Will you add me? Have you written on my wall? Are we LinkedIn? Social networks are not only changing the way we speak to our friends, they are influencing our actions and behaviors.
There is no question that social networks are becoming the networking standard as e-mail replaced snail mail years ago. Today, there are more than 350 million social network users, which is more than the total U.S. population.
Social networks have grown like wildfire — both on a social and professional level. Sites like LinkedIn that target professionals provide an easy forum to build your professional contacts quickly. For example, on my personal LinkedIn profile, I have nearly 100 contacts in my network. Within three degrees of separation from me, I have access to more than 850,000 contacts that might be of interest to me or my company.
As the social network is becoming the de facto standard in how we communicate, interact and react to others, there is no doubt that new innovations will continue to sculpt social networks.
As users have expanded their virtual network, many often ask, “What’s next for social networks?” Social network users now have access to blogs, podcasts, RSS (really simple syndication) feeds, widgets and countless other technologies, which have leveraged on the power of the social networking environment. Yet, how do we, social network users, capitalize on this and monetize our social networks?
A New Advertising Approach
Because power is shifting from institutions to online communities, the way we’ve traditionally conducted business is changing. As Web 2.0 proliferates, so do the new buzzwords and behaviors associated with new media. A mashup with social network applications is similar to turning a kaleidoscope. While the pieces inside might not change, the image that appears changes radically. Take the rate of e-commerce within social networks.
The current social network revenue model relies heavily on targeting consumers via online advertising, hoping the ad reaches the best demographic possible to influence their buying decisions. This approach is outdated and has proven unsuccessful. Business owners and advertisers are finding it harder to segment audiences into distinct demographics.
Furthermore, most people do not even pay attention to the sea of online advertising, especially on social networks. BusinessWeek recently reported a drop in page views and advertising click through rates on social networks. This isn’t such good news for advertisers who want targeted exposure to social network users. Plus, with an ever-increasing number of social networks, ad dollars will not increase to create sufficient revenues for social networks, or returns for advertisers.
The Holy Grail
Clearly, the traditional online advertising model within social networks is not working. A failure for social networks to find a long-term revenue strategy will limit their growth. We see a mashup between e-commerce and social networks as the Holy Grail for members, advertisers and social networks.
The demographics of the social networks are changing; the relationships between the members are changing; and thus, the applications from the developer communities on social networks are changing. New breeds of social networking widgets are giving social network members the opportunity to instantly participate in e-commerce without the headaches of back-end fulfillment such as payment processing, fulfillment and customer service.
People naturally seek out products and make buying decisions based on recommendations from their friends, not necessarily from third-party banner ads and advertising placements.
The ability to create a fully e-commerce-enabled site for total transaction management, all without any involvement from the user’s perspective, is a new way to conduct e-commerce. It’s more like MeCommerce, from me to you, with a plethora of vendors’ products to recommend on your social networking profile.
Users are putting themselves into the driver’s seat on what and how they are choosing to buy. This is a new trend and an extremely cost-effective sales channel for vendors. With ease, any size vendor can tap into this enormous channel, featuring their products to millions of potential customers as part of a multi-channel retail strategy reinforced by user-generated content — without a huge marketing budget to gain online exposure.
Just What Social Networking Needs
What makes the mashup of social networks with e-commerce, or MeCommerce, compelling is that it not only makes users’ recommendations viral to their social networking friends’ list, but enables the author (social network member) to actually benefit monetarily from their recommendations.
As the MeCommerce generation emerges, social network users will be empowered to leverage sites like Facebook, MySpace and LinkedIn through a mutually beneficial “social commerce” model for all parties involved.
Social network users can cash in from a simple product endorsement. Vendors gain a new online sales channel without a huge marketing cost. Social networks increase membership, site visitation and potentially gain a much-needed new revenue stream over-and-beyond advertising. MeCommerce will prove to be just what the social networking community needs.
Sue Spielman is cofounder of bSocial Networks, a provider of business-to-consumer and consumer-to-consumer software for social networks and inventor of the Market Lodge application. She has designed and architected enterprise and Internet-based solutions for more than 20 years.