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March 15, 2007
The Rise of Niche Social Networks and That Money Question
With the phenomenal growth of MySpace, it makes perfect sense that over the past year, a host of niche social networks including Nike's Joga soccer site, Dogster, and the boomer site Eons would pop up. It's impossible at this point to beat MySpace in the general market, so go niche.
This morning, I spoke with the Michael Sanchez, who kickstarted the fastgrowing CafeMom social network late last November. The site has around 100,000 registered users and is expected to do 20 million page views in March, up from 1.8 million in December. Definitely impressive growth.
So the questions become, how big can a niche site get and how much money can you make? Of course, that depends on the demographic and interest and how effective you can be in coming up with smart advertising that has an impact for marketets. That can help you get higher CPMs. But the ultimate problem is the very nichyness of a niche site. As Brian Balfour points out, you need scale to justify paying your own ad sales to sell your advertising. He has a great point that maybe most niche sites only make sense if they can team up with other niche sites and sell advertising across them. That also means you need to get smarter about a broader set of data, if you're going to pull together sites about dog lovers and moms, for instance.
Either way, it seems like it makes sense to create a joint venture of other sites, or simply to sell the niche social network to a bigger company, such as a Viacom or an iVillage, that can integrate what you have into what they have. If Cafemom can keep growing, it will likely be a good buyout bet. But in the meantime, because the company also runs an older more mature site called ClubMom, it already has an advantage in terms of economies of scale (ad reps, bandwith, etc) than most standalone niche sites.
Also, check out the story by BW's Catherine Holahan on other niche social networks.
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Check out virb.com. A new social network that is attracting the web professionals. And it's pretty.
Posted by: George Huff at March 15, 2007 02:35 PM
My fear in the monetization of all these broad-interest social networks is their potential to become over-valued. After all, NewsCorp can project great future earnings for MySpace based on the growth they've seen. Their projections, however, seem to require still more 13 year-old girls and unsigned metal bands to find out about MySpace because they haven't already.
Certainly niche sites like you mentioned can both have steady growth, as well as provide the kind of targeted interest that keeps users from feeling their interests are being ignored.
Posted by: Eric at March 16, 2007 12:11 AM
Ticketmaster.com should have its own social network strapped to its hip. Really getting people in the door is their trick not just page views. Then connecting people from the Ticketmaster event into local pizza joints with 20 of your best friend to a reserved table is it. Same for catering the tail gate parties before the event. Real people looking for corporate box seating or even tickets in exchange for a look into your car dealership. That and local movies seating that have been captured by ISP's are real social networks, the extra need to be added like Ebays developers. Every sports team and high school needs event support outside the school. Same for adding extras to theme parks they all should have more than a local tv or radio sponsorships.
Posted by: Mike Reardon at March 17, 2007 01:34 PM
Check out Fast Pitch! (www.fastpitchonline.com). These guys get it! It's one of the first business networking sites that has figured out how to monetize it's user base beyond just advertising and subscription (i.e. pay to connect). The website offers its users (business professionals) a suite of value-added services by leveraging it's own userbase to help people promote their business. Even more compelling is the kind of data they capture about each user... I can't help but wonder what kind of vertical advertising and cross-selling they are capable of (I'll save my thoughts on this for my own blog) :)
Posted by: Barry J. at March 30, 2007 07:02 PM
Will Vertical Search and Social Networks combine to challenge Google?
Publishers and advertising agencies have a very difficult challenge ahead as traditional “horizontal” media like newspapers, TV channels and magazines see their traditional demographics and advertising revenue streams fragmented by the increasing preference of consumers for online access and the huge presence of Google eroding their audiences and potential future revenues.
Perhaps they should remember the words of Sun Tsu, who once said “When the enemy is too strong to attack directly, then attack something he holds dear. Know that in all things he cannot be superior. Somewhere there is a gap in the armour, a weakness that can be attacked instead.” Google’s major strength – the clean search box and the ease of use, commoditised ad revenues, perhaps masks its principal weakness. As media content and advertising revenues fragment to serve thousands and thousands of “vertical” online communities based on lifestyle or profession, Google may suddenly seem standardised, commoditised and lacking a sense of unique community. Is Google becoming Wal-Mart, while vertical communities may prefer Harrods?
Whilst “horizontal” media companies are similar to supermarkets, specialist professional “vertical” publishers are very specific in serving niche communities with totally relevant content and requirements. However, the publisher’s principal operating difficulty in becoming adaptive to this asymmetric Web 2.0 opportunity is that most tend to run each of their print, exhibition and online titles/businesses as separate profit and loss items on their balance sheet. As a by-product the vast majority tend not to have a centralised IT infrastructure or the human IT skill sets to manage a large scale data centre or web spidering facility – the prerequisites needed to datamine and aggregate open source, user generated and blog content to create vertical slices of the Web that are relevant for their audiences. Publishers will also need to integrate this content into the online extensions of their print brands and thereby allowing advertisers the opportunity to target high value communities. In addition, the datamining, crawling and hosting to identify relevant open source content will also need to be a continual process due to the continual growth of user generated and open source content.
Convera have two very large data centres, an extensive web spidering capability and a web index. Convera are now partnering with a significant number of specialist B2B publishers to create a range of vertical websites for specific professional communities. The first example of this is Searchmedica.com with UBM.
In building the deep vertical search portals, the key is to reach into the specific professional community in a number of ways. First, you can combined the trade publisher's knowledge and contacts in the profession with community appeals that engage the specific audience in a way that general search cannot, and also by taking special care to use the taxonomies common to the targeted profession in organizing search results so that the user feels more at home and among peers. Building a good vertical engine can be costly and time consuming, and getting a critical mass of users to de-Google their search habits into more specialized engines is potentially a tough sell. However, in tests with focus groups from different professional communities to test these vertical search properties against Google, the results are hugely encouraging.
In building the beta test sites, the specialist publishers are providing Convera with "white lists" of data sources online and websites that would be most relevant to its readers so that the searches are restricted to reliable and trusted information. Publishers are also securing agreements with owners of key proprietary content not normally crawled by Google by leveraging some of its contacts and resources so that Convera can crawl and deliver some of their proprietary content. Another key consideration is getting the user community engaged in the process as co-developers. No matter how bad the results at Google or Yahoo may be for a given professional segment, the interface is familiar and the destination is always at hand. Getting users to think of a specialized brand as the go-to place for business information is the challenge.
A number of publishers are actively assessing the potential of adding social networking to the mix in order to get professionals interacting with each other and adding weekly podcasts by industry experts on issues affecting the community – these additional services will create more community loyalty and also additional advertising and sponsorship opportunities.
The publishers can also use their print titles to drive the audience to the new online areas and this will also assist the transition of their high value print ad revenues to online. Publishers also have exhibitions, seminars, events and email newsletters to assist this transition – and recent research suggests that professional communities will actively attend seminars and events to meet peers and other members of their community. The theory goes that once you get some professionals involved then the viral mechanism or behavioural “Hive Mind” also kicks in and professional workers start referring to the vertical portal as a community source. It is also allows advertisers and public relations organisations access to a clearly defined, affluent, influential and stable audience.
Google does not allow you to have a beer with a potential business partner - it doesn't have that sense of community. But Google is fighting back – the recent launch of Google Custom Search and acquisition of teenage social network sites indicates they are aware of their weakness – but specialist publishers see this as a Trojan Horse. Social networks for teenagers are highly transient and target a demographic that is volatile, unpredictable and has a low level of disposable income – whereas a social network alongside a vertical search service for 22,000 bio-chemists, 55,000 UK GP’s, 55,000 insurance risk assessors or 120,000 US psychiatrists is stable, affluent and attractive for advertisers.
Posted by: Victor McGuire at April 2, 2007 09:22 AM