Wednesday, April 13, 2005

Social Networking Will Soon Become a Core Component of Commercial Websites

It is the talk of the industry; it is network enhanced word of mouth; it’s the booster rocket that launches websites into the networking? Nope I’m talking about viral marketing circa 2000. (Or maybe I’m talking about MLM circa 1949 without the websites of course ;).

Back in the day, viral marketing was unique to a few websites, like Hotmail, and it powered them to fame and fortune. Now the tell-a-friend link to a canned email is a standard tool in every webmaster’s toolkit. Custom hyperlinks in signature files are also pretty common these days, especially with web affiliate marketing. Once these tools became common, they lost their ability to drive tremendous growth. In time, we’ll see the same thing happen with social networking.

At the moment, social networking is a fun, unique and powerful mechanism for growing the registered user base of websites. A year after its launch, MySpace—a generic social networking website—enjoys 23 million unique visitors a month and is one of the 20 busiest websites in the world. MySpace’s parent company has recently launched a gaming website that incorporates social networking called Other companies have released websites that incorporate social networking in verticals like photography, schools, professional networking, chatting, movies, and more.

Critical mass, eyeballs, the tipping point, whatever term you prefer, all of these sites are using social networking to build a base of registered users, barriers to entry by competition and high switching costs for users. By encouraging people to recruit their friends, you get critical mass. Of course, critical mass and expanding networks create barriers to entry by competition. And once the users have set-up their networks of friends, they are loath to switch, meaning they have high switching costs or user lock-in. It’s a marketeer’s dream scenario.

Let me give you an example: Netflix has recently added social networking where you can link to friends who are also members of Netflix. Then you can share ratings with your network. If you find that you and a friend have common tastes in movies, and that friend highly recommends a movie you haven’t seen, you feel confident that you too would like that movie. The net result is that it creates additional switching costs, should you wish to move your business to Blockbuster Online or Walmart Online, barriers to entry by these folks and, as a side benefit, it promotes older DVDs versus new releases, which are in short supply.

Social networking is a great way to get to know someone online. People fall in love with people online without ever meeting the other person, by sharing hopes, desires, insights, favorite movies, books, etc. Remember Kip and Lafonda in Napolean Dynamite? Social networking has similar benefits. People publish the things that make them unique, their likes, dislikes, groups, friends, and they start linking to people through friends. This fosters a sense of community and trust between people.

Users of opened their homes to a woman they had “met” through tribe as she traveled from Florida to Berkeley. There’s a saying that “the eyes are the window to a person’s soul”. Well the modern day equivalent might be “the web profile is the window to a person’s soul”…or maybe it’s the blog.

But alas, like all good things, social networking will eventually become as common as prior differentiators like discussion forums, shopping carts and yes, viral marketing. Early adopters will ride social networking to fame and fortune, but eventually it will be ubiquitous. At some point, your social network will become portable to each site you visit. There’s an XML standard called FOAF—for Friend Of A Friend—that enables portable social networks. I’m sure that the folks running passport and browser development are hard at work incorporating social network portability as well. Some day, you’ll visit a travel site you’ve never been to and it will tell you the names of several friends, or friends of friends, who have used their services and rated them highly.

But, we aren’t there yet, so make hay while the sun is shining and ride social networking to fame and fortune now!