Make Money From Social Networks | Ralf Ahamer, Xing | iStrategy, Berlin
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Ralf Ahamer, CMO of XING AG, discusses opportunities and risks of social networks for businesses. He outlines XING's business model of generating revenue from premium memberships, recruiting services, and advertising. Social networks provide opportunities for advertising within the new media landscape. Businesses can also generate revenue from virtual goods and subscriptions if they offer professional networking services valued by members. However, most brand communities on social networks fail, so leveraging existing popular networks like XING and Facebook may be more effective.
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Make Money From Social Networks | Ralf Ahamer, Xing | iStrategy, Berlin
- 1. iStrategy Forum BerliniStrategy Forum Berlin Make money from social networks – example XING Ralf Ahamer – CMO XING AG
- 2. 7,0 7,5 7,9 8,3 Members in mio. Premium Members in thousands. 36% 41% 01 XING in Numbers (I) 470 513 550 606 635 662 Ralf Ahamer – CMO XING AG Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 6,1 6,4 7,0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 470 513
- 3. 12,9 * 35,3 02 XING in Numbers (II) EBITDA in Mio € Umsatz in Mio € 37% margin Ralf Ahamer – CMO XING AG 2007 2008 6,9 2007 2008 19,6 * Excluding one-off costs for M&A
- 4. 03 Business Model 5,95 € mth. 6,95 € mth. 3 Months 12 Months Premium Membership Recruiter Membership The XING Business Model consists of three main revenue streams: Premium Membership, Recruiting Business & Advertising/ e-commerce. 39,95 € mth. 29,95 € mth. 3 Months 6 Months 1. Ralf Ahamer – CMO XING AG 5,95 € mth. 4,95 € mth. 12 Months 24 Months Job Board: 0,59 €/ Click on Job Ad Advertising/E-commerce Various models, Best Offers, Enterprise Groups, Opensocial 39,95 € mth. 49,95 € mth. 6 Months 12 Months Fix-price 395€, 495€ , Corp sol. 2. 3.
- 5. Ralf Ahamer – CMO XING AG 5 Social Networks – What? Why? Value?
- 6. Social Networks Ideas Jobs Contacts Social networks don‘t create something new – they just provide an infrastructure for typical human behavior on the web. 01 Ralf Ahamer – CMO XING AG Me Contacts Employees Efficiency Productivity Friends Love Spare time
- 7. Ideas Jobs Contacts Social networks don‘t create something new – they just provide an infrastructure for typical human behavior on the web. Social Networks02 Ralf Ahamer – CMO XING AG Contacts Employees Efficiency Productivity Friends Love Spare time Me 7
- 8. Dating Jobs Deals Acquisition Family Spare time Almost 80% of experts and management clearly separate business from pleasure 03 Social networks – professional vs. private Ralf Ahamer – CMO XING AG Dating Jobs Ideas Sales Friendship Party Source: Forsa Study 01/ 2010
- 9. The Case of the Facebook Fairy [Intern at a US Bank]: “I just wanted to let you know that I will not be able to come into work tomorrow. Something came up at home and I had to go to New York this morning for the next couple of days.” 04 Social Networks are a source of information for everyone. They are comparable to elephants – they never forget... Ralf Ahamer – CMO XING AG morning for the next couple of days.” [Boss]: “Thanks for letting us know–hope everything is ok in New York. (PS: cool wand)”
- 10. Social networks in real life 05 Ralf Ahamer – CMO XING AG
- 11. Viral Gene: Social Networks06 The virality lies in the added value that every additional member brings to the community. The viral growth in social networks is a function of: the added value a member gets through another member. Ralf Ahamer – CMO XING AG through another member.
- 12. Value of social networks07 Value social network Registered Members ActivityX= The value of social networks heavily depends on two values: number of members and activity. Ralf Ahamer – CMO XING AG 12 network Members ActivityX= If one of these is zero – the whole value is zero!
- 13. Ralf Ahamer – CMO XING AG 13 Shift of reach to social networks
- 14. 01 Social Communities – a success story • „Republic“ Facebook is the 4th biggest country behind China, India and USA. 300.000.000 facebook users change their status message every day. • In the last 60 seconds 15 hours of video material has been uploaded onto youtube. If you add all videos material together it equals 3.500 years of content (and growing) Ralf Ahamer – CMO XING AG Source: Sueddeutsche.de 19.09.2009 together it equals 3.500 years of content (and growing) • Twitter had 1000% growth last year
- 15. 02 Social Communities – a success story Search queries reflect demand Google Search queries reflect trends … Facebook vs. eBay Ralf Ahamer – CMO XING AG Source: Google trends: Graph above shows search queries worldwide. Graph below shows search queries in Germany Facebook vs. Spiegel
- 16. 03 Social Communities – a success story Back in time 2006 vs. 2009 (1/2) IVW Page Impressions October 2006: Portals portals everywhere… Ralf Ahamer – CMO XING AG Source: IVW, Page impressions x1000 for October 2006
- 17. 04 Social Communities – a success story Back in time 2006 vs. 2009 (2/2) IVW Page Impressions October 2009: Invasion of the social networks Ralf Ahamer – CMO XING AG Source: IVW, Page impressions x1000 for October 2006
- 18. On XING there are up to 25% of all employees of one industry in Germany. Reach of XING05 Ralf Ahamer – CMO XING AG Source: XING internal statistics for DE– Q4 2008
- 19. Usage of Social Networks Brand Communities: Social Book-marking Communities: Micro-blogging Sites: Podcasts: Internet Usage Frequency Social Networks are already the 2nd most popular entry point to the web 06 Ralf Ahamer – CMO XING AG Source: Ralf Schengber, 2009. Search engines: Social Networking Sites: Forums: Web-blogs: Video-Portals: Photo-Portals: Special Interest Communities: Everyday Several times / week Several times / month Seldom Never / I do not know that No Answer
- 20. Social Networks – Context to information Why bother “Google”…. ..when your peers are just a click away? Our Friends, colleagues, family give context to massive information overflow. 07 Ralf Ahamer – CMO XING AG Unidirectional (search function) Volume (search results) Standard (Portal site) Bidirectional instantaneity (comment & tweet features) Value (recommendation power) Personal (personal profile site) = where information LIVES. “The warm Internet” = where information ACCUMULATES. “The cold Internet”
- 21. Exkurs: Community Make or „Buy“ or both ¾ of all brand communities fail. Using existing social networks & infrastructure could lower costs and increase speed. 08 - Over 2k Ikea employees on XING.com - Over 90k users are fans on facebook Ralf Ahamer – CMO XING AG Ikea community „Hej“ recently started - Over 90k users are fans on facebook
- 22. Ralf Ahamer – CMO XING AG 22 Chancen und Risiken von Social Networks für Unternehmen Social networks and business models
- 23. Subscription fees: Professional Networking01 Professional Networks have a huge (perceived) value that directly translates into “money”. Members are willing to pay for that. Ralf Ahamer – CMO XING AG Consulting Media -Print Internet and New Media Sales Public Relations Science and Research Training Human Resources Real Estate Arts and Entertainment Telecommunications Media - Broadcast Advertising Financial Services IT Hotel and Travel Education Restaurant and Food Beverage and Tobacco University Customer Services AccountingSource: >82k tests on mynetworkvalue.com
- 24. Advertising: Web 2.0 in the marketing mix 100% 7-12% 30% 88-92% ca.60-65% The value chain of media planning must be disrupted. New scales of ratings need to be defined. 02 Ralf Ahamer – CMO XING AG Advertiser Media Agency Publisher Advertising medium Kickbacks Results: • Marketstructure and value system constrain marketing • Advertisers have (too) little Know-How for Web (2.0) • Media Budgets go mainly in “traditional” online media
- 25. Virtual products The expected market size of virtual goods (US) is 1,6 Mrd $*. Social games share will be half of it. - 65.000.000 Farmers*** - 26.000.000 are feeding their cows every day for 2 hours - 100 Mio $/year revenue* 03 - 90 Mio $ in 2009 with virtual gifts** Ralf Ahamer – CMO XING AG *Inside Virtual Goods - The Future of Social Gaming ** C’t Magazine 2010 *Source: Business Week *** check on facebook feb 2010: 78Mio already
- 26. Conclusion04 1. Clear goal and topic for your community • „Having influence on your target group“ as a goal leads you in the wrong direction • Set-up a clear topic for your community – e.g. “Professional networking” 2. Members and Activity • Value of a social network = registered members X activity • Viral growth in SN = function of value a member gets through another member Ralf Ahamer – CMO XING AG 3. Keep in mind: First of all - your community serves its members • Consequently listen to the community and serve their needs first • See the community as living organism – it’s a socio-psychological challenge 4. Use existing infrastructure and reach • Use XING, facebook etc. to leverage your business • Community work needs resources in your company
- 27. Thank you for your kind attention! Ralf Ahamer – CMO XING AG Presentation Titel | Author | City, 11/02/2010 27