The following is paraphrased from a presentation made by Allison Cerra, Chief Marketing Officer, Americas Region – Alcatel-Lucent, at the Social Networking Conference 2010 in Miami, FL.

Consider the following identified marketing challenges in the current online social media ecosystem:

1. Service providers are constrained: Today, just 20 households consume more broadband than the entire bandwidth used in 1995
2. Developer community aren’t making money: They need to launch and maintain services that end-users want for free
3. End-users are frugal: How to get users to pay for things when they are accustomed to having things for free?
4. Marketers are strapped: Very few in the marketing space have figured out how to monetize things

The common thread above is that current business models aren’t stable in today’s social media ecosystem.

However, research indicates that conditions can be created to market services better online. Based on a survey and focus group sessions with over 1,000 social networkers, three key points stand out:

• Social networkers are not that social

A recurring theme in the study was: “I have a lot of relationships I try to maintain, but I don’t have time to develop deep substantive relationships.”

Also, social networking is all about the users: their social networking experience “validates” them. For example, being tagged in a photo is an egocentric pleasure: to the user, it means “I am important”.

In contrast, MMORPG players are not introverts at all, quite the opposite. These people love the network, not the game. It’s about sharing a passion so intimately with a small group of people, that the relationship becomes more important than the game.

• Social networkers can be convinced to pay

People online are used to having things for free. But what if you know your friend’s status at any time, regardless of the device you’re using? What if you know where your friends are at any time? How would this change the social networking experience?

Let’s think about an “advanced friend finder” application: I land in Miami and I can know where you are and what places you recommend and whether you are free to meet or not, based on your location data, your presence, your history of geolocation, and your shared calendar. If this type of ecosystem of services is put together, would you pay for this type of  information?

Another example is, what if you meet someone at a conference and two weeks later they call you and you don’t remember them well anymore? But how about if when they call you, their LinkedIn profile pops up automatically? Would you pay for this type of information, if services were integrated in this way?

Research show that social networkers are willing to pay for these types of value-added services. (Also, they are not as averse to advertising as we might like to think.)

• Privacy is a concern … or is it?

If I’m going to give you my presence and location, isn’t that too much info? In focus groups, people are not comfortable with sharing information. However, in practice, people do share this information when the following three conditions are met:

1. You allow  users to opt-in (rather than opt-out) — the user must remain in control
2. Social networkers are more concerned about when information about them is released, than who has access to it
3. Social networkers overwhelmingly trust service providers more than social app developers with their sensitive information

Conclusion:

The above suggests that when privacy concerns are addressed and social applications are combined with service providers, new conditions can be created to develop an ecosystem that is more conducive to marketing and monetizing online services.

snc2010, social media, business, models, marketing, umcnj595, monetization

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