Digital Marketing and Technological Insight

Every month the Oxyweb Blog puts out a “world map of social networks around the world”. The map is a visual representation of the most popular social networking services on a country by country basis - rankings are based on Alexa data.

I love looking at this map for many reasons, the biggest being people in the United States tend to look at the social networking / media world from a MySpace vs Facebook standpoint. However, as you can see from the multitude of colors on the map that just isn’t true. It is a big and growing world out there and each country operates differently - this is the challenge and excitement of doing International Digital Marketing. Marketers in the U.S. do not even mention Google’s Orkut, however they dominate India and Brazil - two of the fastest growing economies in the world. Obviously Social Networking conversations should start with the big players, however sometimes you have to look outside your window and see who else is coming up the driveway.

Here are the map changes from September 2008:

Facebook gains Bahamas from Hi5
Facebook gains Belgium from Skyrock
Facebook gains Cuba from Hi5
Hi5 gains Cyprus from Facebook
Hi5 gains Luxembourg from Facebook

Here are the changes from august 2008:

Facebook gains Albania from Hi-5
Facebook gains Austria from MySpace
Facebook gains Bahamas from Hi-5
Facebook gains Italy from MySpace
Facebook gains Libya from MySpace*
Facebook gains Libya from MySpace*
Facebook gains Madagascar from Skyrock
Facebook gains New Zealand from Bebo
Facebook gains Qatar from Orkut
Facebook gains Uruguay from Orkut
Hi5 gains Syria from MySpace*

Check out the full-sized Social Networking Map Here…

Facebook went “live” today with Live Web Search functionality within their site search box. The integration was part of Microsoft’s $250 million investment in Facebook last year and has been long in coming. When Facebook users start to type a search query, along with “Search Facebook” and related network information, there is now a “Search the Web” feature. When choosing to search the web the user gets Live.com web results integrated into the Facebook UI with Microsoft AdCenter results displayed alongside the results. When a search result is clicked the user is taken to the Live.com search engine result page.

From the Facebook blog: “By integrating web search into Facebook, you can increase the information available to share with your friends, family and coworkers on the site. For example, your friend may invite you to an event at a new restaurant. Without leaving Facebook, you can check out the details of the restaurant on the web. Or, say you see photos in your News Feed about a friend’s recent trip to Dubai. Inspired, you can search the web for more information about travel without having to leave Facebook. Along with your search results, you may also begin to see ads for products, services or other things that are relevant to your query. “

Microsoft says that this is the first step in their partnership with Facebook and are currently exploring additional ways to “integrate Live Search more deeply into the Facebook experience”. This is certainly not the last we have heard on this and I am sure there will be better integration of Live Search within Facebook. However, looking at what went live today how much is this really going to do for Microsoft? I am sure Microsoft will see some incremental revenue from their ads, but I question how many people are actually going to search the web while within Facebook. For those that do search the web I would have though there would be better integration of Live Search within the UI - is this really going to take search share away from Google and Yahoo? No, it wont.

I hoping this is just a first crack and better integration will be coming shortly. Lets go Microsoft!

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.

TechCrunch posted an article today that talks about the “real” value of social networks. The article gives a great in-depth look at the real valuation of  Social Networks from a global perspective and ranks them accordingly. However, the article stops short from really getting into the burning question when talking about Social Networks - monetization.

It seems like over the past few weeks there has been a flurry of articles written that discuss how Social Networks can monetize their traffic in a more effective manner. The obvious path for most social networks lies in advertising, especially targeted / behavioral based advertising. Even though the monetization via advertising on sites like Facebook and  MySpace has been talked to death, as the recent redesign of the MySpace home page shows, monetization is and will always be a top priority. So what are they suppose to do? How else can they monetize the hoards of people visiting their websites on a daily basis? From my perspective, companies, regardless of what niche they are in,  should not rely on advertising alone – in fact, as it was discussed in this Silicon Alley Insider article – Social Networks should be looking at more creative ways of augmenting their revenue.

So what exactly would be my solution to this all important question? Social Networks need to think outside the box. Yes, that is easier said than done, however from what I see in regards to plummeting CPC rates and advertiser value, do Social Networks really have a choice? With that being said, here are some of my thoughts on how Social Networks can further monetize traffic. Yes, some are realistic, some are probably ludicrous - however, all are feasible. It is also important to point out that the growth of the big Social Network players has mainly been caused by the openness and free aspect that allowed for the viral message to get out. Obviously a social network needs to be careful when looking “outside of the box” for monetization so that they do not interfere with the overall user experience or flow.

• Add-Ons: Like I said above, a Social Network needs to be careful with what they charge for when most people are used to getting things for free. However, there are a few add-ons that many people would not mind paying for. These add-ons, like small profile enhancements,  would be minor in the grand scheme of things – they would have to be very cheap to buy (e.g. $0.99) and easy to obtain. The key with add-ons is creating the “cool factor”. Once something achieves a level of cool, especially with the teen demographic, it becomes a must have for everyone. Add-ons can be big like exclusive profile control / designs or minor like a custom media player - regardless of what they are, the cost to make would be minor but the impact would be huge.

• Premium accounts: Social Networks can go the Ning route and allow users to create their own personalized Social Networking experience based off of the Social Networks existing platform. Using MySpace as an example, a “premium user” would be able to create a fully customizable Social Network living off of the MySpace domain – for example the URL example.com/Kieran would be for standard users and the URL Kieran.example.com would be reserved for premium users. Allowing for premium accounts can be billed in just about any method possible…monthly, yearly, one-time – you can also allow for add-on services that cost extra…for example, no ads (like Ning offers), more storage space, premium features, etc. With very little effort a Social Network can leverage its platform in a whole new way. Premium users might not bring in as much as display advertising, but when billed on a regular basis, these users can be a nice guaranteed cash flow.

• Virtual Worlds: Virtual worlds do not get the press they they used to and it is possible they will only be a niche area and never truly go mainstream, but I still think Virtual Worlds will play a big part in how large groups of people participate and interact with others online. So what about adding a “Second Life” type environment to a Social Network that users have to pay to use? Think about it for a second…take all that time people (especially the younger demographic) spend on MySpace and now make it so they can “virtually” interact with their friends - imagine instead of your own island or city your place in the virtual world is your profile and the changes you make on the web and in the game are transferable between each. Putting a virtual world into play opens up numerous revenue streams: membership fees, upgrades, in-game sponsorships…the list is endless. Plus, by creating a virtual social network you will be generating extreme brand loyalty as users would be less likely to tire and move on to another service.

There you have it, my ramblings of how a Social Network can leverage its brand and traffic to generate other revenue streams. I am sure as time goes on I will think of more crazy ideas…when I do, I will be sure to add them to the list. One last thing, when writing this post it occurred to me that taking away the ability to display ads might cannibalize the advertising business - however, since I predicted and mentioned in previous posts, advertisers are not necessarily looking for just bulk traffic, the highest CPM’s go to targeted traffic - quality over quantity.

When looking at monetization of a website, also check out my previous post on the monetization of micro-blogging start up Twitter.

The recent search partnership between Google and Yahoo has already been talked to death and I see no need to continue it. If the deal does get approved by the Justice Department it will add some nice revenue to Yahoo’s bottom line, but really how much will this really help Yahoo in the long run? Since the deal is important let me just call out some high-level aspects of the Google / Yahoo search deal.

• The deal between Yahoo and Google is non-exclusive
• Yahoo will display Google’s search and contextual ads will be displayed on Yahoo’s US and Canadian web properties and partner sites.
• Yahoo’s ad platform Panama is not going anywhere - Google’s ads will be inserted into results based on monetization opportunities.
• Yahoo’s search platform and results will not be impacted at all.

This deal with Google is not a game changer and there are still a great deal of questions that surround Yahoo right now. Questions like what is the future of Yahoo, how does Yahoo become relevant again, what do they do with the $800 million from the Google deal and how do they stop the mass exodus of top talent should be what keeps Jerry Yang up at night. Sadly, there is no easy answer, no partnership or solution that will right the ship anytime soon. But, does this mean all is lost and Yahoo is just slowly fading away? As I see it, this is not necessarily the case. First lets look at the Raw numbers, Yahoo.com drove over 1.9 Billions visits in May alone and had 10% year over year growth - that is impressive and means that no one should count Yahoo out. The crazy thing to me is that despite the shear magnitude of people that come to Yahoo properties everyday they have lost out on the biggest aspects of the online environment…the search race is pretty much over. Remember the social networking effort Yahoo 360? Yeah, all those Facebook and MySpace users don’t remember it either.

So enough with the Yahoo bashing, what is Yahoo to do in order to rise to the top again and take back what was once theirs? The way I see it Yahoo does not need to do any mega-deal or spend billions on some second tier web property that is the “it” online name of the moment. What Yahoo needs to do is focus all of its attention and revenue internally. First and foremost remember all of that money coming in from the Google deal? Reinvest that money on 3 things: research & development, retention and hiring. In fact, all three can be taken care of if Yahoo starts throwing serious amounts of money on R & D. Yes, Yahoo has made some attempts at being innovate with offering like Yahoo Buzz and SearchMonkey, but what I am talking about is really pushing itself and their top talent on improving every aspects of their business, from their enterprise technology, to all of their brands, to their display / search advertising platform and of course to their core search offerings (especially Video search). Take that Google money and throw it right back into the company and start building a innovate / entrepreneurial environment that would not only keep top employees but recruit top talent as well. A lot of people have a great deal of loyalty to Yahoo, it would not take much effort to change the overall perception of the once king of the web.

Secondly, again focusing internally, Yahoo should work on further integrating all of their products and services into each other. Yahoo Mail, Flickr, del.icio.us, Yahoo Game, Yahoo Sports, Yahoo Movies, Yahoo Maps, Yahoo Finance, Upcoming.org…the list goes on and on. Yahoo needs to create a tighter synergy between all of its properties and I am not talking just about cross-linking. I am talking about true integration of Yahoo properties - for example, Flickr photos and del.icio.us bookmarks fully integrated with Yahoo Mail. Yahoo has the core properties (e.g. Mail and Finance) that drive heavy daily traffic - what they need to do is get some of those people expanding across their network and consuming more Yahoo content. Yahoo can not have internal “walled gardens”, each and every property should be fully open and integrated in order to create a comprehensive Yahoo experience. Oh, and remember how I said they should reinvest the Google money in Research and Development? Here is where that will all pay off.

Of course it is very easy for someone outside of Yahoo to come up with answers or solutions to all of their problem. Yahoo has a long road ahead of them no matter which way you look at it…however, if anyone can make a full comeback it would be Yahoo.