Learning to love being out of control
The explosion of social networking online has marketers around the world terrified about the loss of control over brand messages. Simon van Wyk looks at how some of them are coping.
User-generated content sites dominate the top 10 fastest growing Web brands, according to the latest statistics from Nielsen/NetRatings. MySpace, whose brand has grown 183% in 12 months, was the fastest growing site on the list in terms of users, moving from 16.2 million unique visitors in July 2005 to 46.0 million in July 2006 – ahead of Internet giants Google and eBay, respectively.
Other user-generated sites making it into the top 10 were ImageShack (an image-hosting site), Heavy.com (a video-sharing site), Flickr (a photo-sharing site) and Wikipedia (the user-developed encyclopaedia).
The rise and rise of MySpace
MySpace continues to be the user-generated, social networking website on everyone’s lips. Ever since it hit the mainstream radar last year when News Ltd plonked down US$480 million for the site, it has created an increasing amount of hype – and followed it up with traffic growth and revenue deals to match.
Not surprisingly given its growth in user numbers, MySpace has overtaken Yahoo’s email login page as the most visited web destination in the US, accounting for 4.5% of all Internet visits in July.
The money has followed the traffic. Google paid US$900 million in August for exclusive rights to provide search and keyword advertising on the teen-dominated site over the next several years. Online marketing researchers eMarketer estimates that MySpace will generate US$180 million in advertising revenue this year, 65% of the total revenue in the social networking category.
eMarketer also estimates that ad revenue from social network sites will rise to nearly US$1.9 billion in 2010 in the US alone, up from US$280 million in 2006. With the Google/MySpace deal, ad revenues at MySpace may top US$1 billion as soon as 2010. Worldwide social network ad spending is expected to rise to US$2.5 billion in 2010, from US$350 million in 2006.
Future Exploration Network chair Ross Dawson told the Australian Financial Review recently that “With the purchase of MySpace, (News Ltd chair) Rupert Murdoch understood that this demographic is not reading magazines. Teen magazines are dropping off because they are too slow. MySpace is the way to access this demographic.”
AFR also reported that since the News Ltd purchase, advertising content on MySpace has risen noticeably, but, “even so, it remains the online hangout of choice.”
Not surprisingly, MySpace’s success has spawned some sizable mainstream competitors, such as Windows Live Spaces from the Microsoft Network. An Australian-flavoured version of Live Spaces has been promised by Nine chief executive Eddie McGuire and new ninemsn chief Tony Faure, offering video search capabilities, user-generated content and TV episode downloads.
Meanwhile, the early adopter market has decided a Murdoch-owned MySpace is no longer cool and has moved on to sites such as Second Life, a virtual reality community where people build their own 3D avatars and live virtual lives in virtual beach houses, earning and spending virtual money.
Does that mean MySpace has already peaked? While the early adopters may be moving on, the main bulk of the online population is just becoming interested in social networking. There is also an enormous amount of growth to come in the availability of broadband, which will benefit sites like MySpace and the video-sharing site YouTube.
Not just the young ones
Interestingly, although video sharing is widely seen as a youth phenomenon, recent data from Nielsen/NetRatings show that YouTube is attracting significant numbers of Internet users, particularly those more than 35 years old. 60% of audience believed to be 35 and older.
Technology research firm In-Stat has reported that the potential market for online video content worldwide will grow from 13 million households in 2005 to 131 million households in 2010. In-Stat predicts that by 2010 there will be 413 million broadband households worldwide, up from 194 million in 2005.
The opportunity for marketers
In a recent Australian webcast about the revolution in user-generated media, Media Zoo managing director Tom Kennedy called user-generated sites “the publishing model of our generation”. However, as Viocorp managing director Ian Gardner pointed out during the same webcast, the problem with user-generated sites was that they have no revenue model.
The bigger problem, from a marketing perspective, is how to work with these new media in order to help them develop a revenue model in the future. Unlike traditional media, marketers have very little control over where and to whom their message is delivered on social networking sites.
Connect and build
Steve Rubel wrote recently in Advertising Age: “The conversation is global, and marketers worldwide are terrified of losing control. Consumers are tearing down the wall that separates two diametrically opposed forms of marketing: control and collaboration. Savvy marketers know they must move from a command structure to one where they connect and build value together with consumers.”
A few companies are harnessing the possibilities of user-generated media. Coke has developed the “Coke Side of Life” site, where the company entices users to take a series of monthly challenges and create and upload videos about those challenges. The first challenge on the site, “The Essence of You”, asks, “If you could bottle the essence of you and share it with the world, what story would you tell?” None of the videos uploaded so far would win awards, but it’s a great way of engaging the social networking generation.
Surprisingly, a handful of financial services companies are already embracing the notion of connecting and building within their marketing communication strategies. HSBC has been quick to see the potential of employing the tenets of social networking with regard to their core brand values. They launched their site yourpointofview late last year.
The website is part of the brand’s global conversation aimed at highlighting HSBC’s global understanding and local relevance. The site invites people to share their opinions on a wide range of issues affecting the world and compare views with the rest of the world.
Along these lines, Vancity, Canada’s largest credit union has launched a social networking site which invites the community to “change everything”. The site changeeverything.ca, is built around community activism and encourages users to create a list of the changes they want to make, blog about the progress, link into advice and join a conversation about the changes that are being made by friends and the community.
Meanwhile, MSN in the US has taken the concept of reality television online and is letting users make decisions in a real-life situation. Fan Club: Reality Baseball asks “viewers” (their term – still thinking in traditional media terms) to vote on management decisions for a real professional baseball team, the Schaumberg Flyers, a minor-league team in Illinois.
All those armchair experts vote on which players play, what positions they play, and the batting order. Mind you, when I checked out the site, the Flyers were in the middle of a nine-game losing streak, so the team’s manager doesn’t look like he will be out of a job any time soon.
The key for marketers trying to leverage user-generated media is to use their creative talents to create activities that stand out from the amateur-created crowd. As Tom Kennedy said in the above-mentioned webcast: “You can’t replace quality. A well-executed idea is irreplaceable.”
Simon van Wyk is founding partner of strategic online solutions company HotHouse Interactive.
The sites
If you would like to check out some of the websites mentioned in this article: