Your SlideShare is downloading. ×
0
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter2

1,767

Published on

Published in: Technology, Business
0 Comments
5 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,767
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
2
Comments
0
Likes
5
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. ADTELLIGENCE GmbH Mannheim, Germany www.adtelligence.de info@adtelligence.de “Cashing in” on Connections – Monetizing Today‟s Social Networks White Paper (2009) Chapter 2 – The Global Market of Social Networks
  • 2. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 2
  • 3. The History: Social Networks go from Niche to Mass Phenomenon The term ‘social network’ was picked up by the media just a few years ago. The basic functions of any network, communication and interaction between two or more people, are not new technologies. They’ve been around since the beginning of the Internet. Chats, email, forums, and some specialized communities also have a long history, but were always very decentralized. Centralized systems, such as the “news groups” (i.e. Usenet) existed mainly in the IT sector and have played a special role in the open source movement since the early 90s. “Social networks” as central platforms where people could create user profiles mostly existed among online gaming communities, dating services, or information services and have been around since the turn of the century Since 2006, there has been a mass adoption of large Social Networks in Europe, since the advent of platforms such as StudiVZ, Netlog, Bebo, MySpace and Facebook Front Cover of COMPUTER magazine, September 1979 www.adtelligence.de 3
  • 4. The Drivers: Social Networks Go from Niche to Mass Phenomenon  The spread of broadband access at home and Wi-Fi Internet access in public areas has led to a mass distribution of long-lasting and cost-effective Internet Broadband Internet Access  Lack of broadband connections in the 90s prevented the breakthrough of many innovative Web technologies  In recent years, mobile Internet access has finally caught on in the private sector. This, after years of acceptance in the business sector, is finally giving way to the introduction of useful mobile applications and hardware  The mobile Internet is gradually replacing the asynchronous communication via e-mail through a permanent, active interaction between the real and virtual world. The “life” within Social Networks is Mobile Internet slowly being merged with what’s happening in reality (1:n communication instead of 1:1)  Photo uploads to Facebook and Twitter and mobile “status-updates” are very ‘en vogue’ among young people and continue to become standard communication tools  Many Social Networks have opened their doors to external developers to increase the speed of innovation and connectivity. Some networks have bound together and have chosen an ‘open source’ standard for these developers, allowing them to “write once, install many” Open Source  Various open source Internet services and social networking sites have made it possible for Interfaces end-users to keep one login scheme, which allows them to access multiple sites with one user profile or login (e.g. Open ID). This has cleared a very big hurdle for new Social Networks that seek new traffic and users . www.adtelligence.de 4
  • 5. Social Networks Transforming our Communication Chat with your News from my network of Network – What new friends are all my friends up to...right Information now!? Find new Send friends with Messages Entertainm ent similar instead of interests sending Email Social Interaction Walls, blogs, videos, combined with editorial Self- content portrayal www.adtelligence.de 5
  • 6. Social Networks Connecting our “Virtual” Lives with Reality „What ever happened to John Doe and Lieschen Müller after University?“ (Facebook, The Success of Social Networks MeinVZ, stayfriends) Social networks do differ from one another to some extent „What event should I go to – and who’s going to be there?“ (Netlog, MySpace) In particular, it is certain features, functions, and aesthetics that make up the attractiveness of individual social network „Who’s the good looking blonde girl in our Basic social networking features have existed on most platforms for a Latin class?“ (StudiVZ) long time now. More modern networks have had massive growth breakthroughs because of good strategic planning of users and how „What the heck is my neighbor up to?“ (Wer they used the network effect. (i.e target users in regional areas, or kennt Wen) certain ages groups, special interest groups) „What music, fashion, etc. is in right now? Am In addition, they have cleverly defined the local dominance in target I cooler, or are you? (MySpace) groups. (For example, x% of a students’ friends belong to network XY, through the natural network effect, he will be encouraged to join „What do you do, who do you know, and are them) you an important connection for me to have? Virtual communication and interaction is common among all Social (Linkedin, XING) Networks: chat, messaging, and related functions www.adtelligence.de 6
  • 7. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 7
  • 8. Social Networks What it all means on the Global Scale Six of the top 15 Websites in the world are Top Global Websites (Traffic) Social Networks1) 1 Google The high rate of growth for Internet usage in 2 Yahoo! the past few months has been due to social 3 Facebook network activity 4 YouTube 5 Windows Live The top-ranked sites are continuously changing 6 MSN between Google, Yahoo, Facebook, and other 7 Blogger.com major players 8 Wikipedia 9 Baidu Other top sites outside of “pure search 10 Yahoo Japan engines” have incorporated more and more 11 MySpace elements of classical Social Networks (Blogger, 12 Google India Twitter, YouTube, etc.) 13 Google Deutschland 1) The distinction between "traditional" Social Networks like Facebook and the user-generated 14 Twitter content side of Web 2.0 (eg. Blogger.com. Twitter) is extremely difficult. Therefore, we’ll keep the US-tradition (see, eg. TechCrunch) of the broad definition. 15 QQ www.adtelligence.de 8
  • 9. Social Networks In Germany, there is even more to the Story Top Websites in Germany Ranked in order of page impressions, more (Traffic) than half of the top 15 sites in Germany are 1 schülerVZ Social Networks! 2 wer-kennt-wen.de In Germany, neither Google nor Facebook 3 studiVZ has been audited / approved by the IVW 4 T-Online (Informationsgemeinschaft zur Feststellung 5 meinVZ der Verbreitung von Werbeträgern e.V.). 6 lokalisten Still, the dominace of social network in 7 bild.de Germany is even more than that of the 8 mobile.de international realm 9 Yahoo! 10 Kwick! Even in Germany, Social Networks grow with 11 Travian the same dynamic and faster than their 12 Schueler.cc competitors – similarly to the rest of the 13 MSN world 14 MySpace 15 Spin.de www.adtelligence.de 9
  • 10. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 10
  • 11. U.S. & Chinese Sites dominate the Market for Social Networks Trying to get hold of reliable statistics on the world's Social Networks, Global Ranking largest Social Networks is a task in itself. There is a (ranked by unique visitors) huge lack of statistical comparisons and publications available, making it practically impossible to compare 1 Blogger 2 Facebook In addition, the difficulty is that the establishment of 3 QQ Social Networks has become much more complex 4 MySpace since many websites incorporate community features 5 Wordpress 6 Windows Live Spaces The most relevant statistics can be found within blogs 7 Yahoo! Geocities (Blogger, WordPress), and sites like Flickr, Yahoo!, and 8 Flickr Geocities, which also include user-generated content. Hi-5 9 Statistical experts such as TechCrunch and Comscore 10 Orkut have found analogous results. 11 Six Apart Strikingly, the global market is dominated by U.S. and 12 Baidu Space Chinese pages (QQ, 56.com, Baidu Space) 13 Friendster 14 56.com 15 Webs.com www.adtelligence.de 11
  • 12. Facebook & MySpace Maybe the best in the World, but not locally Country SN #1 SN #2 SN #3 Source: http://www.vincos.it/world-map-of-social-networks/ Australia Facebook MySpace Twitter Canada Facebook MySpace Flickr China QQ.com Xiaonei 51 France Facebook Skyrock MySpace Germany Facebook StudiVZ MySpace Italy Facebook Netlog Badoo Russia V Kontakte Odnoklassiniki LiveJournal Spain Facebook Tuenti Fotolog England Facebook Bebo MySpace USA Facebook MySpace Twitter India Orkut South America Orkut  Despite the widespread use of Facebook and MySpace, they do not dominate every local market. Although, they both have the number 1 position for most countries in the western English-speaking world  Data for this chart was simply collected from Alexa.com und Google Trends, therefore this survey does not attempt to fully prove the accuracy of today’s known rankings www.adtelligence.de 12
  • 13. Facebook Number 1 among English speaking Countries Source: http://www.oxyweb.co.uk/blog/socialnetworkmapoftheworld.php www.adtelligence.de 13
  • 14. Registered User Accounts worldwide Tencent // QQ >870 Mio. Source: iBusiness Facebook > 300 Mio. MySpace > 200 Mio. Twitter >80 Mio. VZ Gruppe Xing WKW ca. 15 Mio. Lokalisten > 8 Mio. 6,3 Mio. 1,9 Mio.
  • 15. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 15
  • 16. Facebook and Student Directory Networks dominate in Germany In Germany, “student directories” (VZs) are mainly targeted to the students of German elementary schools, high schools, and universities. They continue to lead in the social networking space throughout the country and look like a Facebook copy cat but in red Facebook ranks at the top position as a stand-alone network in Germany, but its growth is accredited to its international momentum and its popularity as the major U.S. networking site With overall retention rates dropping off in Germany, Facebook is still ahead, but has decreasing retention trends www.adtelligence.de 16
  • 17. Emerging Top Social Networks in Germany Factsheet Founded October February20 February 2006 August 2002 2005 2003 2001 2005 08 2007 Registered 5.600.000 2.600.000 5.200.000 6.300.000 7.400.000 3.100.000 7.500.000 ~ 1,000,000 Users Average Age 20-29 20-29 years 12-20 years 20-49 years 20-49 years 14-29 years 26 – 40 20-49 years years years Unique Users 5,29 Mio. 3,27 Mio. 4,38 Mio. 5,71 Mio. 2,76 Mio. 1,47 Mio. 5,5 Mio. 0,97 Mio. Visitors 44% 45% Users 51% Users 2,8 Mio. Users 0,5 Mio. Users 20 Mio. >25 Mio. Users visit daily visit daily visit daily visit daily monthly monthly visit daily approx 32 approx 32 approx 32 Min. Min. Min.. Page 3,95 billion 1,74 billion 5,67 billion 4,29 billion >120 Million 1,667 billion 300 million ca. 1 billion Impressions per Month Reach 20-24 20-24 years: 20-24 years: 20-24 years: 30% 20-24 years: years: 30% = 30% = 0,985 = 0,985 UU in 30% = 0,985 34% = 0,985 UU in UU in mio. mio. UU in mio. 1,783UU mio. in mio. Source: IVW, AGOF , Blogs & operator pages, own analysis www.adtelligence.de 17
  • 18. Strong Aesthetic Differences of German Social Networks www.adtelligence.de 18
  • 19. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 19
  • 20. Independent Social Networks in Asia on the Rise due to vast Cultural Differences  Many Asian cultures  Anglo-Saxon players use Social Networks like Facebook have China as their “virtual failed to fully meet escape” to break out the needs of users in from their often Asia due to language conformist lives and character barriers  Social Networks from  Success of the large Asia usually offer Social Networks in Japan much more space on Asia can be similarly users’ profile pages compared to that of for display, dominance players decoration, and self like Facebook in the promotion USA South Korea www.adtelligence.de 20
  • 21. Some Screenshots Source: plus8star www.adtelligence.de 21
  • 22. QQ – China„s money machine reaching 1 billion revenues in 2009 Source: plus8star, Tencent annual report www.adtelligence.de 22
  • 23. Asia as Example? Yes, but think about cultural differences Monetization in Asia QQ (Tencent) as Model of Success  Creating individual profile pages is one of the main  Tencent began as an instant messenger service and features of Asian Social Networks. today, although it is not a typical Social Network, it offers several products like gaming, portal, virtual  This creates a big opportunity to not only sell real currency and many more. All offers are combined goods, but virtual goods (see also in chapter 3) like with typical social network features like user skins, avatars etc for the users cartoon alter ego. generated content, multimedia and communication This is comparable to a mixture of the Sims and features Second Life or Habbo hotel  QQ is Chinas biggest community, but also the world  Virtual commerce is often combined with the leader in number of users and revenue generally known revenue models like advertisement  The business model started with free instant messaging services and up sells premium features,  The Asian leaders often have a monopoly in their games and virtual goods. 90% of the revenues are country. E.g. Cyworld has about 90% market share created through premium services. Advertising is in south Korea and Mixi locks the market of people only 10% of the revenues in their twentys in Japan  Success factors are the big network effects & the massive feature offering www.adtelligence.de 23
  • 24. Tencent Financials (in Mio. €) 1200 1000 800 600 400 200 0 2004 2005 2006 2007 2008 2009 Profit for the year Gross Profit Revenue www.ADTELLIGENCE.de 24
  • 25. Asian Social Networks top the Source: http://resources.emartin.net/blog/pic/China-SNS.jpg Charts among World Players www.adtelligence.de 25
  • 26. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 26
  • 27. Understanding the Content “Boundaries” of Social Networks  Social networks possess very extreme dynamics, both in terms of user numbers and their orientation Dynamic  Networks’ user alignment is usually due to the fact that Social Networks Development of a start in specific geographic locations. KWICK , for example, started as a Network regional social network in the Stuttgart (Germany) area and now has become a pan-regional social network, the same holds for Localisten.de and Wer- kennt-wen.de. (This is also true for vendors from other countries)  On the other hand, large Social Networks like Facebook or MySpace offer Specialized even the smallest communities a home merely through their large numbers Communities and Interest Groups  These smaller interest groups that focus on specific topics make it possible for users to exchange ideas with other like-minded users  In addition, “normal” websites that focus specifically on content, such as European Soccer (like kicker.de) are slowly evolving in the direction of social networking sites - incorporating features that better connect their community “Content Focused” (forums, profile pages, personal messaging, etc.) Web Sites www.adtelligence.de 27
  • 28. Specialized Social Networks Target Audiences and Special Features and Functions  Almost all Social Networks started in some form as a specialized network. Here are the main criteria of specialization: Target Groups  Occupational: students (StudiVZ), business groups, (LinkedIn, Xing.) graphic designer (grafiker.de)  Age: e.g. MeinVZ, platinum grid, etc.  Geography: National, regional or even local networks - such as KWICK!, Nachbarn.de, etc.  Special interest: Music (e.g. simfy.de or last.fm), Auto (e.g. autoki), Old timer (e.g. Carsablanca), Mothers (e.g. NetMoms), etc.  Other Social Networks have “special features” at the core of their community, attracting users who have specific needs Features  Noovo.com - Information Worker / Business Users - Users of Social Networks with similar interests that filter the information "collaborative filtering" and "crowd sourcing"  Ning.com - Marc Andressen's approach combines thousands of niche networks on one single platform, rather than creating one “general” social network  Aki-aki - Location-based Social Networks www.adtelligence.de 28
  • 29. Examples of Social Networks with Special Features and Interests www.adtelligence.de 29
  • 30. Specialization alone does not guarantee Successful Monetization  Large and “successful” Social Networks find it a continual challenge to monetize even a fraction of their enormous user bases. As already stated in this paper, the lack of monetization lies in the inability to efficiently advertize and target large undefined audiences within their networks, which leads to low CPMs and the difficulties of proving an added-value or a unique selling point over competitive websites due to the homogenous nature of Social Networks  “Specializing” a Social Network is still no guarantee for success:  Specialized groups and Social Networks like StudiVZ face the same challenges as their large, general counterparts. Not all students are the same; they want customized news & ads  “Long-tail” Social Networks are indeed an interesting, definable user base to advertisers, but they lack convincing “user traffic” numbers that are needed to attract advertisers to run a solid, lucrative marketing campaign  Therefore some specialized Social Networks use alternative methods, such as subscription-based or “Freemium” models, and are successful The following chapters will go into detail about how Social Networks of different structures create revenue today and in the future www.adtelligence.de 30
  • 31. Contents 2. The Global Market of Social Networks 2.1 Social networks – Part of Web 2.0 2.2 Importance of Social Networks on the Net 2.3 Largest Social Networks in the world 2.4 Largest Social Networks in Germany 2.5 Asia: A special scene in Social Networks 2.6 Specialized Social Networks 2.7 Summary www.adtelligence.de 31
  • 32. Social Networks in Global Competition: Specialization, new Features Keys to Success  Today, rapid penetration and a large number of Social Networks have already Global “Knock-Out” saturated the market in many countries Competition  The result is “cut-throat” competition between established players and newer entrants which occurs globally.  The last few months have shown that users find newer, more innovative features enough of an incentive to switch platforms, despite the higher costs involved Features Critical to Success  Global players (particularly Facebook) heavily invest in the technical development of their platform with the hope that global market dominance is the key to rapid return on investment. Consequently, they have the ability to scale their development more quickly than others with development teams spread over several countries  Certain social network specializations (like special-interest groups or regional markets) can lead to successful business models Attractive Specialization  The question is, how far can they preserve the attractiveness of niche platforms for target audiences and to what extent will regional networks be able to withstand the pressure of global innovation? www.adtelligence.de 32
  • 33. Global vs. Local General vs. Specialized Global/International Which will emerge as the dominant Social Networking Strategy?  Today's Social Networks can be generally Facebook, LinkedIn categorized as "global vs. local" and "general vs. MySpace specialized," despite some gross inaccuracies  Although local specialized Social Networks (such as XING and LinkedIn) show a positive cash flow Specialized General today, reviews from Facebook and MySpace, which follow the global, general pattern continue to raise the eyebrows of investors XING, carsablanca, MeinVZ, QQ  Only the future will tell if there is a dominant model of success in this game. StudiVZ Local/Regional www.adtelligence.de 33

×