffic growth, Friendster comes to a fork in the road. As I see it they can head into two directions: they can focus their attention and resources on the Asian market or they can try and re-enter the larger more lucrative markets in the United States and Europe. The hiring of Kimber definitely says to me that they want to continue focusing their attention on the Asian market where they have the strongest presence. This also makes the most business sense as there is no way they can win a head on battle with both MySpace and Facebook - they would need a lot more than $20 million to compete with the big boys.

So how big are they in Asia? Here are their top ten countries when it comes to sources of traffic:

1. Indonesia
2. Philippines
3. Malaysia
4. United States
5. Singapore
6. South Korea
7. Japan
8. India
9. Canada
10. United Kingdom

7 out of the 10 top sources of traffic for Friendster came from Asian / emerging countries with the top 3 being located in the Pacific Rim region. Looking at the list you can see that there is a great deal of room for growth within the Asian marketplace. Japan, South Korea, India and of course China are all areas that have serious growth opportunities when it comes to social networking. Friendster is probably the best, established, social networking service positioned to become the dominant player in those countries. This is where Friendster’s future lies.

So the question becomes what is Friendster’s fate? With the new money, new leader and the right strategy Friendster could become a dominate global social network - with the wrong strategy they can be stuck in the same “2nd tier” group as they have been in the past few years.

Is there a day that goes by where some new micro-blogging “Twitter Killer” isn’t launched? Jaiku, Pownce, Plurk, FriendFeed…the list goes on and on. Each comes out the gate promising to be the next big thing and outside of a few earlier adopters they usually fizzle into social media purgatory - some good user numbers but nothing to get that excited over.

The latest entry into the micro-blogging field is Identi.ca and the buzz around them is of course very loud. So what is the big deal? Well, first they copy the Twitter minimalist approach in terms of user-experience. They avoid cluttering the site with other features / content and stay away from displaying content in a new way (e.g. Plurk) - Identi.ca sticks to the basics. However, the key differentiation is that while other micro-blogging services are looking to capitalize on Twitters technical issues (Fail Whale anyone?) Identi.ca actually tries to solve it. Identi.ca has made its code open-sourced and encourages users to host Identi.ca on their own servers - this approach would distribute the load if the service became extremely popular and theoretically avoid the downtime that plagues Twitter.

So why wont Identi.ca, or any other micro-blogging service, take down Twitter? The answer is simple, long-term user adoption. There is a difference between just signing up & updating a few times and actually contributing on a regular basis. For micro-blogging the power is in the conversation and right now Twitter wins hands-down. During Twitters technical issues, where it seemed like it was down more than it was up, many people tried out other services, however the majority of users have always come back to Twitter in some capacity. It is true that some other services, like FriendFeed, have better features but if you look at the traffic (see graph below) Twitter has too big of a head start in terms of users and conversations. Any other micro-blogging service who launches is automacially put behing the 8-ball and must play serious catch-up and face, in my opinion, insurmountable odds.

Right now, FriendFeed is probably the biggest Twitter competitor in terms of functionality and industry buzz.  All of the big social media players are users and some (like Jason Calacanis) have become fans and have threatened to start migrating all of their conversations to FriendFeed and away from Twitter. However, the success of a micro-blogging service has to do more than just having Calacanis, Arrington, Scoble, Israel, etc, use it - I already read their blogs and subsribe to their feeds so really how is that providing new content discovery? It isnt.

On top of users and conversations, Twitter also has two other areas where they are killing the competition: their API and mobile strategy. Just about every Web 2.0 service offers their API’s - Twitter is no different. However, because of the volume of traffic Twitter generates, numerous third-party developers have built applications that truly enhance the Twitter experience - Summize, Twellow, TwitterVision, Twirl, the list goes on and on. Granted every other micro-blogging service can replicate each of these applications, but again it comes down to users and Twitter just blows everyone else away.  In regards to mobile, Twitter has gotten this right from day one. Micro-blogging is about sending quick updates and the ability to do that from your mobile phone via text message or applications (e.g. TwitterBerry) adds another layer of ease to the conversation.

At the end of the day micro-blogging comes down to two things - users and conversations, and you cant have one without the other. Twitter has both. Twitter does need to overcome its technical hurdles and there are definite improvements to be made to the user-interface but in the end Twitter is the only micro-blogging service that doesnt have to be perfect to succeed.

The social media world has been buzzing the past 24 hours about Digg’s plans for launching their much needed recommendation engine this week. The engine will be launched in limited beta mode and will only be seen (at first) by a limited group of registered Digg users. The videos below explain in great detail the purpose and value of the recommendation engine, however basically Digg is looking to enhance the content discoverability through increasing the relevancy of the “upcoming” stories presented to each user. Digg will be able to do this through user behavior and will always be working to provide the most relevant and timely stories. I am a huge fan of anything that increases relevant content discovery so I applaud Digg’s efforts…and it is about time they did this!

Below are two videos, straight from Digg, explaining their plans and how the recommendation engine will work.

Digg Recommendation Engine from Kevin Rose on Vimeo.

Anton Talks About The Digg Recommendation Engine from Kevin Rose on Vimeo.

As we all know Twitter is one of my favorite topics to talk about. This weekend I actually had a chance to talk with a friend of mine who works for a competing micro-blogging service on the future of this niche area as well as what lies ahead for Twitter. I can’t name what company he works for but let me just say if you are a heavy user of Twitter you probably use his service as well.

Think Twitter and other micro-blogging services like Pownce, Plurk and Jaiku are not forces to be reckoned with? Twitter had close to 15 million visits last month with 15% growth. Impressive stats for any website let alone one that hasn’t been out of Beta for very long. Also, think about the amount of time a visitor spends engaged with Twitter via the web, desktop applications and mobile applications. I couldn’t find exact stats on this metric but I am sure it is impressive to say the least. Either way you look at it, Twitter and Twitter like services are here to stay.

For those of you even somewhat familiar with Twitter, you know that their biggest challenge lies in fixing the technical issues that have caused its not-so-recent downtime and performance issues. But, let us assume for a moment that the good people behind Twitter fix everything and from now on it runs smoothly. Great, now what? Twitter’s challenges are just beginning, they now have two major hurdles ahead of them: growth and monetization. Two challenges that every Web 2.0 type web service are grappling with and are not solved very easily. However, I do believe that Twitter is in a unique position to overcome these challenges by leveraging its existing user base, allowing micro-blogging to become truly mainstream and building itself into more of a true social destination as opposed to an outlet for the tech savvy.

I think everyone can agree that the obvious path to meeting all of the challenges I listed would be to have micro-blogging go mainstream. But how does one go mainstream? Then once you are mainstream how do you monetize the traffic? Going mainstream is not as easy as one might think, the web is littered with thousands of websites and web services that failed to become even marginally popular let alone hit the social mainstream. With that, based on what was discussed this past weekend here is a quick outline of what I think Twitter could do to take their service and business to the next level.

• First, don’t mess with the main Twitter interface - let the micro-blogging / Tweets remain the core focus of the website. In order to create a successful (and profitable) web business you have to do two things: 1)do something different or 2) do something better. Since micro-blogging is still in its infancy Twitter accomplishes both of these right now - no need to fix what isn’t broken (not counting the downtime of course).
• Secondly, blow out the social aspects of Twitter, let users create full profiles that they are used to seeing on other social networking type websites. Don’t overdo it but make it so it becomes an extension of the micro-blogging. For example, show most popular tweets, expanded groups (which Twitter mentioned was in the works), have better location / photo integration, create a private twittering section…seriously the list goes on and on.
• Also, it has to be mentioned…since the technical issues will always be in the back of peoples minds, make sure to setup the infrastructure in a way that wont affect the main service. For example, Twitter.com/khawe would stay as the twitter hub while the social networking component lives on a sub-domain (e.g. khawe.Twitter.com). Creating a separate infrastructure allows for the best of both worlds, without effecting the performance of either.
• Now of course, how do you monetize such a “soon to be” mainstream web service? First and foremost let me make it clear that I do not recommend monetization the main Twitter value - the Twitter / Tweet page. Serving ads on top of the Twittering will negatively impact the user experience and the overall micro-blogging experience. However, if you do have to monetize the the main Twitter interface I would do it via overall page sponsorship…change a background, add a ’sponsored by” type ad, but nothing that becomes to intrusive or extreme. The main source of revenue would come from the deeper, social, part of the website that contains more static content that Twitter can sell ads against in the traditional CPM model.
• Lastly, You can (but I don’t recommend) create a Twitter premium option - like Pownce Pro - but how much will that really bring? Not a big fan but it is an option so I thought I would at least mention it.

Bottom line is that by creating a social network behind the micro-blogging instant communication functionality allows for a more in-depth and sticky user experience. What more can you ask for?

Ok, that is enough about Twitter for now…are you on Twitter? Be sure to follow me at Twitter.com/khawe

The way the media portrays Social Networking websites it would seem like they were taking over the world. Facebook has a valuation in the billions, AOL bought Bebo for $850 million and of course you have the News Corp. monster that is MySpace. Even though the media loves to talk about Social Networking websites, has all the buzz helped to continue the exponential growth or has growth topped out?

Utilizing Compete’s free web analytic tool you can get a clear snapshot of what is going on within the Social Networking world. The two giants are of course MySpace and Facebook with MySpace being the 800 pound gorilla in the room. However, when you look at the Compete graph below you can see that MySpace’s traffic has been steadily falling for the past 11 months. MySpace’s year over year traffic has actually fallen 27%, while Facebook, which has roughly half the traffic of MySpace had seen its year over year traffic rise 36%. Yes, that is not the astronomical growth we have seen in the past from Facebook, but when you take into account they are driving hundred’s of millions of monthly visits - 37% is a very impressive number.

So the question becomes where is the growth within the Social Networking world? See that blue line above, that is the professional Social Networking website Linkedin. When compared next to Facebook and MySpace, LinkedIn barely registers. With just over 20 million visits a month, LinkedIn is not going to be confused with the big boys anytime soon, however their growth is nothing less then spectacular. Year over year growth for LinkedIn is around 750%. That is huge, especially considering LinkedIn is not a new website, it has been around since 2004. Even better than that growth is the fact that even this niche Social Network numbers are far better then other Social Networking destinations making headlines. Bebo, which AOL bought for $850 million, has just over 13 million monthly visits and has seen a loss in year over year traffic of 47%. Why did AOL buy Bebo again? Oh yeah out of desperation.

As you can see from the below chart growth for the other “big names” in Social Networking is heading in the wrong direction. Hi5 which has about 10 million monthly visits saw a 6% decline in yearly traffic while Orkut, which is owned by Google, has only 10 million monthly visits and is heading in the wrong direction with a 10% decline - hey like my friend at Google once told me: “Orkut is huge in Brazil”!

So what is the future of Social Networking? People have been trying to predict this since the word Social Networking was created. Many people believe that “niche” Social Networks will see the next great growth explosion.  Some believe that web services like Ning.com, where you can create your own Social Network, will be the next big thing. The one thing that is for certain is that there is room for more then one player in the field, not everyone wants to use Facebook or MySpace, plus as we saw with Friendster - nothing is for certain online.