Net Effect: Social Networking as Marketing Change Agent

Google’s acquisition of tiny Web 2.0 company Writely was big news in the blogosphere last week. This week it’s hitting the mainstream media. BusinessWeek’s analysis of the importance of the deal was particularly revealing. 

“In a small deal that signals big changes on the Internet, Google announced Mar. 9 that it has acquired a   Silicon Valley sensation called Writely. The online word processor is still in the testing stage, but it's attracting attention as a free alternative to relatively expensive desktop applications like Microsoft (MSFT ) Word.
 
But the transaction stands out for bigger reasons. Writely is one of dozens of companies that are infusing once-static Web pages with the power, speed, and features of sophisticated desktop applications. And by combining these online applications with the new wireless and broadband communications ability of the Web, they are redefining the Internet itself.”

In other words, this is more than a version upgrade. New applications, greater broadband penetration and shifting consumer adoption models are combining to create dynamic user experiences. And they’re challenging traditional media to keep up. 

A recent study by Columbia University's Graduate School of Journalism shows that newspaper revenues increased by a mere 1 – 2 %, largely because of an increase in revenue from online ads of 30%. The study reports similar dismal numbers of other offline channels. 

And the Hollywood Reporter draws an interesting comparison in CPM values.

 “The value of a viewer is in flux. The average hour long primetime series generates $3.46 million in net advertising revenue, or the equivalent of 41 cents per viewing household. The same program would generate $1.39 in gross receipts for the content owner per $1.99 iTunes download, based on a 70-30 split with Apple, according to estimates from veteran analyst Larry Gerbrandt of Nielsen Entertainment Reports. If a content owner proposes providing downloads off of its own Web site -- as ABC.com, CBS.com, NBC.com and Fox.com have started to do -- they retain all of the $1.99 fee as incremental income.”

Beyond CPM, consumer generated media amplifies value. Social networks translate to trusted relationships. Companies large and small can leverage this into new marketing opportunities. According to Steve Rubel, Forrester Research recently issued a report on social computing which dramatically demonstrates these dynamics. He published a chart on his site today, which is a great primer for the new services, both from the perspective of large companies who want to leverage their social networks and from the perspective of newcomers looking to extend their own marketing advantage. 

Technorati Tags:

 

Advertising, Forrester, Marketing, Social Networking, Web2.0