ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter6

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ADTELLIGENCE_White Paper_Monetization of Social Networks_Chapter6

  1. 1. ADTELLIGENCE GmbH Mannheim, Germany www.adtelligence.de info@adtelligence.de “Cashing in” on Connections – Monetizing Today’s Social Networks White Paper (2009) Chapter 6 – Summary and Conclusions
  2. 2. Contents 6. Summary and Conclusions www.adtelligence.de www.adtelligence.de 2
  3. 3. The importance of Social Networks will persist in the future Lately, Social Networks have become some of the most visited sites in the 1 Internet and will be even more important in the future Social networks not only could replace The importance of 2 email and chat but also provide a Social Networks is platform for all internet-services still growing In Social Networks, otherwise anonymous Internet users reveal a great deal about 3 themselves and talk about their interests www.adtelligence.de 3
  4. 4. Who is the Winner? Depends on “Global vs. Local” and “General vs. Specialized” Global/International  It has been demonstrated that technological innovation is the number one factor if you want to succeed  Global or local and/or general or Facebook, specialized: Social Networks need to LinkedIn continue to concentrate on technological MySpace innovations  Since fast innovation depends on capital, Specialized General capital coverage will have the last word and two things play an important role:  1) The perspective that investors see in a network and with it, the readiness to XING, allocate more money StudiVZ WKW, QQ  2) The actual situation of income of a Social Network, i.e. with positive cash flow as in the business networks  No matter what, the business model should be focused to key monetization factors Local/Regional www.adtelligence.de 4
  5. 5. Is there a trade-off between growth and monetization? ? ■ Popular Social Networks, such as national networks in Germany, propagate trade-off between growth and monetization ■ The growth model of the past which aimed at getting new users through network effects will become more and more difficult through disruptive competition ■ The frontiers of the traditional growth model are already visible in most of the markets ■ The focus on growth will be substituted by the focus on innovation, since that’s the only way to keep current users and gain new ones ■ Only the future will tell if MySpace has made a mistake with setting the focus on monetization, as some people claim www.adtelligence.de 5
  6. 6. Only Innovation Power and Monetization at the Same Time can ensure Success Innovation power Success- model Monetization www.adtelligence.de 6
  7. 7. Social Networks that successfully promote innovations, could help monetize one another  Numerous users permit the implementation of innovative platforms for Social Networks !  Sponsored models build the basis  Virtual currencies and E-Commerce-Integrations could become a second pillar  Abo-/Freemium-Models could provide a price advantage for the user but the barrier of implementation is high  There is still a long road to reach a business model with various pillars, therefore quicker solutions are necessary.  In the specialized area innovations go hand in hand with monetization  Good examples are XING events or LinkedIn Premium Webinars  “Semi-specialized” Social Networks like schueler.cc or StudiVZ either have to expand their scope or have to use targeting approaches to distinguish their quite undifferentiated user group.  The more specialized a network is the more important are quality, individuality and exclusiveness as distinguishing features www.adtelligence.de 7
  8. 8. Social Networks can use Topics such as Advertising, E-Commerce and Market Research to achieve Fast Monetization Possible Revenue Models of a Social Network Indirect Direct Virtual- & e- Market Advertising Subscription Freemium Virtual Goods Commerce intelligence  The major pillar of  Not only an affiliate  Integration  In competitive & fast moving  Very interesting in every online model but real possible relatively markets direct monetization the long term Community integrated e- & v- quickly through subscriptions or paid  Already cash cow  Great potential Commerce shops  Great potential content are possible. in online gaming with targeting with personal & with new  But they make sense only in and some  Online social technologies niches like “decision makers” or communities like Communities can recommendations communities with specialized Netlog or QQ leverage  Quick implementation focus groups & with high vendor  The better competitive possible lock-in effects alternative than advantage  Digital Goods like  Local communities could use subscription through detailed games, music & offline monetization through through pay as audience targeting videos could become events etc. you go & & reporting a second major  Nearly impossible for mass micropayment income stream market  ad revenue model is more attractive Targeting Technologies will help to gather “low hanging fruits” in the field of indirect monetization www.adtellience.de 8
  9. 9. New targeting methods rapidly help achieving profits in advertising and leverage other revenue streams  In the short term, advertising will continue to be the main income Sophisticated targeting, model of a social network – and in the long term the indirect pillar recommendation & that gets more and more important collaborative filtering  Through advanced targeting, the advertiser can access attractive target groups and gain higher revenues technologies are key to individualizing high  Also virtual goods and E-Commerce integrations can benefit considerably from targeting methods: Which user gets which traffic Social Networks product offer? for a sustainable  The yet untouched area of market research approaches gains development and a importance through targeting - clients get access to tailor-made meaningful business target groups model  Finally, targeting is a way to optimize the entire social network – to decide which user gets delivered which contents and information, and can be made considerably efficient.  Users of Social Networks likely to discuss their wishes and interests – data that has to be collected and evaluated in order to gain insight and to minimize the risk of false strategies In addition, indirect monetization models have a competitive advantage so that companies like Google (as they just did with the navigation sector) could not attack the business model through a “free” offering). www.adtelligence.de 9
  10. 10. However, … ...there is no universal or perfect business model Remember… success lies in the appropriate combination of different revenue models and continuous innovation and development! www.adtelligence.de 10
  11. 11. Get Connected! info@adtelligence.de www.adtelligence.de Phone: +49 (0)621 87204066 ADTelligence GmbH Julius- Hatry-Straße 1
 68163 Mannheim

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