Thursday, August 09, 2007

Social Networking Promiscuity??

July 3, 2007

Websites betrayed by unfaithful users

A survey has revealed the 'promiscuity' of many members of social networking sites and raised doubts over surging valuations

Social networks are spawning a generation of internet tarts, research suggests: online consumers with little brand loyalty and no qualms about keeping several sites on the go at once.

Users of social networking sites such as MySpace and Facebook are "chronically unfaithful", a survey by Parks Associates, the analysts, has found. Half of users regularly use more than one site, most of which are free. One in six actively uses three or more.

This phenomenon of "network promiscuity" extends across web commerce. Analysts say that it is symptomatic of a new consumer scepticism over traditional branding.

Robert Jones, of Wolff Olins, the brand consultants, says: "Grand operatic brands no longer work. Think of the ultimate model 'old brand' – the Marlboro man, a myth selling you an item that slowly killed you. It just doesn't work online. As people become better informed, brands become less about emotion and more about functionality."

User infidelity in the social networking sector, made up of about 300 competing sites, is challenging once-accepted dot-com maxims, such as the importance of first-mover advantage and the strengths implicit in scale.

It also raises doubts over the surging valuations being attached to the sector's "superbrands", amid evidence that they will be forced to evolve constantly to retain young users determined to play the field.

Akready, warning signs have emerged: the latest figures from Nielsen//NetRatings showed that MySpace, the market leader, recently lost users in Britain.

The dip coincided with the news that News Corporation, the MySpace owner, had held early talks with Yahoo! over a possible sale of the network that could have valued MySpace at more than $10 billion (£5 billion). News Corp is the parent company of The Times.

The number of British visitors to MySpace dipped to 6.5 million in May, from 6.8 million in April. The fall, which comes as Facebook, its rival, experiences a huge surge in visitors, was the first to hit MySpace since it signed a deal with Google last summer, under which the social network stands to reap about $900 million in advertising revenues. It was only the second dip since News Corp bought MySpace for $580 million two years ago.

MySpace has achieved the traffic targets underpinning its deal with Google with ease, but, according to Nielsen, over the past six months Facebook's audience in the UK has grown at 19 times the rate of MySpace's, surging 523 per cent to 3.2 million.

Alex Burmaster, a Nielsen analyst, said: "MySpace is, by far, still the most popular social network. However, if last month's growth rates were to remain consistent . . . Facebook would catch MySpace in September."

The pattern was repeated in the United States, MySpace's largest market, where traffic to the site fell to 56.6 million in May, from 57 million a month earlier.

MySpace has pointed out that traffic figures from different research firms differ, but admits that it will have to evolve new content and tools to remain relevant. It also takes issue with the idea that switching between free sites involves no cost to users.

"MySpace users invest huge amounts of time building up their profiles as part of our community. That means they are massively loyal," a spokesman said.

Yet the Nielsen figures confirm that network promiscuity is a factor, showing that 444,000 Britons visited all three of the leading rivals – MySpace, Facebook and Bebo – in May.

Even the biggest internet brands – of which Google is the leader – may not be immune to the digital generation's lack of loyalty, analysts say. The eight-year-old search engine was judged to be the fourteenth-biggest global brand last year by Interbrand, the consultants. It was the biggest riser in a top 50 of which half are more than 50 years old.

Rita Clifton, the chairman of Interbrand, said: "The internet has allowed a brand-building process that would have once taken decades to be achieved in a fraction of that. There is a downside, of course: what goes up quickly can descend just as fast."

The dangers are illustrated by the fate of Friendster. The social network accrued more than 20 million users after its launch in 2003. Late last year that figure had fallen to less than one million as users migrated to sites with better music and video tools.

There are also suggestions that, while the internet makes the world a smaller, "flatter" place, personal online services do not suit traditional global branding campaigns.

Mr Jones said: "McDonald's can have the same golden arches in every city, but social networking is a very personal thing and is susceptible to cultural differences. Using one of these sites does not bear comparison with eating a hamburger." Already, Google has been forced to change its brand in China to "Gu Ge". Despite the switch, the search engine trails local rivals by a huge margin.

Orkut, the social networking site run by Google, has gained about 50 million users, but despite its massive popularity in Brazil, it remains little known in America and Britain.

Mindful of the hurdles facing them, sites are already making moves aimed at winning and locking in users. MySpace, which has been criticised for failing to innovate, sought to reinvigorate its user base last week when it announced the launch of a new video-sharing service. MySpaceTV will compete with YouTube, owned by Google. Last month Facebook launched a new platform that allows outside developers to create free and paid-for online services that can offered to users.

Park Associates says that the mercurial behaviour of social net-workers could open opportunities for new sites and developers who build software that links different networks. User infidelity need not spell the end for social networking superbrands, it suggests.

John Barrett, who led the group's research, said: "MySpace is a growing ecosystem and one that, ironically, now extends beyond MySpace itself."

Social services

MySpace 6.5 million UK users, up 28 per cent in six months. Average time spent on site by user in a month: 96 minutes

Bebo 4 million UK users, up 49 per cent in six months. Average time by user in a month: 152 minutes

Facebook 3.2 million UK users, up 523 per cent in six months. Average time by user in a month: 143 minutes Source: Nielsen//NetRatings

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