Building The Web

Slide won the Facebook race, but the competition is just starting.

Slide says it is done making Facebook applications, and while many read into this as a victory announcement, I think of it more like winning the New Hampshire Primaries.  Sure this marks the end of the great Facebook app race, but this is still just the beginning leg of a longer race.  With other social platforms opening their doors, there is now a wealth of OpenSocial real estate up for grabs.

What is more, Facebook is somewhere north of 70 million active users.  According to Adonomics, Slide has about 4.5 million active users or 6.5% of the Facebook active population.  There is still a very large population of people that fall outside of these numbers.  Namely, active Facebook users only make up 0.1% of the world's population, or somewhere around 15% of the U.S. population.  For Slide, those numbers are less than 0.01% and 1%.

Slide's position as the #1 Facebook application provider is still quite admirable.  The population is rich with 18-28 year-old, english-speaking, early adopters, and is an ideal marketing audience for many companies.  What this really means is for other companies to compete for this demographics attention, they are really going to have to do so outside of Facebook.

My thoughts on this are:

• This demographic will eventually move on from Facebook.
• For all other important and specialized demographics, the race is still on.

The Future of Social Apps

Don't jump on the bandwagon

If you are just getting into the arena, it is a terrible idea to simply copy successful apps like those by slide and rockyou.  While you will probably find some success, it will not be very measurable.  The boom is over, and market stabilization is on the way.  If you have not yet done so, read The State of the Facebook Platform.  While I do not think the demise of Facebook Apps is near, I do think the excitement is fizzling for Facebook.  And MySpace has had its day.

Start thinking globally

If it is reach you want, start looking at hi5.  Hi5 has over 80 million registered users and more than 40 million monthly uniques.  Their population is only 15% US, with a strong 30% from South America.  The hi5 application API just opened up less than a couple months ago.

Or, start thinking small

Many smaller social networks are setting up their own OpenSocial API's to allow for applications.  Expect Linked-In to release their API any day now.  Over the next year, I expect the number of social networks with OpenSocial API's to be at least four times the number it is now.

Generally, the more specialized your audience is, the higher the CPC and eCPM.  In other words, get excited if HGTV setups up an OpenSocial API.

Attention is greater than Retention

I have heard from more than one source that social websites are reliably seeing their CTR drop logarithmically in relation to page views.  This means that by the third page view, the CTR has dropped by more than half.  This is important information.  If ad space is part of your business model, then you might want to pay attention.  This says that increased page views does not equal increased revenue.  On the contrary, increased page views may actually mean increased cost.  It actually makes sense that newer visitors are more likely to bounce out of the site rather than stay around.  So, if you cannot get these people to click ads, what can you do?  Assuming ad space is you primary revenue model, my recommendation is that by page view number three, you should stop pushing ad impressions, and start encouraging referrals.  New referrals mean new eyes, which means higher CTR.  If you have other revenue models for users, such as virtual goods or feature sets you can shift to internal marketing and push these other monetization sources.

Virtual Good

While at the Web 2.0 Expo in San Francisco, Max Levchin of Slide.com gave a keynote interview.  In it he mentioned his excitement at the market potential for virtual goods.  That is goods bought and used strictly online.  For example, a virtual leather couch for your virtual room, so you can impress your online friends.  To see an example, check out Cyworld or Second Life.  Jeremy Liew of Lightspeed VP has expressed his interest in the market on many occasions.

However, there are many who are cynical of the frivolousness of the virtual goods market.  Many are criticizing the act of turning real money into virtual goods and stating that it is counter-intuitive to society.  I actually argue much the opposite.  Frivolousness and discretionary spending is a part of human nature.  The Internet has not changed that.   People buy more than one pair of sunglasses, custom rims for their car, and fill their house with designer furniture.  If you think about where all this stuff comes from and goes, you will realize the environmental and economical impact that all of this stuff has on our society.  So, channeling even a percentage of that spending into goods that have virtually zero impact could actually reduce the frivolousness cost on our economy and environment.  I think the U.S. is still early on the adoption curve, but I am hopeful for what this may mean for reducing waste in our country.

 

Why acquaintances matter

The social web supports many interactions for friends, family members and business contacts.  But rarely do you hear people in the web 2.0 space excited about acquaintances.  But why not?  Well, because acquaintances generally do not interact.  The misguidance here is that the social web is only about interaction.  It is not.  The social web is about mimicking real world social behavior in a virtual environment.  The benefits of which are that time and space matter far less, which allows social interactions to happen at a faster pace.

So, why do acquaintances matter?  The answer is in social obligation. Social obligation lies behind the success of viral loops, asynchronous gaming and all of the major social networks.  Invitations and messages are common forms of social obligations.  Social obligations may also be known as an incomplete social act.  An acquaintance is a long lingering form of an incomplete social interaction.  You have become aware of that individual, and for a long time, will have you keeping track of this individual in the back of your mind until you take the next step in growing the relationship.  Companies that leverage incomplete social acts are often much more successful.

I would argue that acquaintances is what supports a large portion of the traffic for blogs and news feeds, as they support and keep this interaction alive, particularly in the long tail of social blogging and microblogging.  People keep track of acquaintances using these tools in hopes of finding a way of completing the social act and taking the next step in building the relationship.  I think that products and companies that take time to figure out how their product fits within the acquaintance social model will see a larger coefficient of success than those who do not.

Weekend Warriors of the Web

As I have been spinning the idea for a new app for Facebook with a colleague, I began doing some research on web 2.0 usage surrounding drinking.  I soon found this data using Facebook's Lexicon, and I was immediately excited (and a bit thirsty).

I have looked at a number of traffic and frequency charts.  On almost every chart, the middle of the week is a slow or large hump between weekends.  This is not just an inverse of that, but an exaggerated opposite of it.  Many spikes are more than 25%, very well defined and consistently reliable.  I would like to compare this cycle further against discretionary spending behavior.  This chart suggests there is some correlation.  But, it would be nice to get some data direct from merchants or credit card companies.

With all of the recession talk, I have had discussions about how beer is a bellweather. Then, during the first night of keynotes at the Web 2.0 Expo in San Francisco, the topic of society's need for gin during the Industrial Revolution was an amusing topic.

I am already optimistic about the correlation between alcohol consumption and discretionary spending and the possibilities of utilizing that in marketing for the social web.  I am excited to see where goes and hope to find more supporting data.