Just looking at the growth of social networks in the last months. Facebook having hit Europe with tsunami force, it has given me a chance to get together with some old friends. A lot of these friends had no other social media involvement until this year. Of course the sheer weight of traffic and demographically friendly information will be a boon for Facebook owners and everyone knows that Myspace is “raking it in” after Google’s rather large financial commitment. I also notice that Europe site Netlog is already making money (not bad for a young company based right here in Belgium) but all of these sites are focussed on the everyone market and if you get that right the potential audience is in the 100s of millions.
Can companies with a more niche focus make it? Can they get the people through the network that make the advertising bucks follow, and let’s face it, most networks start for this purpose. Looking at the travel industry shows that companies are already trying to make this successful. I presented at a few travel events this year and there is a lot of “social” activity in this vertical. WAYN appeals to a younger group of travellers that share their trips, their CEO was very optimisitic about their chances. But still the audience for travel is in the tens of millions (It supports Trip Advisor and group of other recommender/social sites). What gets me really interested is the “niche niche” sites. My friends at Chicks Away are aiming at a further focussed female traveller market. The point here is that even if the audiences are relatively smaller they will have more loyal users. This loyalty, which is a top issue for future social networks, should result in more longer term advertising relationships and more targeted campaigns.
It makes sense to me that the largest networks will make significant money (this is already clear), there will be 5-10 networks per vertical and a further group of very targeted networks that make it because of the loyalty creating content. These vertical networks will be strongest in gadgets, pharmaceuticals, business/finance, fashion and a few other areas that create the greatest buzz online. Of course plenty of networks will survive with little or no advertising with members chipping in to keep them going but the real growth businesses could be less than 100 globally by 2008/2009…