Summary of social network services study - by Pienaar, Parnanen, Makela

Project on Social Networking Pekka Pärnänen, Maria Pienaar – FinNode/Finpro Silicon Valley Riku M ä kel ä , FinNode/Tekes Silicon Valley

Agenda
MyNet project background
Information Collected
Main Trends in Social Networking Services
Social Networking Business Models
Social Networking Services Ecosystem
Industry Examples
Business Opportunity Map
Summary

social networking opportunities
Situation :
Social Networking is the hottest phenomena in Internet right now.
US is the biggest Social Networking market
Tekes is planning to target funding into media space.
MyNet project tightly connected & providing insight
Solution:
Joint effort with Finpro & Tekes:
DuO MyNet – social networking opportunities study January 07 – Oct 07
Tied to and high priority as a Seed Project for FinNode, Finnish Innovation Center in California.
Market opportunity/need/pull approach, not ’traditional’ technology push.
Combining the latest in research and in business
Bringing the Finnish players and US players on the same table
business and research, speaking opportunities, meetings/tours, seminars.
Geographical Interest:
Main focus is in US because of the main players.
MyNet

SPINN-OFF projects 12-24 months LBS Joint Finpro & Tekes NETWORKS – in US and in Finland Main deliverables Dynamic projects / opportunities generated Long-term focused multi-client projects generated from MyNet project MyNet Next Steps / Spin-off Projects MARKET OPPORTUNITY MAP Mobile Content Services MyNet -project, 10 months
Finnish
Infrastucture
match-making
of key people
speakers to
major US events
US Access
2-3 events
connections to
key players
- opportunities
Information
Exchange /
Awareness
Match-making
Market pull
opportunities
-VC
Technology /
Research
Collaboration
Industry-Research
models
Established
companies in US
Ideas
to Finland
1-3 cases
- teamwork / team building

Information Collected
Trends
Business models
Opportunities (biz, collaboration, funding, reseach, …)
What have been the eye openers
Timing, when and what
Ecosystem, now and then, how will it change/develop
Community relationships & collaboration
How to build visibility, viral aspects
Legal aspects, ownerships
Copyrights, DRM
Mobility, when would it happen and how, convergence
Technological barriers, change
Other barriers, mental, organizational, social/demographics, etc, change
What is needed to boost social networking
Where is it going, what’s Social Networking 3.0, where are we now
The role of open source/collaborate development
Operators role now and then (SN 3.0)
Connection between physical networks and virtual/social networks
The goal is to find Market Opportunities!

Overview of Companies Interviewed
Over 30 companies Interviewed and 20 related events & panel discussions attended
Mobile & Internet Social Networking Startups
MBuzzy, Kaboodle, Dogster, Catster, Vavaz, Tiny Picures, Loopt, Bluepulse
Internet, ISP & Search
Google, Yahoo!
Publishers
Hearst Magazines
Studios, Media Companies & Labels
MTV, Sony, EMI, Universal, Disney Mobile
Advertising Agencies & Platforms
SFP Cundari, Admob, Amobee
Investment Community, VC’s, Analysts & Advisrs
Norwest Venture Partners, CMEA, Guidewire
Legal - Attorneys
Hertz & Lichtenstein LLP
Carriers
Vodafone, BT Group, SK Telecom
Retail
Retail Entertainment Design
Enterprise/Office 2.0
Collaborative Strategies, Mashery
Research
UC Berkeley, Standord, SRI
Handset vendors
Nokia and Nokia Research Center

Social Networking Main Trends
Social media services becoming platforms for other communities
Large non-SNS community owners getting serious about SNS
Traditional email and search companies starting to loose ground – looking at how to leverage SNS
These companies still have largest communities e.g. Yahoo! Groups over 300 million users
Handset vendors e.g. Facebook deal with RIM and Microsoft, Nokia
Nokia has the largest global community with over 1B phones in market & biggest camera manufacturer
Carriers starting to leverage SNS business models
Media (tv), social network and virtual reality converging - Laguna Beach from MTV
Porting of the experience between different platforms - media, Internet, mobile, virtual reality, social network services (SNS) such as Myspace, Facebook
Branding - moving from old style broadcast to user interaction with brand
UGC - everyone trying to figure how to deal with it - what copy right to protect and what to allow users to edit and share.
Work - collaborative tools and services are being taken into the work place from the Internet - IT having security and management issues.
Biz models - ads still main source followed by subscription and transaction based. In virtual worlds, ads vs. virtual items trending to 2/3 vs 1/3 split. Investment community want to see play across as many models possible to split risk.

Social Networking Business Models
Advertising funded models still rule
Agencies do not agree with ”premium” for CPM (Cost Per Mille/Impression per thousand) for SNS sites - will not be able to keep CPM’s up
Need to have large base & compelling ad inventory to drive CPM’s
Pixel share e.g. Facebook model
Branded sponsorship models
Advertorials
Targeted social adverticing (Facebook launch 7.11.07)
” Freemium” services to attract & seed community
Incentive based models becoming more prevalent e.g. gifting
Mobile will be driving this due to interaction & context
Transaction based models
Virtual goods, credit card, prepaid/gift cards
Subscriptions
Licensing & Syndication models - Office 2.0 & music content sales (catalogs)
Community data sales
Usage data, user profiles, marketing lists, surveys, social community graphs
“ Paid-to-action” e.g. referral to services, applications and goods on Facebook
Retail e.g. games
Monetization still remains a challenge
 Build multiple revenue streams

SNS Ecosystem – Collaborative Partnerships Create/Edit Share Discover Distribute EXPERIENCE VALUE WISP Mobile Carrier Community Provider (SNS site) Consumer Muni WiFi & Hotspots ISP Cable Studios & Labels Content Aggregators Media Print Media Application Providers Advertising Enablers Developers Games Publishers Search Technology Enablers Device Vendors Other SNS Sites Other SNS sites Advertising Agencies Transaction Enablers Device Vendors Access Brands You SNS Ecosystem – Collaborative Partnerships Create/Edit Share Discover Distribute EXPERIENCE VALUE Consumer Publishers Wireline BB Carrier Wireless BB Carrier Brands & Advertisers Content Publishers Tool & Platform Providers Micro Community Distribution Channels

Industry Examples

Case:
Company
Launched on 2/2004 in Harvard. Founded by Mark Zuckerberg (now 23 years). HQ in Palo Alto 6/04.
Revenue $150 million (2007 estimated), employees 300+ (July 2007), looking for 400 people.
Investors: Greylock, Meritech, Accel and others; $38.2 million into Facebook since 2004. 10/2007 Microsoft’s 1.6% stake @ $240M -> Facebook “valuation” @ $15B (in 3.5 years).
Trends
From exclusive Harvard College student site to Ivy League schools in 2 months. And then to anybody.
5/07 application platform to developers. Now 100,000 registered developers and 6,600 applications.
60 million subscribers (MySpace 110 million users)
and the fastest growing social media network service/
widget platform. 250,000 new users a day.
Business models
Pixel-share biz model, Facebook as an aggregator.
Internal viewer acquisition market (average c20/user).
Challenges / opportunities
Build your application on top of Facebook!
Music sharing site iLike took 6 months to sign
first million users, with Facebook iLike got
1 million users in one week!
10 million fund to provide grants for 3rd party applications
that rely on the Facebook developer platform. Between
$25K and $250K to successful applicants.
Sorry I couldn’t attend, Dudes! Surf’s up! ;-)

Case:
Company
Launched 2005
Help people express themselves & tell stories through photos & videos
Largest personal media network
134+ million people view Slide widgets per month
Before Facebook – 22 nd most trafficed Wed site
Trends
Top 4 applications on Facebook
Own destination site & advertiser relations
In 4 months > 53 mil app downloads
11% daily active users
After Facebook
Reaches 30% of US Internet audience
2/3 rd of Facebook users have installed a Slide app
Business models
Own advertising revenues, product placement
Facebook ad revenue share
Actively acquires 3 rd party applications
Hub for image management across multiple SNS sites

Case: Dogster.com
Service
SNS where each dog has its web page and connections
Trends
People invest to their pets annually 36 billion dollars in the USA
Dog owners tend to socialize with other dog owners
Business models
Sponsorships for brands
Advertising with advertorials and banner ads
Virtual gifting
Premium service $20/year
‘ Community is about passion sets: find out what they are and keep that as the core. Link everything to them’
Niche can be profitable: 10 000 members is good if that is a special group

Case: Tree-nation.com
Company
Spanish social network service, whose community members can plant trees in the desert of Niger to combat desertification and land degradation
Trends
Fight against climate change
SNS as a tool for grass roots movements
Business models
For-profit business that wants to make a difference
Free community membership
Pay for real trees
Individuals and organizations as paying customers
In beta phase now.

Market Opportunities

Social Networks “Movement” EXISTING MOBILE PC NEW MySpace Facebook Twitter Midomi Slide Tree-Nation MOSH NEW OPPORTUNITIES

SNS Ecosystem – opportunities Create/Edit Share Discover Distribute EXPERIENCE VALUE Community Provider (SNS site) Consumer
Increase loyalty
Efficiency/better use
Reach & access
Rich media communications
Seamless user experience
Discovery across communities
Mash-up functions/tools
Mobility
Context
Monetization
Open platforms
Management tools/platforms
DRM
Social Media Optimization (SMO)
Identity management
-Wider and deeper reach
-Targeted services
Community management
Self-supported/servicing
Efficient communications
Content control and monitoring
-Distribution/reach -Community marketing -Awareness -Monetization flexibility -Talent scouting -Instant feedback/discussion -Media interaction -Community Marketing… -Sizable market/big enough community -Measured campaign effectiveness -Brand interaction -Reach -New platforms besides ads -Engagement/relevant -Brand control and monitoring -Rich media comms -Ease-of-use -Discovery -Social connections -Identity management -Entertainment -Relevance -Scaling capabilities -Dominance, focus -> wider -Open platform, alliances -> DeFacto -Big enough for ads -Self-expression -On-line identity -Social need -Create/Edit->Share->Discover ->Distribute Consumer Publishers Brands & Advertisers Content Publishers Tool & Platform Providers Micro/Niche Community Distribution Channels

Summary – Social Networking
Major SNS sites becoming open platforms
Attract more and retain users
New entrants using existing SNS platforms as “OS platform” to gain traction
Data storage, communication with users & other sites & developers e.g. Slide
Collaboration and co-opetition
3 rd Party application providers actively compete with Facebook’s own applications
Leverage as many SNS sites as possible to create visibility: SMO Social Media Optimization
Opportunities for enablerers
How to mobilize SNS sites, messaging, others
Rapidly changing landscape

Pekka Pärnänen, Maria Pienaar – FinNode/Finpro Silicon Valley Riku Mäkelä – FinNode/Tekes Silicon Valley 3945 Freedom Circle, Suite 110 Santa Clara, CA 95054, USA [email_address] [email_address] [email_address]

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Summary of social network services study - by Pienaar, Parnanen, Makela

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Summary of social network services study - by Pienaar, Parnanen, Makela — Presentation Transcript