Thursday, November 1, 2007

Are They the New Portals?

For weeks the industry has speculated on the possibility that either Google or Microsoft would grab a piece of Facebook. The issue was settled on October 25 with the announcement that Microsoft had spent $240 million to acquire a stake in Facebook. WSJOnline pointed out (subscription required) that Facebook is now the second largest social network with a much higher growth rate than MySpace. Let the financial pundits argue over whether Microsoft paid too much or whether the potential for highly-targeted ads will provide ROI in the end.

Largely overlooked was a short paragraph about Microsoft’s rationale. It referred to their view that “social-networking sites like Facebook might one day become the central window consumers use to access the Web.” Translated—are social media sites becoming the new portals to the Internet?

The giants like AOL and Yahoo! have long offered users the opportunity to personalize and create opening pages. So do publishers from WSJ to your local newspaper. All of them are “old media” in their approach to design and content, offering a menu of standard fare from which we can choose, and perfectly fine for a lot of us.

But quietly and without much attention other sites have opened major gateways to the net. Millions of young people visit MySpace, Facebook and other networking sites on a regular basis. To what extent are they using them as their window on the web? I’m not sure anyone has the definitive answer to that, but here are some insights.

Steve Rubel posted some interesting stats from an October 2006 Forrester report on his Micro Persuasion blog in May. These data suggest that only 29% of Forrester’s respondents place a high priority on personalization when you ask the question directly. They seem focused on finding what they want in an efficient manner.

Avenue A/Razorfish conducted a study about a year later that gives a different perspective. Their respondents are using technology to create personalized web experiences. Sixty percent of them personalized their home page. Many reported using RSS feeds and sharing bookmarks, reading “most emailed” links and engaging in other social media activities at least “once in awhile.”

Download the report here.

Why the big difference? It’s the samples, I think. Forrester’s Technographics program uses a sample that’s representative of the Internet user population. AvenueA/Razorfish used a sample they called the “connected consumer.” On their blog Garrick Schmidt described their respondents:

• Access to broadband
• Spent $200 online in the past year (travel, netflix, tickets, amazon, gifts, etc.)
• Visited a “community site” (myspace, youtube, facebook, classmates, wikipedia, etc. — several of which are in the [top worldwide properties according to comScore]
• Geographically, economically and demographically diverse

According to eMarketer, “three-quarters of Americans use the Internet [while] two-thirds of all US homes have a broadband connection.” Broadband users do more of everything, spending both their time and their money on the web. They are the target for all Web 2.0 applications; it’s just not realistic to engage in these activities without broadband. So the “connected consumer” is important.

Venture capitalist Jason Mendelson has an interesting post on AlwaysOn. Guest lecturing to undergraduate economics classes he found that all but 2 of the students used Facebook, many also used other networks, they used Facebook for about 20% of their email, and they considered MySpace a “has been.” Highly unscientific, yes, but in line with my own observations. Every time I ask the questions, more students have personalized pages and more are using one of the social networks, increasingly Facebook. How they are using them—and to what extent they bypass the original portals—is yet to be determined.

But it’s certain that the future belongs to the connected, and they are increasingly wired in through a social site. What does the new generation of portals mean for marketers? Is it good news because we know where to reach them? Or is it bad news because they don’t want or pay attention to ads there? How do we make ourselves relevant in this social ecosystem?

Not easy questions, but the ones marketers must deal with!

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