Social Networks Replacing Portal Sites?

In an article at CNet, Piper Jaffray's Safa Rashtchy, an Internet media analyst, believes the internet revolution is just underway. Social networks are becoming the fastest growing online communities, far surpassing the portals such as MSN and AOL. In specifics, MySpace has grown 119% in the past six months (up to 27.4 billion page views from 12.5 billion). In fact, MySpace now has 48 million monthly visitors, nearly 75% of Yahoo.

The social network is not going away soon. In fact, it is splintering and growing in rapid fashion. As like minded people find each other, they begin their own sub communities and develop again. The Medusa-like growth of these networks is attributed to the ability of a group to form its own identity using the available tools for a social site.

Advertisers - Getting in on the act?

Of course, where the people are, advertising soon follows. As advertisers attempt to gain a foothold in these networks, the people tend to scatter and re-form. However, advertisers and users seem to be hesitantly skeptical of each other, especially in these social networks. Because these are user-directed, content can (and usually does) take on an adult nature. When owners of the sites attempt to "clean up" for advertisers, core users who perceive a change and quelling of their freedoms will tend to leave. NewsCorp finds themselves in this clean-up predicament.

Advertisers seem to be very hesitant as well. Again, using the example of MySpace, Jason Dowdell reported that big brand exec's were not attracted to the user-created environments.

Something about logging in to MySpace always makes me feel a little dirty; like I'm an old man at a middle school dance. It's the kind of dirty you can't wash off and the advertising reps for some of the world's biggest corporations have taken note. . . .

"I wouldn't be caught dead in that kind of environment. You only have to look around for five or 10 minutes to find something offensive." -David Cohen, executive vice president for Universal McCann Interactive, with a client roster including Microsoft, Johnson & Johnson, Lowe's Home Improvement, Wendy's International, and Sony Electronics

"We're being cautious because there's a blurring between advertising and content, and the content does rub off on your brand." -Dawn Hudson, president and CEO of Pepsi-Cola North America

Last month, Weight Watchers pulled advertising because of a porn star promotion being run on MySpace. Strangely enough, Playboy is using MySpace as a "farm league", further straining relationships with big-name advertisers.

But Wait! There is Good News.

After those of you with kids using MySpace have pulled the plug, all in not negative in the world of social networks. In good social media news (not all social networks are outlandishly huge, pornographic or for kids) there is just as much growth.

This weekend, I was amazed to follow one of my favorite social-ecommerce sites, Woot.com. By selling (mostly) electronics a different way than any other site; using forums, an audio blog, RSS, user ratings, comments, and hilarious sales promotions ($1 bag o' crap), Woot has created a unique animal of ecommerce social networking. A hipster-wanna-be, as some have called it.

This weekend was a Woot-off. Typically, Woot sells one product each day, but in a Woot-off, when one product sells out, another goes up, sometimes for the entire day, this one lasted almost two full days. The fan base was rabid, buying, commenting, keeping records on what was sold, how many units, the price, and the time of the offering. There is a race to "challenge" the sale price by checking the shopping comparison sites and verify the "deal." Harmless, capitalistic fun.

Market Intelligence

Sometimes, manufacturers even tune in to field questions when their product is on sale. As one manufacturer said, "What we got with Woot [in 12 hours] took six to eight weeks with conventional retailers. It's better than a focus group. It's such a direct, intimate interaction. Not many companies get to do that."

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June 13, 2006