The World is not Enough

It's not your father's social networking anymore. eMarketer released a report recently titled “Social Network Marketing: Ad Spending Update". Ad spending in the US for social networking will increase from $280M this year to an estimated $865M in 2007, with MySpace hosting 60% of the ad spending. All leading to a staggering $1.86B estimated in 2010. Social networking’s share of US total online ad spending is also projected by eMarketer to grow from 1.7% ($280M/$16.7B) in 2006 to 6.3% in 2010. Globally, such ad spending will grow from $350M in 2006 to $2.51B in 2010.

So, social networks are poised to grow both internationally and in niche groups. International expansion is only natural as social networking promotes communities without physical borders. The large players such as MySpace are already expanding to at least Europe and Asia, where it is facing off against homegrown social networks such as Cyworld in South Korea, Mixi in Japan, Studivz.net in Germany and Skyblogs in France. However, MySpace may gain a slight advantage only if it is able to incorporate media products (ie movies, television shows, etc…) from News Corp. other properties, and not turn off its targets. 24, the TV show has a huge following in Japan (note the energy drink commercial starring Kiefer Sutherland in Jack Bauer mode) and should complement the Japanese launch, if the lawyers allow it.

Niche social networking would be another way social networks can grow in the near future. This segment has been getting its fair share of attention lately as well as funding and endorsement. JibJab launched its social network to share online humor more than ½ year ago followed by some venture capital funding. Sports Illustrated aligned with Takkle, a high school sports social network, recently while it may invest $25M in FanNation.com, another social network for sports, according to another report. The large players will still be the draw for general social networks, while niche sites will become like the Long Tail, attracting communities interested in particular topics, whether acting like virtual watercoolers for entertainment or virtual community center for common activities.

By growing social networks, both globally and in niches, additional advertising inventory can be created. The more targeted the communities (by geography or interest), the more valuable they are for advertisers. Then, these newer social networks will then be alternative distribution platforms for larger media concerns as well as additional advertising outlets. The question is whether the owners can monetize their social networks without alienating their community. I think “yes" but only if they remain true to their community and be upfront about their intentions, ie relevant advertising.

A Night at the (virtual) Roxbury

Tonight I attended a conference in Second Life. It was the Second Life’s first CaseCamp and was hosted by Crayonville, a new marketing company whose office presides in Second Life. At this casecamp, 4 marketers presented their First Life marketing case studies for an audience literally from around the world. Our avatars sat at an amphitheater as if we were physically at a conference location, all without leaving the comforts of our home or office. Both voice streaming by the presenters and their powerpoint presentations came across almost perfectly too. This could be the beginning of something special.

Second Life has now over 2M residents, of which over 800K had logged in the last 60 days (stats from home page). Since it’s founding in 2003, buzz about SL only started to grow exponentially in 2006. Of course, the extra press about Second Life first millionaire didn’t hurt either.

What’s remarkable now is that large media companies are starting to experience with SL as an alternative distribution outlet. Given its early life cycle, SL is a good bet (especially by those with enough betting resources) to gain residency in. If it takes off beyond the niche early adopter stage, those experimenters would have a head start over their competitors. However, Many are unconvinced that Second Life would hit critical mass. Though I agree with them that SL is not ready for consumer prime time (it is still a steep learning curve to learn how to navigate your avatar in SL), SL has the potential to be the next generation 3D internet browser, where your avatar can visit places in SL just like we started surfing the web a decade ago.

What can make it tip is good quality and compelling content. Media companies are exploring that option. NBC’s iVillage Girls’ Night Out programmed a SL tour tonight. A good way for them to dip their toes in the waters. Instead of building an island, let’s explore the world instead! Moreover, Sundance will launch a virtual screening room in SL, with interactive events with filmmakers. Maybe we don’t need to wait in line in the freezing cold in Park City after all! Access to otherwise inaccessible content will bring in more than curiosity seekers. Of course, the insiders won’t be so special after all. It would be wise for them to use this opportunity to convert this new audience somehow. UPDATED: Oops, wrong Sundance, the channel not the film festival

UPDATED (12/15): Circuit City announced an SL store opening that it's developing with IBM. IBM's own SL presence was set up for employees. Circuit will join GM, Nisssan, Toyota, Addidas, Reebok, American Apparel and Starwood as brands in SL.

Recap from ITA TechWalk Lunch

This is the recap from the Lunch Roundtable Workshop from the ITA TechWalk on November 20, 2006, with guest speaker Conrad Riggs of Mark Burnett Productions.

Information about the TechWalk is here