Behemoths Facebook and MySpace weren't the first to capitalize on the human need to connect. The first true social network — friend lists, profiles and all — quietly came on the scene in 1997. Designed as a web of contacts, SixDegrees.com attracted millions of users before shutting down in 2000, when Facebook was still just an ambition of Mark Zuckerberg's. In its place, hundreds of social networks — or those claiming to be — have sprung up. What once was reserved for a select group of teenagers has grown to encompass all ages and facets of life, bringing many consumers and businesses into the fold of one network or another.
No longer blocked from work computers by IT departments, social networks are now a staple of the enterprise, typically in the form of an online presence to connect employees and distribute information. Enterprise social media provider Small World Labs has seen a pickup in its business coinciding with a downturn in the economy. As budgets grow tighter and jobs less secure, companies such as the American Cancer Society and The Dallas Morning News have called on Small Worlds for a nontraditional and cost-effective way to boost morale among employees.
Michael Wilson, CEO of Small Worlds, said that more and more businesses are using social networking as an integral part of how they communicate and collaborate. “In the end, it is all about community,” he said. “If it is going to be successful, people need to have a good benefit of its participation.”
As a byproduct of an increased enterprise focus on community, the demographic of those getting on board with social networking is starting to age. According to Yankee Group studies, in 2007, 51% of 25- to 34-year-olds and 31% of 35- to 41-year-olds were active users of one or more social networks. With 46% of social networkers older than 35, the demographics are beginning to balance out.
“Increasingly, it is also executives who are older trying to get a grasp of what's going on in new media and social networking because it is starting to affect their business,” said Adam Ostrow, editor in chief of Mashable.com. “They have advertisers asking about social networks, wanting to do partnerships with social networks to get more people interested in their brand. It is starting to extend out to a very wide group of demographics.”
Mashable.com is a Web site devoted to covering the social-networking space, and according to Ostrow, the biggest trend it's seen this year has been aggregation. The industry is past the point of consumers discovering their first social-networking site. Now, most Mashable.com readers are on between four to 30 sites, and they want seamless access to all of their networks. Friend Feed, for one, lets them do this. The aggregator streams everything users do on all their networks across every site so that it can be viewed from one central location. Among Ostrow's informed reader demographic, this — along with the microblogging trend — is what everyone is talking about.
“A huge earthquake in China was first reported on Twitter rather than CNN,” Ostrow said. “It's the immediacy of everything right now, whether via live text or audio.”
Getting in touch with this instant gratification, in-the-know market segment has become priority No. 1 for advertisers as well. Jupiter Research predicts that 48% of Internet marketers will find a presence in social media marketing this year. Members of one's social network have proven to be significant influences on purchasing decisions, and the site itself often affects how they find and interact with products and services.
Social network Icebreaker, makers of “Crush or Flush,” ties the advertising experience into the interactive gaming focus of its site. Just as users can decide if they want to crush a contact — meaning connect and become friends — or flush them (“reject” in social-networking lingo), they do the same with the product in an advertisement. Called Golden Ticket, the social-networking experience at Icebreaker forces branded advertisers to view the mobile platform in a whole new light. Michael Robinson, CEO of Icebreaker, said the platform captures the three most important aspects of advertising — awareness, usage and advocacy — all in the context of a social network.
“We wanted our brand to be immersed into the experience, so there would be no objection from the user,” Robinson said. “Quite the opposite, they'd feel like this profile would be a friend in some sense like the people they meet on the site.”
So far, Robinson said Icebreaker members have been receptive to the advertisements. They associate the brands with a positive emotional feeling and, as an opt-in experience, don't find it intrusive. Whereas traditional advertisements have always been one-sided and information-based, social networking has expedited this evolution to more interactive and immersive advertisements. Yet, while advertising has changed as a result of social networking, the benchmark of the phenomenon has remained the same: Communication is still interest No. 1.
“The things that are being most frequently used — it is still all about communication,” said Scott Silk, CEO of Action Engine. “The ones that are taking off the most about communication are things like IM and social networking. A lot of it is one-to-one but also one-to-many communication.”
Action Engine, which last week launched a mobile social-networking on-device portal in partnership with MTV, also offers mobile users an instant messaging platform for mobility. With more than 147 million using IM on their handsets, and eMarketer's forecasts that mobile social networking will grow from 82 million users in 2007 to more than 800 million worldwide by 2012, the handset is evolving into a social-networking vehicle to be reckoned with. In fact, the opportunity here might be more significant than for fixed-Internet sites — a fact that hundreds of mobile social-networking start-ups are banking on.
“I do think that in the fixed-Internet environment, it is a possibility that in terms of the total pie of users, the total volume of users, we've nearly reached a peak,” said Jill Aldort, wireless senior analyst for Yankee Group.
RadiSys, meanwhile, takes a behind-the-scenes approach to social networking, supplying the enabling technology for much of the real-time interactive services. From this point of view inside the network, communication may be the cornerstone, but the future is all about multimedia capabilities.
“The multimedia aspect is a big trend in the future,” said David Smith, general manager of the RadiSys media server business unit. “Not only voice services, but introducing video services as well. From our perspective, those are ubiquitous network-based services that are of low cost and can be widely deployed across the entire subscriber base.”
Social networks are in a perpetual state of evolution. As they mature and continue to change, it is becoming clearer that they aren't a passing trend. Their influence on consumers, enterprises, advertisers and the network itself is only the tip of the iceberg. The next billion-dollar social network may still be just an ambition waiting to find another facet of the industry yet untapped.
“I think that social networking is here to stay, but it might not necessarily look like it does today,” Aldort said. “The overall concept of social networking and creating and connecting to a community is not a fad by any means, but the current mechanics of it may be a fad.”
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