If you have an interest in social networking AND an interest in business or marketing, I suggest you take a look at Cliff Kurtzman’s excellent article Marketing to the MySpace Generation (and the Economics of Social Networking) on www.marketingprofs.com.

The article examines the business model underpinning social networking sites like MySpace, and also looks at what new social networking sites need to do in order to succeed.

Kurtzman argues that new social networking sites need to do more than simply try to build a “better mouse trap”, and that none of the ventures he’s seen has what it takes to build a brand affinity that could rival MySpace. He also says that their business models – ad revenue on top of user generated content – just don’t appear to be economically viable.

He also points out that the MySpace brand isn’t without its problems, and likens it to “Girls Gone Wild” where there’s a lot of money to be made, but the connotations surrounding the brand limit where it can go.

The opportunity that Kurtzman sees for social networking sites is for them to develop deeper relationships with users, which will then allow the sites to offer users with “lifestyle opportunities that they will truly welcome”. So the transaction becomes one where the user participates in a community (providing content and so on), and in return they have access to opportunities that they might not otherwise have to.

Kurtzman also believes that social networking sites need to recognise that people live their lives online and offline, and offer functionality that helps users’ lives away from the computer. Furthermore he points out that while people tend to connect globally, they tend to live their lives locally, which is where most advertisers and sponsors want to reach their customers.

I think it’s obvious to most people that many of the new social networking ventures simply won’t work. And it’s not just that there’s so many of them; many don’t offer a point of differentiation and just don’t understand that it’s more than just about technology (as Kurtzman points out). It’s about being cool to whatever market you’re targetting, and that’s where it starts to get tricky. It’s very hard to build cool in a computer lab.

Posted Thursday, August 17th, 2006 at 7:43 am
Filed Under Category: Uncategorized
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