June 13, 2012

Facebook will remain king, but social pure plays will fade


Facebook collage by Jennifer Daniel

Look for the rise of sites with deep social features

This is second of a three-part series on Facebook as an investment. Also see:
Facebook’s biggest barrier to enormous wealth? Trust
Brands: How to cut your exposure to Facebook business risk

Christopher RollysonFacebook will remain the dominant popular social network in many markets for many years, and it won’t have to worry about being “displaced” by another social network the way that it displaced MySpace. In the near term, this lack of competition will give the company some breathing room, but a more daunting threat awaits: the waning of social network pure plays’ influence by 2017. Nonetheless, the fate of pure plays should be top of mind for serious Facebook investors: to produce the fabulous returns that current investors expect, Facebook will have to move far beyond adverts.

In part one of this series, I argued that Facebook had a significant trust gap with users that would inhibit its ability to monetize its most unique and valuable assets, and that the trust gap was recently compounded by its “IPO irregularities.” Below I’ll take a different tack and analyze the investment prospects of Facebook the platform.

Social networks’ disappointing investment results

Pure play social networks (Friendster, MySpace, Facebook, LinkedIn) have not lived up to investors’ ROI aspirations, despite the fact that people (‘users”) have loved the networks and lavished mind-boggling amounts of time on them. The Web 1.0 logic behind investor expectations held that the more time people spent on the sites, the more ads they would see and the more they would click. #fail

In retrospect, it is understandable that pure plays’ management and investors didn’t appreciate social networks’ social context. It turns out that very few people understand the intricacies of “sociality,” much less how to wire it into a value proposition or a business ROI. Continue reading

January 28, 2009

Social networks maturing fast

Twitter and Facebook top of mind: The nascent power of weak ties and small touches

Design 4 Christoher S. RollysonWhat a difference a year makes! The Social Networking Conference debuted several years ago as a forum for social networking sites and vendors, with enterprise clients few and far between. Miami 2009 took place January 22-23, 2009 at the Miami Beach Convention Center, and it was a veritable enterprise 2.0 conference. Many of the presenters hailed from enterprise-focused high technology vendors, but they spoke as social networking practitioners. The good practices they shared reflected the maturation of social networks. Don’t get me wrong, we are still in early days, but it was obvious to see that social networks would be completely mainstream this year. Enterprise-focused vendors provided additional evidence by explaining some of the new social network features in their offerings.

You may download this report as a PDF:

PDF

Social Networking Watch’s Mark Brooks gave an overview of key trends, while jetBlue’s Morgan Johnston and IBM’s Adam Christensen drove home the message that companies could be rewarded for trusting their customers in social networks. Ford’s Scott Monty, Sun’s Lou Ordorica and Microsoft’s Marty Collins shared how they were using social networking to evolve their companies by opening up to customers and adopting P2P, two-way communications.Yammer’s David Schwartz and Faceforce’s Clara Shih presented two tech innovators that promised significant disruptive potential. SAP’s Steve Mann, Opera’s Thomas Ford and Dow Jones’ Tom Aley all shared fascinating social networking elements of their portfolios, which were all enterprise-focused. Awareness Networks’ John Bruce was on hand to share good practices and pitfalls. I presented the only industry-focused preso, focused on how social networks were beginning to disrupt the U.S. healthcare industry. I also gave the pre-conference workshop, Successful Social Networking Projects in the Enterprise.
Continue reading