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Thursday, March 27, 2008

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deepak(internet marketing expert)

Productive Internet marketing depends upon a reasonable budget. There actually is a good deal of truth to the old adage that you have to spend money to make money. By budgeting wisely, you will be able to get the greatest advantage from the money you do spend on marketing and promotion.

Greg Berry

Alex,

Thanks for the great thoughts. I know there is infinite interest in the monetization of the SuperNets, but I really think the business will be done in vertical markets (like the Dogster example, above).

I believe that all the high-level monetization schemes at the SuperNets will end up alienating many of the users.

This, plus natural evolution, will drive users into more naturally arranged vertical or affinity social networks. These VertNets will have a simpler monetization path, because it will be clearer for affinities to have more value per user, high-level sponsorships to take place and more relevance for the user, especially given the hyper-commercial experience in the SuperNets.

At the elite end of the curve, membership fees become feasable and relevance will increase the CPM of ads into a manageable range.

TKA

Interesting....

OK, so how would one create a profit using pre-built platforms such as Ning to build a social platform? They even offer a way to monetize off the ads in your network for $20/month.

dave mcclure

thanks alex, appreciate the feedback.

altho to some extent the insanity of my presentation & blogging style -- some might call it the "Ransom Note / Kidnapper Font" -- is intentional. or at least, part of my brand differentiation ;)

i'm sure there are many strategic & tactical changes i could make to appeal to readers more, however for the most part i write for my own enjoyment. for my readers, i admit i'm probably an acquired or tolerated taste.

occasionally i do go overboard with it, altho again that's kind of an expression of my personality & character... one that i kind of like, even if it's not for everyone.

that said, i'm always interested in hearing reactions. you never know, maybe i'll change it up.

Alex Hammer

Dave, you are (of course) brilliant, and this post is a good illustration of that.

From my writing experience (publishing and journalism) I can tell you that you will profit even more if you format, structure and highlight your writing better. As a few examples:

You use highlighted color to draw attention to important points, but there is so much in one post that it can easilyl become information overload without increased formatting. You have headlines, but I would make them more discrete and more often to give readers breaks. Also, you can divide up your long posts into series. Stick to one smaller theme in each post, perhaps, leading to the next and that will generate more anticipation and overal interest also.

Also, your posts are cluttered. Use more white space. A clean UI sure hasn't hurt Google etc.

And give summaries or clues at the beginning in terms of the structure of the content to come. Then people can navigate better and won't feel lost.

Thanks.

Alex Nesbitt

Dave,

Good question. The obsession with advertising being the biz model for everything should be re-examined. It's killer for Google, but that's because people are looking for stuff.

The question that we should be asking is what do people want when they go to a social network.

It seems to me they want to be social, they want to be entertained and they want to play. So perhaps a biz model more focused on making money from entertainment and less focused on advertising to people who aren't interested would be a better way to go.

Here's a podcast we produced about a social network that is making money and a service which is making money off Facebook. I followed up with him because the advertising crowd at Graphing Social didn't give him enough air time.

Here's the post:
http://www.digitalpodcast.com/podcastnews/2008/03/17/digital-podcast-45-how-to-make-social-networking-profitable/

Best,

Alex
Digital Podcast
http://www.digitalpodcast.com

Laurel Papworth

It might be worth noting that social networks that rely heavily on advertising don't do well. MySpace makes $2.17 per YEAR per member.

Those that have other revenue streams and NO classic advertising fare much better. Sulake's Habbo (87 million accounts, 8 million uniques per month) for example makes $17 per member per MONTH from sponsorship and pixel products. Even South Korea's Cyworld with its 50+ million members makes many times more than MySpace per head - and that's again, with NO advertising but virtual goods and sponsorships.

I wrote a blog post on it if anyone is interested Revenue streams in social networks

Kevin

That was an excellent summary of issues. Maybe we'll see on May 2nd at the New Media Tastemakers Summit (http://www.NewMediaTastemakers.com), which goes more into lifestyle, business models and web 2.0/video 2.0 topics

Albert Aimers

Very interesting...I would like to get your Communities thought on a new financial social network that we just launched that pays it users/members for consuming content.

Below is a short video


http://my.wallst.net/referral/AlbertAimers/JoinForm

BabySpot.com

Dave,

Great post. Timing is amazing. I just moderated a panel on Web 2.0 - Social Networking and it's impact on today's business world at the a Microsoft Sponsored event at Florida International University, in Miami, Florida. Our panelists were all CEOs for social media companies and one of the questions I asked was in regard to monetizing these great communities. The general consensus was that if advertisers truly want a great return on their marketing efforts with social networks they have to move away from traditional ads and move towards integrated product placements, review, and branding in partnership with the users. CafeMom.com, which has been able to capitalize moms online has done a great job of creating campaigns for companies in this view. For us, at BabySpot.com, as a social network for new parents, we have finalized deals with companies that wish to target this demographic group with campaigns that integrate the advertiser and the user. Overall, I agree with Ted's post above - if the right focus is placed on sales and an emphasis on integrate the user and advertiser as partners there are ample opportunities.

Great Post

Zameer Upadhya
CEO and Co-Founder
BabySpot.com

Ted Rheingold

David, while I whole heartedly agree with your feeling that it's time to face the revenue music, I respectfully disagree that new and exotic methods will bring any quick results.

If these sites simply buckled down and worked as hard at selling advertising as prime-time broadcast television shows did, they'd be profitable by now.

Engineers would rather invent a new revenue system or get bought out than actually do the business-side of running a business.

At Dogster/Catster we've been able to consistently surpass a $5 ARPU because of doing direct ad sales. To anyone that might think "but Dogster, your audience is so highly targeted, it's different for you," I'd say "it doesn't get much better than having an audience of tens of million of Americans age 16-35."

At Dogster, Inc. we're going to hit $4M in revenue this year and we only have 700,000 members and 15 employees. We'll break $10M in '09. It's simply a matter of building a sustainable business from the get go. You simply have to execute on the sales side as hard as you do the product side.

Srinagesh Eranki

Very comprehensive.

My take is the focus is all wrong. Facebook seems too focussed on advertisers. Millions of users are regarded merely as consumers of ads. LinkedIn seems to get that balance right.

Facebook need to make it as painless as possible for users to contribute to the Facebook coffers. Rather than focusing on overt actions by the user (e.g. clicking on an ad), with millions of users, all that "noise" is got to be worth something. Things like Beacon need more modification and fine-tuning.

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