Social Networking

Social Networking
Facebook has long been the UK’s most popular social networking site and now has over 19 million active users.
In May of this year, Facebook finally overtook MySpace to become the most popular US social networking site, according to comScore. Facebook recorded 70,278,000 unique visitors, up 97% from May 2008 to May 2009.
Nielsen Online found UK mobile web users have the greatest propensity to visit a social network through their handset, with 23% or two million people doing so, compared to 19% in the US (10.6 million people).
eMarketer estimates that marketers will spend $2.1 billion to advertise on social networks worldwide in 2009, a 17% increase over 2008.
Worldwide social network spending is expected to increase next year, rising by an estimated 18% to $2.6 billion. 2011 will see an additional 12% increase, to $2.9 billion.
Highlights
Social Networking
Social Networking
The concept of social networking is nothing new, it has been around for tens of thousands of years. According to Microsoft Advertising, social networking is what we humans do all the time, while social media is merely the means through which we do it.
Microsoft Advertising’s recent research shows that ‘communication’ has overtaken ‘information’ as our primary use of the web. The internet allows people to stay connected with friends, family, and a larger community of interests through email, Instant Messenger, social networking sites, blogging, and sharing pictures/videos. A commentator at Microsoft suggested: “Not surprisingly, humans have continued to adapt new technology channels for their timeless need to communicate and share.”
Current Market
Social Networks continue to dominate online activity and usage across the globe and this is no more evident than here in the UK. A recent report from comScore reveals that of the 36.9 million UK internet users in May 2009, 29.4 million visited at least one social networking website.
It is clear that social networking has now become very much a mainstream activity for UK internet users of all ages. In fact, 80% of all the UK’s online population visited a social networking site in May 2009, a 9% growth across the board in a year. The highest level of penetration was with the age group of 25-34 year olds, of which 90% visted a social networking site over the month period.
Interestingly, this was higher than in the 15-24 year old range – the demographic usually presumed to have the highest user figures. Of this group, 86% of internet users visited a social networking website.
Although usage amongst older age ranges is much lower than in 15-34 year olds, penetration is still very high – reaching over three quarters of people aged 35-54 and over two thirds of the UK online population aged over 55. When put into perspective this is extremely impressive particularly in comparison with other website categories visited by this demographic such as business & finance (63%), technology (62%t) or travel (52%).
User engagement was also greater amongst the younger age groups, with monthly usage averaging 5.4 hours for 15 – 34 year olds. This was much lower than in the over 55 age range whom spent an average of 3.7 hours per month on social networking websites. Overall, the average UK internet user spent 4.6 hours on Social Networking sites over the one month period.
Facebook has long been the UK’s most popular social networking site and now has over 19 million active users. In May 2009 alone Facebook.com received 23.9 million visitors in the UK (see Table 1). Other popular social networking sites, however, continued to struggle to keep up with Facebook – Bebo followed as the second most visited UK social network (8.5 million visitors), followed by Windows Live Profile (6.9 million visitors) and MySpace Sites (6.5 million visitors). Despite Twitter having grown more than 3000% over the preceding
Social Networking
12 months the sites visitor numbers only reached 2.7 million in May 2009.
In the US, there was bad news for MySpace when Facebook finally overtook it in May of this year to become the most popular US social networking site (see Table 2). According to comScore, Facebook recorded 70,278,000 unique visitors, up 97% from May 2008 to May 2009. MySpace’s audience shrank by 5% over the same period, falling to 70,255,000 unique visitors.
While Twitter has clearly seen exponential growth in the 12 months to May, it is interesting that the 5th and 6th biggest social networking sites in the US are MyLife.com and Windows Live Profile. Also, Bebo (an AOL purchase) is slowly making inroads into the US market and it is expected to continue growing market share.
However, one area that MySpace continues to dominate Facebook is in advertising, not withstanding the recent layoffs at MySpace. In April, MySpace visitors viewed 31.8 million ads, accounting for almost 47% of the total social network advertising space. Facebook followed, serving nearly 25 million ads and making up around 37% of the sector. In third place, perhaps surprisingly, was Tagged, which served 2.4 million ads, or 3.6% of publisher views (see Table 3).
MySpace is doing a good job converting those ad impressions into revenue as they are predicted to earn $495 million in 2009, more than double Facebook’s projected income.
eMarketer expects that the revenue gap will likely close in 2009-2010. MySpace entered into an advertising agreement with Google in 2006 that would pay the social network roughly $300 million a year, ending in June 2010. But TechCrunch reported that a new deal between Google and MySpace would be worth only $50 million to $75 million yearly, punching a big hole in the social network’s revenues.
“Facebook is becoming the go-to social networking site for marketers,” said eMarketer senior analyst Debra Aho Williamson. “While MySpace still has a huge quantity of visitors, they are becoming less relevant for advertisers.”
Social Networking
Social networkers utilise popular websites such as MySpace, Facebook, Twitter and LinkedIn in different ways depending on their age.
According to Anderson Analytics, Generation Z (13-14 year olds) social network users are more likely to use MySpace than Facebook. Only 9% of them used Twitter and none used LinkedIn.
However, Generation Y shows a different picture with three-quarters of 15-29-year-olds using MySpace, 65% using Facebook, 14% using Twitter and 9% using LinkedIn.
Generation X, 30-44-year-olds, and Baby Boomers (44-65-year-olds), connect on LinkedIn more than any other demographic.
Nine in 10 older social network users, which Anderson Analytics calls the WWII generation, use Facebook, and 17% tweet.
When it comes to why social networkers join a particular social network, however, the reasons are similar from generation to generation.
Sizable percentages of every age group want to keep in touch with friends, have fun or stay in contact with family, or have been invited by someone they know. The youngest users are the most likely to be interested in fun and friends, while family contact appeals more to older social networkers.
Very few users of any age join for business-related purposes such as recruiting potential candidates, sales, job searches or business networking.
Social Networking
Due to the difference in age of the users, the interests of users are naturally different,” write the authors of the report.
“LinkedIn users are more interested in luxury activities, Twitter users are more interested in pop culture and MySpace users are more interested in humor/comedy and video games.”
Mobile Social Networks
Mobile is playing an increasingly important role in social networking. Nielsen Online found UK mobile web users have the greatest propensity to visit a social network through their handset, with 23% or two million people doing so, compared to 19% in the US (10.6 million people). These figures are a significant increase over 2008 – up 249% in the UK and 156% in the US.
Strategy Analytics data shows that mobile social networking facilitated $4.4bn revenues in 2008, which is predicted to rise to $17.1billion in 2013. Revenues facilitated by social networks’ mobile activities include those generated by browsing and messaging (which is largely kept by mobile operators) and music sales (largely kept by the music industry).
Growth in users and usage has been significant, the “always on” nature of mobile access complimenting the constantly changing nature of social networks. Strategy Analytics data indicates that by 2013, social networks will account for over 20% of all browsing on mobile devices.
According to a recent forecast from eMarketer, the number of mobile users accessing social networks from their mobile devices will reach 607.5 million worldwide by 2013, representing 43% of global mobile internet users. In the US, mobile social networkers will total 56.2 million by 2013, accounting for 45% of the mobile internet user population.
Noah Elkin, eMarketer senior analyst and author of the report, said: “Combining two much-hyped but still-emerging channels – mobile and social – results in a developing opportunity for marketers.”
Social Networking
eMarketer also found that location-based networks have not yet reached critical mass, but are worth keeping an eye on as they work to link people, places and interests.
Elkin added: “Location-aware branded applications and utilities that include a social component provide advertisers
an avenue for marketers to engage their audience directly.”
Social Networks: Advertising Tool
The leading social networks, MySpace and Facebook, are now targeting ads based on members’ interests, in a new twist on word-of-mouth marketing, and this advertising technique is expected to evolve and be joined by several other methods soon.
Facebook is attempting to capitalise on its current popularity with its advertising system, Facebook Ads, which the site claims is the “most effective marketing ever seen”, according to the company’s former chief revenue officer, Owen Van Natta.
Through Facebook Ads, brands and advertisers can create their own profile, as well as place ads into users’ ‘feeds’. Businesses are also able to build custom-designed pages on the site, which include photos, videos, music and applications, such as a booking system or ticket purchasing. Users can then become “fans” of brands and advertisers, acting like a “trusted referral”.
According to new study by eMarketer, Facebook is the social networking website of choice for marketers. The report, dubbed Social Commerce on Facebook, Twitter and Retail Sites, indicates that 57% of companies in the Internet Retailer Top 500 Guide have a presence on the portal.
Meanwhile, nearly 75% of these firms utilise at least one of the major social networking sites or social shopping sites to advertise or make their brand known. Interactive features providing brands with the chance to communicate directly with fans are one of the reasons why Facebook is so popular with marketers, eMarketer states.
Jeffrey Grau, ecommerce senior analyst at eMarketer and author of the report, said: “Retailers need to place their virtual storefronts where their customers congregate.” Ecommerce is moving from “a transactional experience to a social one”, he added.
Debra Aho Williamson, senior analyst at the company and author of the report Social Network Ad Spending: A Brighter Outlook Next Year, said that more organisations will start focusing on implementing overall social marketing strategies.
Social Networking
Social Network Advertising Revenue
Advertisers have more than doubled the amount of money they’re spending on social networking web sites since last year, according to a new analysis from market researcher the Nielsen Company. Around $108 million was spent by advertisers on social sites like Facebook and MySpace in August 2009, up 119% year on year. Nielsen estimates that social networking sites now account for 15% of all online ad spending.
This surge in spending found a corollary in Nielsen’s analysis of people’s media habits. In August, Nielsen found that social networking and blogging sites accounted for 17% of the total time Americans spent online, up from 6% last year.
“This growth suggests a wholesale change in the way the Internet is used,” Nielsen Vice President Jon Gibs said in a statement.
Advertisers have historically been hesitant to funnel dollars to those sites which are dominated by user-generated content and which don’t always guarantee an optimal setting for marketing placements.
Nevertheless, an axiom about the ad business mandates that advertisers follow their audience, and Gibs said the new figures could signify a fundamental shift in the way marketers are regarding social sites.
“In the past, advertisers had significant concerns with social media advertising,” he said. “The considerable increases we’ve seen in ad spending over the past year suggest that many of these concerns have subsided or been addressed.”
Gibs said that advertisers are increasingly seeing that Facebook and MySpace offer compelling opportunities to seed their messages across a highly engaged community.
The surge in social media spending comes amid a sour economic climate that has sapped advertising budgets. But social media appears to be bucking the trend, recording across-the-board increases in all categories, including a staggering 812% increase year-over-year in spending within the entertainment category.
Nielsen’s analysis found that Facebook was the preeminent destination for advertisers on the social web, commanding the most placements in all but three categories the company analysed. Rival social hub MySpace followed in second, although beat Facebook in the entertainment, financial services and hardware and electronics sectors.
According to eMarketer, however, social network ad spending is taking a hit from the worldwide economic crisis and the ongoing challenge to develop effective advertising models remains. Even so, eMarketer estimates that marketers will spend $2.1 billion to advertise on social networks worldwide in 2009, a 17% increase over 2008.
The Social Networking Worldwide report analyses the struggle to build revenues for a channel that—despite overwhelming consumer acceptance—many marketers still view as “experimental.”
Though a double-digit ad spending increase during a recession sounds good, the reality is that it is half the growth rate eMarketer previously projected. In fact, growth in spending on social network advertising is slowing around the world, a result of poor economic conditions and a lack of proven ad models.
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Social Networking
Advertising Revenue Forecasts
Growth in social network advertising spending worldwide will take a hit in 2009, but not as severely as in the US, according to eMarketer’s latest projections.
The forecaster projects 9% growth in worldwide spending in 2009, to $2.2 billion. That is down from the 17% growth eMarketer forecast in March 2009. The good news is that worldwide social network spending is expected to shoot up again next year, rising by an estimated 18% to $2.6 billion. 2011 will see an additional 12% increase, to $2.9 billion (see Figure 1).
Changes in the US market are the primary reason for the forecast revision and eMarketer now estimates that US social network spending will slide 3% this year, as marketers continue to cut back on ad spending during the recession and MySpace, once the leading social network in the US, loses traction.
In fact, non-US social network advertising spending is forecast to grow 27% in 2009 (see Table 6). The US has led the way in the development of social networks, but entrants in Europe and Asia are ramping up. In addition, US-based social networks will see an increasing portion of their revenues from international operations.
Strong social networks outside the US include mixi in Japan, Cyworld in South Korea, VKontakte in Russia and QQ in China.
Worldwide ad spending on MySpace is expected to fall 14% in 2009, to $520 million. Facebook spending is projected to rise 20% worldwide, to $300 million.
Together, Facebook and MySpace will account for 64% of US social network advertising spend in 2009 but just 38% of worldwide spending.
Social Networking
Social Network Advertising – The Issues
Taking a step toward creating more formal standards, the US Interactive Advertising Bureau have recently released a set of best practices for social media advertising covering key terms, creative elements, and user privacy, among other topics.
The guidelines unveiled at the IAB’s Social Media Marketplace conference in New York are intended to encourage the growth of social advertising by giving marketers, agencies and social networks preliminary rules to navigate a category that now spans hundreds of millions of users.
“Industry standards are essential to making social media easy, safe and scalable for advertisers,” said Seth Goldstein, CEO of Socialmedia.com and co-chair of the IAB’s UGC Social Media Committee, in a statement. “The new IAB framework is a critical first step in this direction and we are excited to help enable the next generation of social advertising.”
While marketers have been eager to experiment with social media, a lack of standard ad formats and metrics and privacy concerns remain obstacles to more rapid advertising growth on social sites.
Establishing a common language around social media is one of the main objectives of the new IAB guidelines. To that end, it defines terms such as social ad, social graph, interaction data and profile data. The IAB had previously released a set of ad metrics definitions for social media.
Much of the new document also focused on providing privacy policies and guidelines in connection with the use of consumer information in social ads.
It recommends opt-in and opt-out policies for the use of profile data in ads as well as calling on advertisers to allow people to preview and approve ads featuring their likeness and information before they run. Consumers should also be able to select which group of friends will see the ad, or opt-in to having the ad served to their entire network, according to the IAB.