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The biggest challenge for popular social networks thus far has been finding sustainable ways to turn their massive audiences into massive piles of cash.

That could be the least of their concerns very soon, however.

If Google's troubles monetising social networks coupled with Facebook's leaky financials weren't worrying enough for players in the social networking space, comScore's release of user engagement metrics for popular social networks might be cause for even more concern. It looks like the novelty is wearing off.

Some of the engagement metrics that should be of most concern to those in the social networking space include:

  • The average Facebook user spent nearly 200 minutes on the site in February 2007. This declined to nearly 170 minutes by December 2007, with a steady monthly decrease seen in each of the months leading up to December.
  • In December 2006, the average MySpace user spent around 235 minutes on the site. In December 2007, this was down to just under 180 minutes.
  • The time users spend on Bebo and Friendster has dropped by 50% and 75%, respectively, over the past four months.
As Silicon Alley Insider correctly observes:

"It seems to be an industry-wide issue. The total audience of U.S. social networks seems to be stuck at a low-to-mid-single digit growth rate, while the engagement metrics are falling for just about everyone. This is not good news for social networks."

Most of the hype and investment in the social networking space has been based upon the assumption that the popular social networks would not only continue to see solid audience growth, but would continue to serve as a new  "medium" where consumers can easily be reached and engaged, making them advertising cash cows.

Of course, the fact that social networks are seeing slower growth and that users aren't spending as much time using them was very predictable.

I have been just one voice stating that the social networking market would inevitably cool off.

Anybody with a basic understanding of economics recognised that all markets are finite and that there would come a time when social networks would inevitably see slower audience growth as they captured large portions of the potential market.

Furthermore, anybody with common sense (or who has been around long enough to remember previous Internet fads like Geocities) probably recognised that social networks are little more than the modern equivalent of past fads and that, eventually, consumers would find "the next big thing" to become infatuated with. The psychology that fuels the growth of fads eventually fuels the decline of fads.

If consumers continue to demonstrate that social networks are becoming blasé, social networks will find themselves in considerable trouble.

Right now, their inability to effectively monetise is made forgiveable by virtue of the fact that they represent one of the most talked-out platforms for reaching consumers.

Because the popular social networks can deliver a large volume of advertising inventory, many advertisers have been eager to experiment and throw money their way despite the paltry results.

As the novelty of social networks wears off and more users start to spend their time elsewhere, it will be increasingly difficult for social networks to get a free pass.

They will lose leverage with advertisers and will urgently need to find ways to deliver tangible results (I suspect Mark Zuckerberg might hear the word "ROI" for the first time in his life).

When you consider that companies like Facebook have scaled their operations at a foolish pace and that it now appears that even the Googles of the world will not be immune from economic slowdown, it's clear that social networking companies may find themselves second guessing some of their decisions.

While I do not expect social networks to disappear overnight and there is value in social networking, this value has been heavily exaggerated and a reality check has been long overdue.

Expect 2008 to be a make-or-break year for many social networks. If they want to become the valuable companies that they like to think they are, they just might have to start delivering like them.

Perhaps the most amusing part of the inevitable decline of social networking from its peak will be that the idiotic publications that fuelled the hype, such as BusinessWeek, will have to start fuelling the bust.

Drama 2.0

Published 5 February, 2008 by Drama 2.0

237 more posts from this author

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Peter McCormack

I think it is to be expected that users will spend less time on a social network each month. When you first discover a social network such as MySpace and Facebook you spend most of your time in the first month setting up the account, personalising and learning how it work.

As months pass you become more economical in your use as you learn what you want and don't want from the network.

Same when you buy a new car, you spend the first month driving it everywhere or even the same with a new girlfriend etc etc...

almost 9 years ago

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Vincent

Well done peter McCormack.
You took the words right out of my mouth.
As always, statistics using averages are ALWAYS misleading, and absolutely useless on their own - unless of course you want to twist reality to fit your media headlines ;-)

almost 9 years ago

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Henry West

I am getting tired of social networks because of all the updates and friends that I don't really know. There's just too much clutter now. They got too popular. Most of my close friends are using them less too.....

almost 9 years ago

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Ian Smith

This is the end of me-too social networks. What will emerge are private social networks that have rich interaction and most important of all - enough inherent value to justify subscription fees not advertising.

Private social networks will become extensions of on-demand CRM and CMS offerings - features, not life-changing businesses!

almost 9 years ago

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mike ashworth

There is an air, initially at least, of multi level marketing, sign-up, get your friends signed up, throw sheep at each other(!), get bored, in the mean time more of their friends sign up, etc. etc

All these sites are free, they have to make money somewhere in their model, yet interruption marketing is a tired old way of doing things, might as well be like banner ads. Facebook wanted to make it more personal (with beacon) then got into lots of trouble for wanting to do this.

A time will come when, if people want a site like facebook they will have to give up something for it, a subscription or enough personal info re their shopping likes and habits to allow ads that are relevant, personal and timely. Anything else and the sites are going to die.

I have found them to be of some use with catching up with people whom i'd lost touch with, some networking, letting ppl know about events that might interest them, and that's it.

More network sites = less time on each, maybe opensocial might make a difference, personally I think sites like tumblr and twitter might well be the way forward, micro blogging, call it what you will.

Mike Ashworth
Business and Marketing Coach
Brighton and Hove, UK

almost 9 years ago

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Keith

There's going to be a growth in people using smaller, more focused, niche social networks instead of the big, popular ones.

This is because niche social networks are based on specific interests, vocations, hobbies etc. They offer users genuine relationships, support and advice instead of sheep-throwing and hotness ratings.

This will also be appealing to advertisers as they get targeted demographics and give smaller sites a way to make some money.

Sites such as http://www.ning.com allow anyone to create a social network about any subject while search engines like http://findasocialnetwork.com help users find niche social networks related to their interest while enabling these sites to promote themselves.

almost 9 years ago

Jonathan Moody

Jonathan Moody, Freelance at Language4Communications

I agree with Keith's comment above. Fairly low tech more focused niche social networks have been around for a while already in the shape of forums, message boards, usenets, blogs etc.

So if I want to find out what people think about car x six months after its launch, I'll probably do better taking a look or posting a question on some of the the myriad social media dealing with this subject. That's not to say that I can't tap into a car x forum on Facebook (or whatever), but you're better off going to niche sites for opinions and / or advice.

From a commercial point of view, these social media are going to provide me with a much tigher focus in gaining insight into and possibly engagement with consumers than more generalist, popular ones.

almost 9 years ago

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