Social Networking & Online Advertising
                                                                                                                                                                                                     
June 12, 2006
Copyright Mediaware Infotech Pvt. Ltd.
Social networking web-sites are the latest phenomenon on the Internet. As far as popularity is concerned, social networking web-sites may be compared to Reality TV. (Everybody has experienced Reality TV programming, which has become an essential ingredient of mainline TV. Today we can even find Reality TV channels which are dedicated to reporting crime on a real-time basis.)

The similarities continue. Like Reality TV, content for social network sites costs less to produce. And like Reality TV, the viewer / user has a significant role to play in content generation.

Social Networks : The Classical Definition
The term "social network" was first used in 1954 by J.A.Barnes (Class & Committees in a Norwegian Island Parish). Here's a classic definition of social network (taken from Wikipedia & other sources) :

    A social network is structure made of nodes which are generally individuals or organizations - the     network indicates the ways in which the nodes are connected through various social familiarities     ranging from the casual to the close, including familial bonds.

    Social network analysis (a.k.a. network theory) is a key technique in sociology, anthropology &     organizational studies. Social networks operate on many levels, starting from extended families and     going up to the level of nations.

     Social networks play an important role in solving problems, running organizations and      achieving goals in general.

Size: As per a study conducted by Hill & Dunbar in 2002, the average size of social networks tends to be around 124 people with the maximum size around 150.

Social Networks Redefined
Today, social networking (or online social networking) refers to a category of Internet applications which help connect friends, business partners or other individuals over the Internet. These web-based software applications are loosely referred to as online social networks.

Social networking is gaining popularity everyday! Apart from dedicated social networking sites, most portals are expected to host social networking features.

That social networking web-sites are popular would be an understatement!
Here's a list of the no. of visitors to a few leading social networking sites in April 2006 :

The undisputed No. 1 social networking site MySpace (recently acquired by News Corp), is the obvious favourite among today's youth. MySpace topped the growth list with a year-on-year growth rate of 367%, translating to 38 million unique users in April 2006.

Blogger (owned by Google Inc.) grew by 80% to touch 18 million visitors. While Classmates Online which grew by 10 % to 13 million visitors.

And although YouTube & Microsoft's MSN Groups saw a 14 % fall in visitors, they still attracted more than 12 million & 10 million visitors respectively in April 2006!

The World's Leading Social Networking Sites
RankSiteDescription
HIts/Month
1MySpace General (music/video)
77,564,548
2sms.ac Cell phone users
50,000,000
3Classmates.com School, college, work & military
40,000,000
4Xanga Blogs & "Metro" areas
40,000,000
5FriendsterGeneral
27,000,000
6Bebo Schools & colleges
22,000,000
7BlackPlanet.comAfrican-Americans
18,000,000
8OrkutOwned by Google
16,000,000
9Cyworld South Korea
15,000,000
10LiveJournal Blogging, networking & communities
9,900,000
11Facebook College & high school students
7,000,000
12Faceparty Teens & 20-somethings
5,900,000
13LinkedInBusiness
5,200,000
14MiGente.comLatinos
3,600,000
15Flickr Image sharing
2,500,000
16Yahoo! 360ºLinked to Yahoo!
2,000,000
17Tagged TeensTeenagers
2,000,000
18Hyves DutchStudents
1,800,000
    
As per Nielsen/NetRatings (April 2006), the top 10 sites in the United States collectively grew by 47 % year-on-year in April 2006. Attracting an amazing number of nearly 70 million unique visitors!

Wallop From Microsoft
Microsoft's state-of-the-art software R&D lab has been developing software which promises to "turn social networking on its head". Microsoft has helped spin off a start-up co. called Wallop, which will deploy this new social networking software.

When it is goes online later in 2006, Wallop promises to "change the way we look at social networking: by bridging the gap between how we express themselves in the virtual world & the real world".

Whack From Regulators!
The U.S. Congress meanwhile, is targeting social network sites. And with good reason - to protect minors from paedophiles & other predators on the Web.

A proposed U.S. federal law titled "Deleting Online Predators Act" (DOPA) if passed, will require schools & libraries to render inaccessible to minors all social networking sites, interactive web sites & instant-messaging services. Incidentally, DOPA is based on the result of polls conducted by U.S. politicians in 22 suburban districts.

Since minors are the most frequent visitors of social networking sites, DOPA will have a significant effect on social-networking sites like MySpace, Facebook, LiveJournal et al. Many believe that DOPA will be the next major step in Internet censorship wars. In any case, DOPA will also inhibit traffic on interactive web portals and web-based services like instant-messaging in addition to social networking sites.

And as it stands, DOPA may not even spare online gaming services like Microsoft Xbox 360 because it facilitates in-game chatting !

The Bottom Line
Where there are eyeballs today, there will be advertisers tomorrow. Regardless of whether DOPA becomes law, social networking sites which started as zero revenue ventures are expected to become big ad revenue generators in the near future - comparable to portals like Yahoo!, MSN & Google.


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