The Impact of social networking phenomenon on the business media communityAA212007-10-09T17:27:00Z2007-10-09T17:27:00Z1509529045A242683407211.8134The impact of social media and social networkingon the business information communitySteve Ennenvice president, digital media and business informationAmerican Business MediaJanuary 2006ContentsExecutive summary...3The reconfiguration of community & new world audience development...6Content and new ad models...8Expertise and content: Control is so 20th century...9Virtual business, real money...10The video promise and the ad dollar reality…11The future is in your hand…12Social network addresses…14Glossary…14Appendix 1 Demographics…15 Appendix 2 Second Life: Community Standards…17 Executive SummaryTens of millions of information users across the globe are tuning into the social networking/social media sites every day. This online social phenomenon offers both challenge and opportunity to business information companies: Users are investing more time, attention, and money into new information hubs - many of which did not exist a year ago – thus drawing time, attention and money away from more traditional information platforms. Yet, the opportunity exists for business information companies to entice new audiences, to capitalize on new habits, increase engagement, establish themselves as multi-platform communities and generate new revenues.The ubiquity of broadband, the dropping costs of computers, handheld devices, digital cameras and video recorders, drive widespread participation in consumer-generated content sites, social networking/media sites, mash-ups, blogs, video, music and photo-sharing sites communities. In December 2006, eMarketer noted that one in two American households are broadband-enabled. A September 2006 study released by Hitwise noted, to much fanfare, that one in every 20 Internet visits went to one of the top 20 social networks, a near doubling of that access over the previous year. One of the most renowned of these sites, MySpace, increased its market share, measured by visits, by 129% in one year - 51% in the six months prior to September 2006 - and boasts more than 140 million users at this writing. The video sharing site, YouTube, enjoyed a rise in its market share of visits by 249%, and, as well chronicled, was absorbed by Google for $1.65 billion. Linkedin, the social networking site for the professional set, will likely generate 2007 revenues, as reported by MarketWatch, of $45 million to $60 million and has been valued as high as $250 million. Most of the revenue generated by these communities is still advertising based, but more creative revenue means are appearing every day. Overall, advertisers are expected to pump in more than $900 million into social networking sites in 2007.Despite the fact that few digital communities make the front pages, users tend to belong to more than one online network and hundreds of these networks are populated weekly. Interest categories are as varied as the users: HYPERLINK "http://www.ittoolbox.com" ITToolbox, a professional network for those in the information technology field, boasts more than 200,000 users who have contributed more than one million pieces of content shared in a peer review format. The site also offers personal profiles of its members. GlobalSpec, an online community for engineers, has more than three million users in its engineering, manufacturing and related technical market space. The company says it adds 80,000 new registered users each month. Even communities with limited mainstream media exposure have captured the attention of millions of users. Xanga, a network originating for those of Chinese decent that has blossomed into a cross-cultural community, has more than seven million participants; Blackplanet, more than six million, and Daily Motion, the French competitor to YouTube, is boasting 16 million pages views a month. This flurry of activity has also spurred more than a hundred companies out to measure this engagement the same way Nielsen measures television (though Nielsen continues its efforts in the online world).Online communities represent a cross mingling of purpose, drawing together occupation, leisure and passion. This creates a greater degree of “engagement” for a social networking community than, say, a business media Web site, because the digital infrastructure facilitates participation from members of the community. Second Life, for example, is a three-dimensional, online community in which participants can create their own “avatars” or representative online personalities. Users select the avatar’s wardrobe, hairstyle, and interact with the community in scores of ways. The tool is so versatile that, as reported in the November 13, 2006 edition of the Wall Street Journal, major firms are using this site as a communication platform and training area for their employees. Second Life has more than one million “citizens” and has developed community guidelines for behavior (see appendix 1). The list of popular, interactive communities grows exponentially each week. The money is bigger too.Major corporations fuel new entrants to digital networking, like the Korean-based Cyworld seeded with investment millions by telecom giant SK Telecom; and the billion-dollar buyouts buyout of some of the better-known communities has become M&A lore and lure for hundreds of start-ups. Global conglomerates are flocking to sites like Second Life and YouTube to enhance their investment portfolio, advertising reach and even to train employees. The audience numbers generated by this social networking movement renders the traditional media concept of “circulation” anachronistic and challenges the reliance on traditional media brands as the source of expert information. Users themselves become involved in the audience development and user investment enhances engagement via digital links and complementary communities across the globe. Clear examples of this are plentiful the consumer title space, where print titles aimed at younger audiences used celebrity images to move the publications from newsstands. These brands have moved online and adopted many of the traits of popular social networking sites. Hearst Corp. has launched mypromshopper.com, a user-feedback site for prom dresses. ELLEgirl.com was relaunched in October 2006 with Web video and a community (chat) section. Flip.com, from CondeNet, has drawn participation from Johnson & Johnson as a sponsor user-generated content. Pair the adoption of these youth-oriented sites with MySpace, YouTube, the growing popularity of business sites like ITToolbox and the eight million professionals belonging to Linkedin, and one can easily see that hundreds of millions will be spending their time and money online.From an advertising standpoint, the movement represents a great opportunity for business information brands. While advertisers accustomed to traditional business information brands may not (or may) want to advertise on the more social of these sites, inter-linking, referencing and passion-fueled participation can drive traffic to business sites that will blow away audience numbers generated by traditional circulation models. One popular video, linked from site to site, can generate hundreds of thousands of views. It is important to remember that these sites not only generate high numbers of participants, but also supplement those numbers with online behavior metrics that are extremely valuable to advertisers targeting specific audiences. In effect, online communities offer high-volume traffic and, at the same time, pinpoint audience profiles and behaviors that create a smorgasbord of tantalizing metrics for the advertisers. As Newsweek claimed in November 2006, and as more and more business information firms discover, “data equals dollars.” It is vital that business information sites find ways to tap into these tools in ways that best suit their business models or they will lose audience and dollars to other online destinations.The reconfiguration of community & new world audience developmentFor more than a century, business media brands have offered a sense of community to its users. Born of common industry, interests, specialties, and passions, business media has long been the meeting place and the fount of expert knowledge aggregated across multiple platforms: in print, in person, and online. Those in the media profession have built their brands on service to these special interests, or “niche” mentality: the more specialized the information, the more valuable the business information and the more unique the sales proposition. Those invested in the community, intellectually and financially, gravitate to the brands that serve them.That dominion is challenged and will face new challenges in the future as the online world creates a greater number of niche meeting places, and the reach of the Internet creates access and enticement to an audience on a true global scale. The access is enhanced by search: broad, vertical, contextual, enterprise, semantic or communal. The ability and ease to find and access - from one’s home, office, laptop or handheld device - common areas of interest and peers that share common values has changed the ways we communicate. As search becomes more sophisticated, and as search revenue increases (Google’s AdSense revenues were up 54%, to $1 billion in 2006), the potential to link revenue to the actual search for like communities becomes a more plausible revenue stream for business information firms.In addition to the professional community sites like ITToolbox, “general” sites like Cyworld offer as many as 2,500 “clubs” or interest niches, diluting further the attention factor across multiple Web communities, but offering pointed marketing and investment opportunities. This certainly has a dramatic impact on audience development. Whereas business information brands have often been able to sell around their “qualified” audience, the advent of the online communities have given rise to new audience development techniques and a higher expectation on the part of advertisers for metrics that prove out claims of participation.As Magid Abraham, CEO of comScore, an online measurement company, told Newsweek in November 2006 “What is very significant is the value of the audience: what do they do online, what purchases do they make,” For the business information community, the “qualifying” of an audience can be enhanced exponentially; these sites enable a global, digital reach and touches an audience well beyond those generated by traditional circulation development means. It also offers opportunities to gather greater amounts of information tan were possible just a few years ago. Online behavior, content engagement, purchase habits, or favorite sports teams are all metrics offered up voluntarily by users. However, if an online community wants to collect volunteered information, it is best to offer some sort of premium in return: privileged information, a special-interest club, discounted offers, etc.Content and new ad modelsThis movement is also revolutionizing the way content is generated, vetted, and disseminated. Because of the high volume of participants invested in the topics, information posted on social networking sites is shared and validated by those close to the topics; it creates a phenomenon of consensus where discussion generates agreement and every skeptic can be heard. Those who have the opportunity to contribute to, and become a part of, the structure of a social networking site tend to spend more time there. This creates greater engagement by the users and powers the content via intellectual investment. In essence, the community, not the brand, as in the business information model, sanctions content. Perhaps more important than the sheer scale of the global adoption, is the fact that citizens of online communities are spending more time online than ever before. Business media brands, once locked in a battle for share-of-market are now in a de facto battle for attention. With users of social network sites spending up to an hour per session, (that is per session, not per day; many online citizens enjoy multiple sessions on at least two sites in a day) the time allocated for traditional Web sites, such as business media sites, is challenged if not eroded. This disparity is clearly illustrated by the fact that users of general business Web sites currently spend about 10 minutes per session. Yet, no matter what the medium, there is a finite amount of time a “user” has to dedicate to a media product. Thus, key performance indicators (KPIs) focus more on engagement, “share-of-time” or “share-of-attention” as they relate to the relationship with that site and advertisers are looking to these KPIs for their return on investment. Advertisers wishing to pinpoint aficionados in any area of enthusiasm or practice are flocking to these sites because of this engagement, and, though few, if any standards exist, are exploring ad models and ad pricing on these sites. The theory is, of course, the same model as that of traditional business media: those of similar needs and interests – a professional community - are prime targets for advertising messages; the brands must deliver these specialized audiences. Advertisers playing in the business information arena still want to reach key players in their own communities. This presents a key opportunity for business information brands to adopt the successful principals of the social networking and entice advertisers to participate in traditional and non-traditional ways. By developing stronger engagement and online community, advertisers can become part of that community (not unlike the way print drives such association) and the business information brands can prove ROI via analytics that are unique to that community. One caveat remains: advertisers wishing to be part of the online dialogue must still be clearly identified as advertisers. Attempting to infiltrate a community under the guise of participant has backfired on many an advertiser. Expertise and content: Control is so 20th centuryFor the last century, a driving force behind business media brands has been its expert content and the expertise of editorial staffs and contributors. Now, information consumers of all interests access their information from myriad sources. Web sites abound, but those invested in online networking communities tend to trust the information disseminated across those platforms in which they are invested. In many ways this reflects the peer review methodology standardized by medical and high-tech journals.In what is called the “network effect,” the more people that use a Web site by adding profiles and content, the more valuable it becomes by its users. Users tend to be frank and are more trusted when they are active in one of these networks. Consumer Package Goods (CPG) companies have been trying to capitalize on the activity generated by blogs and social networking sites by hiring - to use a 1950s term - “beards” to pen positive comments and reviews about their products. These are usually exposed and the attempt backfires into a PR gaffe and the site citizens regain control of the message. Social networking sites have their own mechanisms to sniff out deceit and in that, they enhance the site’s (and its users’) credibility. This may pose one of the greatest challenges facing business media: that of positioning their expert commentary and analysis above the din of online enthusiasts. If the dialogue, or any conversation encroaches upon the expertise of a business information company, then, the latter could become superfluous.“These social networking sites offer more than insight and information, they offer engagement: the opportunity to be a part of the conversation in topics that interest them.”It also offers a great opportunity for respected brands and the editors that drive those brands and it is the prime reason why business media must be “wired in” to the social communities that involve, or even border, their special interest areas. For example: The food community is an impassioned bunch. Food industry brands have been a great resource for flavor trends, recipes, HAACP best practices, etc. But with the arrival of sites like Epicurious and other foodie sites, the business information brands have a hard time drawing attention to themselves. Enter the online community opportunity: position the expertise garnered from years of recognized success and business information brands have way to insert themselves into the online dialogue and establish the strength of the brand across that social network. This changes the complexion of the printed brand dramatically.The days of waiting for a letter to the editor are over. Blogs link to networking sites and the dialogue runs on its own impetus. Better still, opinions can come from a cell phone user riding a bus with the click of a few buttons and can be posted online, sans editing, in the blink of an eye.The movement is so strong that in November 2006 Reuters invested in Pluck, a bog syndication engine.Virtual business, real moneyThe HitWise study reported that upstream traffic from MySpace to the Telecommunications, Shopping & Classified, Banks & Financial Institutions and Travel categories, increased by 70% from March 2006 to September 2006. This is a meteoric rise. For business media it offers a proven model that communities drive purchase decisions. That model, of course, has been a staple of the business media community, but the danger of being circumvented or, simply, ignored by the community factor is one that media brands must examine. Because these communities are blurring boundaries between older business-to-business information routes, advertisers investing in traditional business information brands may find them less important if they receive attention from other routes. Many times, that attention is simply the buzz generated by the “conversations” taking place on these sites. Advertisers are constantly looking for creative ways to insert their brands into this online conversation.Not unlike any suite of business information products, the “space” ad models are not the only way to generate revenue in online communities and the more novel the community, the more novel the revenue models. As reported in BusinessWeek, December 18, thousands of people make at least $20,000 per year selling virtual clothing, housing, shopping malls, etc. on Second Life. Businesses are also rushing to invest themselves in the phenomenon. Starwood Hotels & Resorts has built a hotel inside Second Life to promote its brands, IBM is involved in the community, Reuters has a reporter “based” there, and corporate involvement continues to grow. As BusinessWeek states, “The businesses not only hope to reach new audiences but also engage them more fully in their brands than they can in the first world, where traditional advertising seems to have diminishing returns.”The revenue models are shifting to the point that it is no longer enough to have a brand presence on these sites, but by partnering and cross-promotion, brands can now be part of the community infrastructure itself. South Korean-based Cyworld, making its move in the U.S. to challenge MySpace, derives 80% of its Korean revenue from deals with mobile phone operators and e-commerce, as reported by the Financial Times.Linkedin has three revenue streams today -- sponsorships, subscriptions to search and contact Linkedin's membership base, and job listings. About 45% of the revenue comes from subscriptions, according to experts. “Corporations, such as Microsoft and Salesforce, pay between $10,000 and $100,000 annually to let their internal recruiting staff use Linkedin's database for potential hires,” reported MarketWatch on December 21, 2006.The video promise and the ad dollar realityOf course one of the driving forces behind the social networking movement is the integration of video into the mix. User-generated videos gave YouTube its start, but more and more TV, music, business, and film industries are migrating their videos to social networks and the ad dollars are following. As MediaPost noted in November 2006, an annual American Advertising Federation HYPERLINK "http://www.aaf.org/news/press20061114_01.html" survey of leading ad execs found that advertisers are beginning to shift amounts that were originally allocated to TV advertising to online video instead. Most leading ad executives expect a significant portion of broadcast and cable TV ad dollars to shift to online video by 2010, with 33% predicting that switch will be between 10% and 19%. In addition, 2007 budgets for online advertising are expected to rise by an average of 42% over 2006. As to the challenge of integrating traditional with online media, broadcast TV is seen as offering the "most innovative" integration with online media, while magazines are seen as "most effective" for driving consumers online. iMedia Connection reports more than half (53%) of the ad execs surveyed said they expect at least 20 percent of their broadcast and cable TV ad budgets will move to online video by 2010, writes MediaPost. Some 33% of predict that 10% to 19% of their TV budget would move to online video.Budgets for online advertising in 2007 are expected to increase by 42% over 2006 amounts; over 23% of total 2007 ad budgets are expected to move to digital, up from 16% this year. Magazines are seen (by 26% of respondents) as "most effective" for driving consumers online. One enabler of this phenomenon is the willingness of code writers and program developers to share their work free of chargeThe future is in your handAny business information company with a desire to grow must examine its future users/participants. America graying as the Baby Boomers grow into retirement, those who take their pace will acculturate into a technologically advanced world that few today could have envisioned. The driving force behind tomorrow’s information technology won’t be ubiquity it will be familiarity. Every youthful user of new information/communication tools will have adopted, as de rigueur, handheld devices and the online tools older adults still grapple with. According to the recent "Mobile Social Communities" report from ABI Research, the social networking phenomenon will soon move to mobile phones. The report states that "mobile social communities" currently number almost 50 million members worldwide, and that number is projected to rise to 174 million in 2011.The Internet and mobile phones are changing the way ‘teens and teens define friendship and interact with their peers, according to a new study by Harris Interactive and Alloy Media & Marketing.The study, conducted in August 2006, found that for teenagers ages 13 to 18, e-mailing and instant messaging are "as common a way to spend time with friends as speaking to them on the phone."As Padmasree Warrior, Motorola Chief of Technology said in the November issue of Fortune, “The Internet is still in phase two. Phase three will be about making it pervasive, where everybody in the world has access to it. To do that it is going to require a different type of device. At Motorola, we call it the device formerly known as a cell phone.”Social Networks BlackplanetCyworldNing – Netscape-backed do-it-yourself web sitesVox – news services targeting older AmericansEsnips – lets users create “microportals” to share media platforms of special interestsDogster – dog owners and enthusiastsITToolbox business community for the IT setGlobalSpec – one of the earliest business-based online communities serving engineersMySpaceYouTubeXangaGlossarySearchVertical (domain-specific) SearchBroadSemanticEnterpriseAppendix 1Demographics Users of MySpace.com and Friendster.com generally skew older, with people age 25 and older constituting 68 and 71 percent of their user bases, respectively, according to comScore. Facebook.com, which began as a site for college students, has a younger user base: 34 percent of Facebook users are 18-24 years old, approximately three times the representation of that age segment in the general internet population. Xanga.com has a younger user profile, with 20 percent of its users age 12-17, about twice as high as that segment's representation in the total Internet audience."There is a misconception that social networking is the exclusive domain of teenagers, but this analysis confirms that the appeal of social networking sites is far broader," Jack Flanagan, EVP of comScore Media Metrix, said.As MySpace.com has undergone dramatic visitor growth, it has become more popular among older users. The most significant shift has occurred among teens 12-17, who accounted for 24.7% of the MySpace audience in August 2005 but today represent 11.9% of the site's total audience. Internet users between the ages of 35-54 now account for 40.6 percent of the MySpace visitor base - 8.2 percentage points more than than last year.-------------Netpop|Portraits, a new research report on the U.S. broadband population from strategic market research firm Media-Screen, slices and dices users into five distinct segments (via ClickZ):1. The Content King: Content Kings value entertainment, creating their own entertainment experiences from both established and user generated content sources. Some 76 percent regularly play games online; 75 percent visit websites for personal reasons, spending more than 2.5 hours on a typical weekday.2. The Social Clicker: Social Clickers particularly value communications. The group relies on the Internet to maintain relationships with friends and family, as well as to seek out new ones. Some 78 percent contribute to Internet content or information in a typical month; they spend 57 percent of their time going online for communications.3. The Online Insider: Online Insiders value every aspect of the web with equal enthusiasm and see the Internet as a rich personal and cultural phenomenon. This group tends to be early adopters. Some 86 percent contribute to Internet content or information.4. The Fast Tracker: Fast Trackers particularly value news and information, including news, sports and weather. This segment is particularly loyal to sources that provide frequent updates and real-time information: 77 percent regularly read news online.5. The Everyday Pro: Everyday Pros value personal productivity and incorporate the efficiency of the Internet into executing their daily tasks: 84 percent regularly bank online; 68 percent regularly shop online.Turns out that a campaign focused around MySpace, YouTube and Second Life wouldn't be the universal panacea for online marketers. The challenge, as ever, with segmentation studies: having identified the segments, how can they be reached in meaningful, measurable ways?Appendix 2Second Life: Community Standards================================The goals of the Community Standards are simple: treat each other with respect and without harassment, adhere to local standards as indicated by simulator ratings, and refrain from any hate activity which slurs a real-world individual or real-world community.Behavioral Guidelines - The "Big Six"=====================================Within Second Life, we want to support Residents in shaping their specific experiences and making their own choices. The Community Standards sets out six behaviors, the "Big Six” that will result in suspension or, with repeated violations, expulsion from the Second Life Community. All Second Life Community Standards apply to all areas of Second Life, the Second Life Forums, and the Second Life Website.Intolerance-----------Combating intolerance is a cornerstone of Second Life's Community Standards. Actions that marginalize, belittle, or defame individuals or groups inhibit the satisfying exchange of ideas and diminish the Second Life community as whole. The use of derogatory or demeaning language or images in reference to another Resident's race, ethnicity, gender, religion, or sexual preference is never allowed in Second Life.Harassment----------Given the myriad capabilities of Second Life, harassment can take many forms. Communicating or behaving in a manner that is offensively coarse, intimidating or threatening, constitutes unwelcome sexual advances or requests for sexual favors, or is otherwise likely to cause annoyance or alarm is Harassment.Assault-------Most areas in Second Life are identified as Safe. Assault in Second Life means: shooting, pushing, or shoving another Resident in a Safe Area (see Global Standards below); creating or using scripted objects which singularly or persistently target another Resident in a manner which prevents their enjoyment of Second Life.Disclosure----------Residents are entitled to a reasonable level of privacy with regard to their Second Lives. Sharing personal information about a fellow Resident --including gender, religion, age, marital status, race, sexual preference, and real-world location beyond what is provided by the Resident in the First Life page of their Resident profile is a violation of that Resident's privacy. Remotely monitoring conversations, posting conversation logs, or sharing conversation logs without consent are all prohibited in Second Life and on the Second Life Forums.Indecency---------Second Life is an adult community, but Mature material is not necessarily appropriate in all areas (see Global Standards below). Content, communication, or behavior which involves intense strong language or expletives, nudity or sexual content, the depiction of sex or strong violence, or anything else broadly offensive must be contained within private land in areas rated Mature (M). Names of Residents, objects, places and groups are broadly viewable in Second Life directories and on the Second Life website, and must adhere to PG guidelines.Disturbing the Peace--------------------Every Resident has a right to live their Second Life. Disrupting scheduled events, repeated transmission of undesired advertising content, the use of repetitive sounds, following or self-spawning items, or other objects that intentionally slow server performance or inhibit another Resident's ability to enjoy Second Life are examples of Disturbing the Peace.Policies and Policing=====================Global Standards, Local Ratings-------------------------------All areas of Second Life, including the www.secondlife.com website and the Second Life Forums, adhere to the same Community Standards. Locations within Second Life are noted as Safe or Unsafe and rated Mature (M) or non-Mature (PG), and behavior must conform to the local ratings. Any unrated area of Second Life or the Second Life website should be considered non-Mature (PG).Warning, Suspension, Banishment-------------------------------Second Life is a complex society, and it can take some time for new Residents to gain a full understanding of local customs and mores. Generally, violations of the Community Standards will first result in a Warning, followed by Suspension and eventual Banishment from Second Life. In-World Representatives, called Liaisons, may occasionally address disciplinary problems with a temporary removal from Second Life.Global Attacks------------Objects, scripts, or actions that broadly interfere with or disrupts the Second Life community, the Second Life servers or other systems related to Second Life will not be tolerated in any form. We will hold you responsible for any actions you take, or that are taken by objects or scripts that belong to you. Sandboxes are available for testing objects and scripts that have components that may be unmanageable or whose behavior you may not be able to predict. If you chose to use a script that substantially disrupts the operation of Second Life, disciplinary actions will result in a minimum two-week suspension, the possible loss of in-world inventory, and a review of your account for probable expulsion from Second Life.Alternate Accounts------------------While Residents may choose to play Second Life with more than one account, specifically or consistently using an alternate account to harass other Residents or violate the Community Standards is not acceptable. Alternate accounts are generally treated as separate from a Resident's principal account, but misuse of alternate accounts can and will result in disciplinary action on the principal account.Buyer Beware------------Linden Lab does not exercise editorial control over the content of Second Life, and will make no specific efforts to review the textures, objects, sounds or other content created within Second Life. Additionally, Linden Lab does not certify or endorse the operation of in-world games, vending machines, or retail locations; refunds must be requested from the owners of these objects.Reporting Abuse---------------Residents should report violations of the Community Standards using the Abuse Reporter tool located under the Help menu in the in-world tool bar. Every Abuse Report is individually investigated, and the identity of the reporter is kept strictly confidential. If you need immediate assistance, in-world Liaisons may be available to help. Look for Residents with the last name Linden.PAGE PAGE 2