CES: Social networks need to prove their staying power

When an attendee at the Consumer Electronics Show in Las Vegas on Monday learned that the Caramel bar at the Bellagio hotel had mistakenly given someone else his corporate credit card, he didn’t call American Express.

Instead, he went to his room, fired up the Internet and searched his social networking sites to figure out where he might locate the person at the conference, using the name given to him by the Bellagio staff, which still had the other man’s American Express card.

The attendee, who asked not to be named, used his LinkedIn social-networking account to find out that the person he was looking for worked for wireless networking company Netgear and was also a CES attendee. He used this information to leave a voicemail message for the person at his office and send him an e-mail, and went to Netgear’s booth to try to locate him. Eventually, the attendee was able to retrieve his card when the person who had it by mistake returned his messages.

As the popularity of social-networking sites grows, so does the opportunity for Web users to access information about people both inside and outside their personal networks. While that information in and of itself can have relevancy in specific situations — such as in the case of the attendee who lost his credit card — not all of it is useful or interesting to either the users on the site or the advertisers who support the site’s revenue structure.

Now that social networks have reached a critical mass of users, their next challenge is to ensure they can continue to provide value to users and advertisers beyond giving people a crowd of online friends to boast about. At CES this week, executives from companies such as Yahoo, AOL and iMeem discussed the next step for social networks as they continue to evolve and serve the changing needs of their communities.

David Liu, senior vice-president of social media, messaging and homepages at AOL, said Tuesday at CES that the key to the success of social networks is that they allow people to tell their “stories” online to make connections that can exist both online and in real life. Communities that allow people to do this in a user-friendly way will have the most success in the long run, he said.

“There’s a tremendous opportunity for the community to do this the right way,” Liu said. “I think the networks that will be successful and grow will be the ones that allow people to tell these stories in their own words with the most open … platforms possible.”

However, the expectations of users differ from those of advertisers, and companies running those sites must serve them both. So while users may find personal information — such as someone’s vacation photos — interesting and useful, advertisers probably will not, unless they help them target ads to those users.

So far, the information gleaned from social networks has been largely untapped by advertisers, said Steve Jang, chief marketing officer and head of business development for social-networking site iMeem. iMeem provides a social-networking site based primarily on people’s music interests, letting users post playlists and stream music and video content for free.

There are a couple of reasons advertisers have not been able to take full advantage of targeted advertising on social networks, according to Jang. One is that people have been putting user-generated content into three buckets — “one that is not that great or interesting to the user or advertiser, one that is mildly interesting and one that is universally well-received,” Jang said. He said advertisers and social networking companies should broaden their preconceived notions of user-generated content to find new ways to create the right kind of advertising for their communities.

Another reason it’s been difficult to target ads is the “creepy” factor, said Alex Blum, CEO, of KickApps, which provides software for building online communities and social networks. He cited the controversy surrounding Facebook’s Beacon online advertising engine, which reported users’ online behavior back to the company even when they weren’t logged into the site.

But there are other ways advertisers can glean information from social-networking sites and leverage “a tremendous opportunity that isn’t viewed as creepy” to target users with ads, Blum said. By knowing what people like to do by viewing their publicly available tastes in books, music and films, companies can tailor ads related to those interests without making users feel as if their online behavior is being tracked, he said.

Some factors that will contribute to the successful evolution of social networks are out of the control of the companies running those sites, said Leonard Brody, CEO and co-founder of NowPublic.com.

Brody’s organization collects information from citizen journalists and redistributes it on the Web, and has used Facebook as a way to gather information about news as it happens from people in online communities. Many people have not realized the power of online communities beyond their mere social aspects, he said, but once that changes those networks eventually will affect other areas of culture, such as the way people report and receive news.

“We look at these social networks the same way we look at Miami, London and Dubai,” he said. “(Facebook) is a city, and an incredible vehicle for people to create micro niches around news that is important to them.”

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