Acceleration Factors

by Jay Deragon on 10/09/2007

Accelleration FactorsWhile social networking aggregators continue to grow there are developments within adult segment to create networks that serve local needs. Mediapost reports: “Local networking sites are also beginning to spring up.

In New York City, Jared Nissim started in his East Village apartment building because he was craving more interaction with the people who lived nearby.

The Front Porch Forum in Burlington, Vt., has helped neighbors sell cars, find roommates, organize block parties and get to know each other; caters to people who live in gated communities.”

In the business market major brands are rushing to establish their own presence by launching networks that attract consumers who have affinities to their brands, i.e. MTV, Disney, NBC etc.  In addition there are networks for industry specific audience affinities i.e. Aviation, Wireless, Law Enforcement, Medical, Recruitment, Entertainment, Real Estate etc. etc.  Further there are networks and forums that address segments within industries, topics and geography, i.e. Yahoo alone has over 60 million forums tagged by segment of interest.

Aggregators attempts to address these diverse markets of interest have been in the form of groups within their networks and search capabilities tagged with key words, industry and location categorization.  The most recent buzz about “social search engines” by the majors, i.e. Yahoo, MSN, Google etc., is aimed at increasing the functions and features of “search” to increase reach across all the key words and categorization of social networks.

In the blogsphere technology is already available to aggregate content affinities and link engines that enable content feeds into blogs and social networks.  Individual content producers can now use widgets to syndicate their content across the blogsphere.  For the average consumer all of this appears as a confusing mess.  To the industry all of this is called a mesh.

The Economic Challenges

Kathleen Burge of MediaPost says “But despite the proliferation of these sites, no one knows what it will take for them to make money. Some researchers say that the largest social networking sites will draw more ad dollars in the next few years. A recent report by eMarketer pegs spending on such sites as $900 million this year, and forecasts an increase to $1.38 billion. Still, those figures represent less than 6 percent of the total amount expected to be spent on online advertising overall.”

“Niche sites (including sites sponsored by marketers) will take in far less: an estimated $70 million this year and $120 million in 2008, according to eMarketer. Social networking sites that rely on user-generated content also face well-documented challenges. Among the most significant: advertisers fear their ads will end up on sites with offensive content. Even the largest social networking sites face this problem. In July, six marketers in the United Kingdom, including Vonage, pulled their ads from Facebook after they were displayed alongside content by the right-wing British Nationalist Party.”

“Advertisers want to be where they have control,” says Gordon Borrell, CEO of consultancy Borrell Associates.  That sense of control is even more important to local advertisers than large brand marketers. Small shopkeepers, he says, are “scared to death” of appearing on sites where consumers might badmouth their businesses. While consumer reviews are a staple of the Web, large companies are so eager to be online that they’re willing to take the risk that a disgruntled user might criticize them. “They’ll weather the storm,” Borrell says.

But local businesses are more reluctant to spend their limited ad dollars on sites where they might be condemned. “They don’t have much to spend, so they tend to put into a medium that they trust,” he says.

Systemic Solutions will Soon Appear

Technological advancements are already happening at lightening speeds. The collective efforts of the BIG players and the creative powers of the small are accelerating technological changes that exceed expectations and the self appointed analyst ability to predict. Who would of thought a twenty something would appear on the scenes three years ago and create a “Facebook” that becomes the fastest growing social network in the world worth billions of dollars.

The current emphasis on social searching capabilities by the BIG combined with the never ending release of “networking applications” by the small will create new shifts in behavior, markets and economics.  The next five years, or even as fast as tomorrow, will emerge with solutions that empower the individual to better understand the mess and use the mesh for individual purposes and economic gains with ease.  Advertising income will become one of many economic factors of gain, not the dominant factor.

As Dorothy said in the Wizard of Oz…….follow the yellow brick road.

What say you?

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