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APRIL 23, 2007
Harnessing Social Networks A new service lets companies get into the game quickly
Many of the companies reaching out to the teens and twentysomethings who populate MySpace have built their pages on that service, owned by News Corp. (NWS ) The page for American Eagle Outfitters (AEO ), for example, is mostly an ad for the youth-oriented clothing chain, but it also features discussion forums that cover topics from fashion to store employment. The company has 36,000 MySpace "friends." Some businesses also post videos on YouTube (GOOG ); Hewlett-Packard (HPQ ) is sponsoring a contest for the best video featuring an HP calculator. One of the odder places attracting business interest is Linden Labs' Second Life, a virtual world where avatars—3D cartoon representations of players—live, love, and try to get rich. IBM (IBM ) has built a replica of its Almaden Research Center in Second Life, and Coldwell Banker has opened a virtual office to sell virtual real estate. But for all the buzz, it's not clear to me that Second Life is much of a business investment. Linden Labs claims 5.2 million "residents," but only 1.6 million have logged on in the past two months, and there are generally fewer than 50,000 around at any one time. A STARTUP CALLED NING, backed by former Netscape Communications honcho Marc Andreessen, may be a better bet for small-to-midsize businesses that want to get into the social-networking game without making a huge commitment of either time or money. Ning is a hosting service and a set of tools that let any individual or organization—a soccer team, a church choir, or a business—create its own social network. Using Ning to set up your network requires a bit of skill: It's much like creating a Web page. But once you're up, adding videos or a photo gallery to the design is simple. And Ning offers all the standard tools of the social-networking trade: discussion forums, blogs, and lists of "popular members." A basic Ning account is free, but "free" comes with some features you may not want and will have to pay to get rid of. The most significant is that Ning runs ads by Google (GOOG ) down the right side of the page. You not only get no revenue from the ads being run on your site but also risk the chance that the text spots, linked thematically by Google magic to the content on the page, might contain something you'll consider offensive—or even promote a competitor's business. For $19.95 a month you can replace Ning's ads with your own ad service or lose the ads altogether. Another $4.95 a month lets you change the address of the network from "mybusiness.ning.com" to "mybusiness.com." And $7.95 a month more removes a link that lets members of your networks create networks of their own, which could include an "I hate your business" network. Taking the plunge into social networking raises challenges for any business. When you let customers or prospective customers participate, you have to pay close attention to what they're saying. You are going to get negative and sometimes ugly comments (BW—Apr. 16), but you have to accept this as part of the culture of the Web. The upside is that building a social network around your business can not only give you a richer way to communicate with customers but also a golden opportunity to learn what they're thinking. That can make it well worth the effort. For past columns and online-only reviews, go to Tech Maven at www.businessweek.com/technology/wildstrom.htm  By Stephen H. Wildstrom
BW MALL
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