Classic Jack: Social Network Predictions from 2004

In February 2005, I headlined my commentary "Online Social Networks are Hot New Killer App." A year earlier, I predicted the investment by several leading online companies in social networks, focusing on the work being done by Google and MSN. Here are highlights from those commentaries, providing a fascinating perspective on the success of what was called "theFacebook.com" in 2005 and the failures of MSN, Google, AOL, Yahoo! and others to capitalize on their early efforts and recognition of the market opportunity. I occasionally publish Classic Jack commentaries to provide insight into the current state of the industry and as context for my contemporary reports that forecast and predict future industry developments. (Original reports will return in early January.)

Originally Published: March 31, 2004

Traditional Media & Marketers Seeking Early Advantage with Social Network Tie-Ins

It's intimidating to seriously imagine the long-term potential of the Internet to advance well beyond its current iteration. There are few barriers to the most aggressive and expansive developments we can imagine and the marketing opportunities that will be created. 64-bit processors, the advanced 802.16 wireless standard, advanced high definition video, integrated telephony services, virtually unlimited storage capacity, ultra wideband connections, speech recognition, and other emerging technological developments will exponentially expand video and audio capabilities, interpersonal real-time communications, intelligence gathering, and super-fast connectivity.

Software is now in various stages of development that will enable the broadband integration of cable, satellite, wireless and wired telephony, allowing access to an unlimited array of passive and interactive content and software. As the major media corporations and marketers zero in on the most promising advances for revenue generation and profitability, social networking is emerging as the most opportune.

Blake Irving, Microsoft Corp VP, commented at the company's recent Strategic Advertiser Summit, that he can envision a "visible social network" as part of MSN's future. He suggested it would not be like Friendster or Orkut, but would be "a database that has relationships in it already that can be interconnected with manageable scale. This creation of a massive social network can help drive network affect and a ton of engagement, furthering merchant effect," said Irving. MSN currently has 170 million regular online users and 120 million users of its instant messaging service. Social networks began to emerge in the earliest days of the web, primarily springing up at universities where the Internet gained its first advocates. The simple concept was to unite students with common interests and provide a social framework for communications.

Social networks have evolved in the past two to three years, spurred on by venture capital firms, entrepreneurs and companies like Google, which created one of today's hottest social networks, Orkut. Their origins as small groups of like-minded enthusiasts with shared interests have expanded to unlimited universes of diverse individuals, each of whom seek out others who either share common interests from dating to buying a car.

One problem with social networks is that they can become unpopular as quickly as they become popular. In a recent "Wired" magazine, Orkut was identified as "wired" while Friendster was disposed of as "unwired." Friendster, Orkut, Tribe Network, Craigslist, and many other smaller social networks are rapidly expanding but revenues have been much slower to materialize.

The big guns in the online industry -- MSN, AOL, and Yahoo! -- are hoping they can aggregate their huge user base into efficient social networking centers. Google launched Orkut, which describes itself as being "committed to providing an online meeting place where people can socialize, make new acquaintances and find others who share their interests." Orkut gathers a wealth of information in its registration process, providing parent company Google with the one asset it cannot gather - user data. But that may be Orkut's only asset, as revenues have proven hard to come by.

Originally Published February 31, 2005:

Online Social Networks are Hot New Killer App

Social networks are fast becoming the hottest new craze in the Internet world. Just as search engine marketing swept the online ad world with dramatic revenue growth in the past two years, social networks are poised to experience similar gains. Business networks Plaxo and LinkedIn provide formal links among people who share associates in common, but do not provide the types of "community" features that are becoming increasingly attractive to a growing number of online users, especially young people. Craig's List, which has not defined clear revenue or marketer applications, has become a popular resource in New York and an expanding list of cities for dating, buying and selling goods and services, and related services. eBay can be considered a massive social network organized into smaller social pockets based on shared consumer interests in buying and selling products. New media companies, such as Neopets.com, Craig's List, thefacebook.com, and several others are strong emerging players in the social networking arena.

Similar online networks are being envisioned by several traditional media players and marketers that have strong existing consumer brand equity. It's inevitable that online social networks will emerge in the next several months capitalizing on the brand equity of popular magazines, websites, television networks and programs, and well-known personalities. (Editor's Note: WRONG!)

Early last year, Google quietly launched social networking service Orkut, which was originally developed by an employee as an internal community service for Google employees. Friendster, the leading global online community, combined late last year with Eurekster.com to launch personalized Internet search and navigation services on Friendster networks in eight countries. Friendster Search, powered by Eurekster, shows search results that have the added relevance of ranking results based on preferences of Friendster members and their friends.

Social networks identify people of like-interests by mapping relationships and interaction among members. The services link members based on shared interests, needs and relationships and create opportunities for them to interact through instant messaging, e-mail, discussion groups, online forums, message and bulletin boards, blogs and other community features. MySpace.com recently constructed a community site for Fox Network enabling fans to preview future episodes of "The O.C." and meet up online during the show to share comments and opinions. According to an executive at MySpace, 16,000 fans have become members of The O.C. online community. CBS-TV had a major promotional presence on the home page of MySpace, promoting "Joan of Arcadia" last Friday. A community has also been created for Green Day's "My Chemical Romance" tour enabling fans to interact with the brand and with each other, including the opportunity to listen to up to four Green Day songs.

Procter & Gamble worked with MySpace and Warner Music, registering close to 30,000 people by offering users an opportunity to win an iPod pre-programmed with free songs by Bonnie McKee and other artists. Fans of the performers were pulled into the promotion, which integrated Secret Sparkle into profiles of the artists available at MySpace. Friendship is a core-marketing theme for Secret's teen-targeted deodorant product.

We think we're at the tip of the iceberg, MySpace CEO Chris DeWolfe told Jack Myers Report. "Our members spend more time on MySpace.com than on the telephone and watching TV. We have several new features in the product pipeline and we'll continue to add a new feature every month." DeWolfe says his team is working with Filter Magazine to provide editorial content as an "arbiter of cool for new music, events, and hot new music."

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