Social Networking: An Exploding Market Opportunity
Intro
The phenomenon known as ’social networking’ has exploded on the global scene over the past five years beginning with sites like Friendster and The Globe and taken to new heights by the likes of MySpace, Facebook, LinkedIn and other newcomers. With growing patronage on these sites have come investment opportunities unlike those ever seen before on the web. Facebook, valued at $200 million less than two years ago, now enjoys estimated market valuations approaching $15 billion. MySpace, bought by Rupert Murdoch’s News Corp in 2003 for what most believed was a rather rich $680 million, is now estimated a few short years later, to be worth north of $18 billion. Triggering this explosive categorical growth in social networking is the inherent utility of leveraged communication via web-based technologies coupled with rapid adoption by 20-something’s resulting in a sonic boom of activity and interest everywhere around the globe.
Market Overview
The use of social networking sites worldwide has grown substantially in the past year, with some sites seeing total visits increase by as much as 270 percent, according to a study recently released by Internet measurement company ComScore Inc. MySpace, for example, drew more than 114 million global visitors in June 2007, a 72 percent increase over the past year, ComScore noted. Facebook, which in September stopped limiting access only to college or university students or workers, experienced a 270 percent increase in worldwide visitors over the past year, according to the study. Bebo, a popular social networking site in the United Kingdom, experienced 172 percent growth, with 18 million visitors in June 2007. Tagged, a social networking site aimed at teenagers, grew 774 percent over the past year, attracting 13 million visitors in June.”Literally hundreds of millions of people around the world are visiting social networking sites each month and many are doing so on a daily basis,” said Bob Ivins, ComScore executive vice president of international markets in a statement. “It would appear that social networking is not a fad but rather an activity that is being woven into the very fabric of the global Internet.”
Chronicling Market Growth
While sites like Yahoo! and AOL continue to see a slowing in their site traffic growth, social networking products continue to gain market share and now dominate the Global Top 20 of most trafficked (and most highly valued) web-based properties. Additionally, many sites continue to see net negative declines in average page views per month, social networking sites continue to dominate. With the increase in prominence of social networking sites, comes the increased interest by advertisers to reach this audience. As a result, social networking products are expected to command an increasing share of total advertising dollars spent by marketers online in the coming years.
The Bottom Line on the Web In an analyst report dated August 14, 2007, Juniper Research indicated that revenue from social networking, dating and personal content delivery services will increase from $778 million this year to a staggering $7.8 billion by 2012.
Mobile Social Networking: The Next Frontier Many believe that the next frontier for social networking products will be in the wireless world. “Even though social networking sites are in their infancy, the exponential growth experienced by a number of mobile service providers, in some cases achieved primarily through viral marketing, would seem to affirm that there is huge potential in this area,” says report author Windsor Holden. Holden’s report also noted that users of mobile social networking sites will rise from a current 14 million to nearly half a billion by 2012.
At Fuego Nation, we believe that the promise of mobile social networking could exceed that currently enjoyed by market leaders MySpace and Facebook on the web which is why we designed a web-based product to seamlessly integrate with mobile devices from the outset. As a result, we feel optimally positioned to capitalize on usage trends currently seen on the web while preparing for the next wave of social networking generated by the global proliferation of web-enabled mobile devices.
