I embarked on this blog beginning with the mechanics of LinkedIn, but I find myself responding more and more to questions regarding social media in general, how to effectively utilize social networking sites for certain purposes, and finally how to monetize all of this. I have big plans for this blog to evolve into a broader forum and gateway for understanding social media, and I will be launching this new website when I announce plans for the new book that I am writing. Stay tuned for more!
As I write this the buzz continues around social media, and the membership numbers of social networking sites continues to soar. According to Alexa.com statistics, Facebook is now the 4th most visited site in the world, followed by MySpace at 9th, Twitter at 55th, and LinkedIn at 100th. These are impressive numbers.
What is more impressive is that social networks become stickier and stickier as time progresses, and thus the amount of time spent on these sites far surpasses that of the average site. It is said 2/3 of the global Internet population now spend time on social network and/or blogging sites, and that this sector accounted for 10% of all Internet traffic in 2008. I can only assume that this number will further grow this year as traffic and membership numbers continue to soar.
It is interesting if we put these numbers into perspective as to membership numbers compared to their monthly visitor numbers. On the membership side, Facebook this week signed up their 200 millionth member. MySpace is at 130 million members, while LinkedIn is inching up to 38 million members. On the other hand, it is estimated that Twitter only has 14 million members.
But when looking at monthly visits to these sites in January, 2009, while Facebook with 1.2 billion and MySpace with 810 million share a constant 6 monthly visits per member ratio, I estimate Twitter, with 54 million monthly visits, to be more than double the ratio of Facebook & MySpace (considering these numbers are from January while Twitter’s membership jumped 76% in March alone), while LinkedIn’s 42 million is way behind at a 1 to 1 ratio. In other words, Twitter, with its small membership, is an extremely sticky service where its members are making more visits per person than the other sites, and more overall visits than to LinkedIn. You can understand the buzz around Twitter and why there have been rumors that Google is negotiating to buy them out.
The other astounding figure is the growth of some of these sites. Facebook went from 100 million members to 200 million in just 8 months. That’s right, 8 months. But have they been able to monetize this growth?
Despite the growth of these services and their dominating statistics, there is still very little revenue to show. According to the numbers that I could find, MySpace seems to have generated approximately $800 million from adv…, with Facebook behind at $300-350 million, LinkedIn at $75-100 million, while Twitter apparently has 0 revenue. It is, indeed, a mixed bag, but no one doubts the future potential here, and thus all of these companies have huge valuations regardless of these numbers.
So the media is lumping social media together into one, but as you can see there are vast differences in terms of membership numbers, stickiness of the services, growth, as well as demographics. And some sites show little if no revenue when compared to the traditional companies that we know about. In order for companies to monetize on social media, they need to understand the dynamics of each of the sites, become members themselves to understand the different functionalities that each site has, and then create and execute a plan to drive new business from these sites. The strategy, as well as the tools employed, will have to be different depending on the site, and just the fact that it is USERS and not COMPANIES that are controlling these sites, there will have to be a lot of creativity employed in order to find benefit from either directly advertising or driving people to another site where they can sell them something. Social media will require businesses to consider a new and creative approach in order to monetize on them.
And social media, like the Internet, has flattened the playing field for businesses. It doesn’t matter how big or small you are, everyone has an even chance to find and influence new customers here. It’s like the old rush for land in Oklahoma, as nothing is set in stone at this moment and those that move the fastest with the most dynamic marketing plans may be able to grab more. In fact, some of these sites may be better geared for small businesses to find revenue versus the big companies.
But one thing that a lot of people miss out on is the indirect revenue that can be derived from these sites, and this is where larger corporations should be taking advantage of social media. When I talk indirect, I talk about exploiting these sites for brand awareness, to win mindshare as being the leading company for xxx product or in yyy industry. Because so many consumers are on these sites, even if you can’t sell them something per se, you can affect what they think about products and services. And that may be where the big money in social media is.
This post has no conclusion to make because, as with the Web 2.0, users are generating content and changing the face of these social networking sites as we speak. And as each site’s membership numbers grow at this pace, their demographics are transformed in creating a new community. My only recommendation is that, for any business looking to monetize social media, to get involved themselves in each site and create their strategy only after understanding the nuances in terms of demographic, etiquette, and functionality that is provided. The media lumps social media into one, but it is really a collection of diverse communities and demographics. Only after understanding this can you really start to see the potential behind the buzz.