Posts Tagged: situational relevance


30
Mar 06

Facebook’s Value Proposition

The leaks to Businessweek keep coming, and this time Google is the purported 2 Billion dollar suitor. The scary thing is this actually makes sense to me. Google’s motives are not much different from any intelligence gathering organization; they are particularly interested in the life-bits of the new web generation. Taking a step back, let’s explore how this makes sense.

Design and implementation of technologies that capture mindshare require a number of elements: a problem, a granular understanding of that problem, a granular understanding of how that problem is to be solved, a sense of how users approach the problem, and a sense of how users will approach the designed solution. The user equation, or how the user fits into the picture, is an ongoing area of study, particularly in IS departments.

The web is generational. Every few years a new generation matures, each taking a set of skills forward that they acquired during their social maturity. Simply put, we acquire our social-technological skills when required, and the course of our life-interaction with technology is charted by these acquisitions. When I was an undergrad, we communicated with email, IM, and cell phones. My friends, to this date, remain proficient at email, IM and cell phone use. Today’s undergrads communicate with email, IM, social networks, game communication channels, blog comments, text messages, photo messages, cell phones, and a host of others I can’t even think of. Social trends drove adoption, and now these students will have lifelong experience and comfort using these technological channels. (Of course, some of my friends today are comfortable with the tools undergrads use today, but I’m talking broadly, and I keep close to very net-conscious folks. I think you get the point, though).

I’ve gone down this tangent to explain the value of the data Facebook owns. Put simply, Facebook owns the data, use patterns, preferences, communications and adoption trends of the entire next web generation. Whatsmore, the data is incredibly clean, trustworthy, and segmented as a marketer could only dream. But don’t get completely trapped by the marketing aspects, there’s something much greater in Facebook’s data. Facebook owns the data of the first generation to live their entire lives online, a generation that we will spend our lives studying and trying to understand. These young people are out of our frame of reference, and they will completely drive the next 30 years of the social web. Does anyone doubt me on that?

It takes broad thinking, broad ability to operationalize, and a very long view to take on such a project, meaning there are only a few companies that could do it. Boiling it down more, there’s really only one company that I can think of that would actually take a project like this on. It is Google. Google, for all its faults, wishes to deeply understand its users, and it wishes to be part all aspects of our web interaction in the future. An investment of 2BN into a corpus of data like the Facebook’s would be a key strategic acquisition, one that frankly makes sense for a company creatively thinking about the next 30 years.

Don’t get me wrong, though. I have no idea who will buy the Facebook, and I’m not trying to win any speculation prizes with this blog post. The eventual owners of Facebook could easily be a media company, a multinational products company, or a government contractor like Raytheon, Lockheed Martin or Boeing. Any of those could easily put Facebook’s data to work, for anything from trend research to homeland security. That said, I do feel the Facebook is worth 2 Billion to only one company, and for that one company, Facebook’s real value is a whole lot more than 2 Billion dollars.

Postscript: If you’re interested in seeing results of studies regarding Facebook use on a college campus, you can check out An Evaluation of Identity-Sharing Behavior in Social Network Communities (pdf), in which a randomized study design found that 90% of undergraduates used the Facebook (data from Summer 2005). Additionally, you can check out Student Life on The Facebook, a blog post that I’ll be turning into a journal article this summer. Using a whole-network design, this study found that over 94% of freshmen at UNC had a Facebook account.


12
Jan 06

Situational Relevance in Social Networking Websites

-or- The Vast, Untapped Secondary Social Networking Market

Anyone who has spent a fair amount of time on a social networking website is familiar with the “what’s next?” problem. Put quite simply, “what’s next?” is what you say to yourself after you have exhausted the novelty of the service, and from that moment on you use the site less and less.

Friendster.com has been stung terribly by this problem. Orkut and LinkedIn as well. Looking at the traffic graphs for Friendster and LinkedIn we can see similar traffic patterns – a long, steady climb upward, followed by a sharp drop, and decreasing pageviews over time. In television, they call a phenomenon like this “jumping the shark”. While I’m not going to try and coin such a catchy name, I call this the “what’s next?” moment because it represents the time period when the users sat up, looked around, and got tired of the service.

MySpace and Facebook (Alexa’s charts are misleading) do not suffer from this problem. In many ways, Facebook and Friendster and MySpace and LinkedIn are similar: the visible technology, interface and face-value outcomes of site use are all very much similar. Why is it, then, that users demonstrate clear preference of some social networking websites over others?

The answer, it turns out, is actually quite simple, and it deals with the concept of situational relevance. We all have many social networks: our primary social network, which is comprised of our close friends and family, and numerous secondary social networks, which may be comprised of coworkers, classmates, neighbors, fellow church patrons, teammates and so on. As our social networks are webs, the primary and the secondary nets all intertwine; regardless, we maintain separate identities for each.

Additionally, at different times in our lives, our primary and secondary social networks grow together and apart. For example:

  • As youths, our primary social network grows very close to the secondary social network of classmates.
  • As we enter adulthood, our primary social network moves away from the secondary social network of our classmates, and towards the secondary social network of coworkers and community relationships.
  • As grown adults, our primary social network may move closer to the secondary social networks of PTA’s, church groups and neighborhood associations.

Of course, these lists are not absolute, just illustrative examples. At different times in our lives, different social networks play more or less important roles: they are situationally relevant.

From birth through adolescence and young adulthood, our primary social network expands continuously. Eventually, we settle; the incentives for primary social network expansion, such as partnering and friend aggregation, diminish. As we settle on a core social network, the secondary social networks step forward to serve the role of providing us a steady stream of new people to meet (sustaining a human need for sociality). Just as “the new kid” was a remarkable event in grade school, the new neighbors down the street and the new vocal parent at the PTA provide us with later-life social network renegotiation that we all find interesting.

Regardless of how it is spun, all social networking websites rely on users to fuel the interestingness of the system. Users know that the websites are only as interesting as who is on them; that is why social networking website users often become advocates to non-users. However, once everyone is on the website, the users are posed with a quandary: “what’s next?” We know what happens to traffic after that point.

The actual problem is not that users are tired of each other or the sites are faddish (common explanations); it is simply that the users no longer need the website’s service. Take the case of Friendster: Aimed at a mid-to-late twenties demographic, Friendster positions itself as a way for people to visualize and expand their primary social network. The problem, of course, is that an average Friendster user has long established much of his or her primary social network. If the average user is not frequently or drastically changing his or her primary social network, a site that seeks to aid in that role is actually not useful. Visualization and exploration of a social network is simply not enough.

Let’s bring situational relevance back into the picture. In the context of social networks, situational relevance of a social networking site is based on 1) the demographic it attempts to serve, and 2) the social network it attempts to map. While it is almost always interesting to view social networks (for example, conducting a time-to-time investigation of ex-classmates on Classmates.com), to create real value, a site must be positioned properly. To do so, the site must address the social network, primary or secondary, of a demographic where that social network is relevant and in flux.

Facebook may be the best example to date of synergistic situational relevance. Facebook addresses a secondary social network (classmates) that is, at the time, closely tied to the primary social network of its demographic (college students). College students spend 4 years constantly in flux, each semester meeting new people and dynamically shifting their primary and secondary social networks. For the college student, their world is largely the campus; the Facebook provides a constant companion as they navigate the college experience. For this reason, I believe that the Facebook, as long as it continues to serve the core information needs of the students (by continuing to give them interesting ways to explore information about each other), will continue to stay relevant on college campuses for a long time to come. Of course, poor marketing or unpopular business practices could diminish the brand; nevertheless, students will always find a service like the Facebook necessary and useful, because it answers student’s social and informational needs.

I hold Facebook up as a shining example, of course, because it is the service that best fits my criteria of situational relevance. LinkedIn, the popular business networking site, is an example of a site that addresses a secondary social network of a relevant demographic. However, LinkedIn is not nearly as popular as Facebook. Unfortunately for LinkedIn, the only time people strongly rely on their personal-professional secondary social network are in times of need. When someone has a comfortable job, there is limited incentive to invest much time in a site like LinkedIn. While LinkedIn serves a real need, its users will never be simultaneously vested in the system the way Facebook’s users are.

Now let us look at Friendster and MySpace, two sites that attempt to serve the primary social network of a wide demographic. Friendster and MySpace eschew situational relevance, opening up the door to all comers; as a result, both are faced with the “what’s next” problem. Friendster did not successfully deal with this problem; MySpace, by properly leveraging the userbase’s media interests, is in the process of a transformation. Both sites effectively realized that leveraging non-dynamic social networks eventually lead to burnout, or “what’s next?”

Addressing secondary social networks of relevant demographics may seem formulaic, but it requires changing attitudes towards the ways websites support social networks. For example, residents of a neighborhood, whose primary social network do not change, are interested in the constantly changing secondary social networks that comprise their neighbors. Church members, again, whose primary social networks do not vastly change, are very interested in the constantly changing secondary social networks of their fellow worshippers. These networks are large, personally relevant and dynamic (new neighbors move in, new worshippers join the church, families expand and change, etc); unfortunately, simply setting up neighborhoodsocialnetwork.com or churchsocialnetwork.com is not the answer.

Secondary social networks do not benefit from economies of scale. That is, simply because I am interested in my fellow neighbors, I am not interested in all neighbors everywhere, nor do I wish for all neighbors everywhere (a secondary social network that may encompass many of my social networks) to be able to see my particular identity in that social network. In each social network, we possess a unique identity; this is why the Facebook works. In the Facebook, students can retain a particular identity without worry of everyone (parents, siblings) being privy to that identity. In essence, the vast, untapped secondary social networking market is comprised of semi-open (gated) secondary social network communities.

Imagine gated social networks for parents of students at a school. Imagine gated social networks for the in-flux neighborhoods of a place like Cary, NC or Northern Virginia. Imagine a gated social network for church members, for employees of a company, for adults entering retirement living. All of these cases, and the many more like it, involve in-flux social networks that the relevant demographic is personally vested in, where they have strong incentive to participate. Since these secondary social networks are gated, users are comfortable the way college students are comfortable in the Facebook.

Of course, there are difficulties that come with this model. The Facebook gets off easy by limiting access by email accounts; they let the universities do the gating for them. Gating churches and neighborhoods are harder, but how much harder? I can think of a number of solutions off the top of my head; if a business could solve this problem elegantly, there’s no limit to the secondary social networks that can be augmented by websites. In a sense, this is the perfect long tail, and everything that is right about Web 2.0. There’s gold in them hills, people. Now go get it.