Adotas

Where media buyers start online

Featured Author

Author Photo

Seth Alpert is Managing Director of AdMedia Partners, a leading boutique merger and acquisition firm that provides middle market M&A advisory services to advertising and marketing services, media and publishing, and related Internet businesses. Founded in 1990 and located in New York City, the firm has completed over 150 transactions worth over $5 billion since 1999.

More articles by Seth Alpert





Features

Why Most Networks Are Dead on Arrival

Written on
Oct 28, 2008 
Author
Seth Alpert  |
Share
Why Most Networks Are Dead on Arrival

behavioral_ruined_small.jpgADOTAS EXCLUSIVE — With the success of MySpace, Facebook and Bebo, many media companies have launched (or are considering launching) online social networking sites aimed at B2B marketplaces. The question is: are online social networks viable in niche markets?

The reality is that social networking websites are not going to be viable in most cases. In fact, vertical search engines may provide a cautionary tale for B2B publishers hoping to generate revenue via social networks.

As recently as three of four years ago, the success of Google prompted many to believe that vertical search would be a strong revenue producer for niche publishers in B2B markets. For the most part, it hasn’t worked out that way.

That’s because Google is a satisfying habit, and habits are hard to break. As long as it is working well for you, you’ve got to have a good reason to break that habit. Since Google generally provides very accurate (and probably superior) search results regardless of the terms you search on, there’s no reason to switch. That’s why vertical search hasn’t been able to get significant traction.

The prospects for niche social networking sites are limited for the same basic reason – viability starts with having a desirable audience, and that’s a big challenge for any new kid on the block.

MySpace, Facebook and similar online social networks, which have already aggregated huge audiences, are habit forming. And these large social network websites have likely beaten B2B publishers to the punch by providing mechanisms to allow their audiences to create niche networks within them. Combining these capabilities with their massive audiences, evolving technology platforms and growing economic power, these businesses have the capability of serving users better than most aspiring niche social networks. I don’t see how that is going to change, so the big guys are going to have and to retain the audience. The niche businesses will end up being like parties that you don’t want to go to because there won’t be anyone interesting there when you arrive. And, no audience means no business.

Apparently, many in the media world agree with this point of view. AdMedia Partners conducted its 14th annual survey of nearly 1,600 senior executives at leading media companies in December 2007 to elicit their views on merger and acquisition activity among U.S. media companies in 2008. A substantial majority – 69% – of respondents thought that the perceived growth opportunity for social media networks was over-hyped. In contrast, 72% thought the perceived growth opportunity for niche enthusiast online media (i.e., proprietary online content) was accurate.

Another problem for niche B2B social networking is that social media networks and user-generated content is very risky for advertisers who can’t predict the nature of the content that forms the context for their ads.

As one executive said, “Content remains king, but the only ones selling for marketers are real content – not fluff. The noise with social media networks is only getting advertisers impressions – not a connection or a sale. Online should and can be a sale driver, much more valuable than an impression generator.”

The big challenge in starting something is getting a conversation going. So, social networks may not be for everyone.

Here are some dos and don’ts for those in B2B publishing who are considering launching a social networking site:
• Do consider creating an online social network if your audience is large – say, more than 100,000 people – and can benefit significantly from communication with peers.
• Don’t assume that a social networking website takes minimal work. At the very least, it must be monitored and often seeded with content to create more postings.





Reader Comments.

Hmmm, interesting read, but I’m a bit surprised at you suggesting that seeding is the way to go …”it [social networking site] must be monitored and often seeded with content to create more postings.”

Seeding can often be spotted a mile away, and it does nothing for the integrity of a brand (including that of the social networking site). Shouldn’t we rather be generating discussion by releasing an interesting campaign, press release, or sincerely having something topical/thought-provoking/educational to discuss?

Posted by Jeannette Durick | 5:38 pm on October 28, 2008.

Leave a Comment

Add a comment

No Tags
Article Sponsor

More Features


  • Right now, at the beginning of 2012, what are you watching the most closely for its ad and marketing opportunities?

    View Results

    Loading ... Loading ...

Latest News

News Archive

Spotlight

Sponsormob Leads the Way Into RTB for MobileADOTAS – For more than half a decade, Berlin-based tech firm Sponsormob has remained relevant in an industry characterized by [...] more...


Adotas Partnership