Tuesday, September 25, 2012

Does the social NET work ? Facebook/Linked in and old models of value


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Thinking about both facebook and Linked-In is that they have both failed to use what they are in order to make value. They are both stuck in previous generation economic models. 
Let me explain - if you want to advertise on Facebook it's 'big advantage' or 'USP' is the detailed demographic information that it holds on it's users. They know ( or think they know) how old you are, gender, geographic region. Let's face it this is knowledge that most web advertisers can either find out or infer. Google probably know how old I am or could find out by profiling if they wanted to.

So the demographic data isn't something that Facebook or Linked in or any other social media has a strong monopoly of. 

But something they do have is the social nextwork. 

There have been various studies and reports showing how much your social network effects you. If your friends are fat, your more likely to be fat. If you friends vote on way your more likely to vote one way.  From social network theory we know not all these friends are equal.  The person who is most likely to introduce new thinking is the so called 'weak link' the person who knows you and a completely different social group. So from a value point of view an advertiser whats to target people who are likely to be influential - these might be like the  early adopters, they come after the inovators but are socially more connected and 'respected' in a broad sense. Yet if you sign up to use Facebook or Linked-in advertising you DON'T see an option to pay a bit more and only target 'influential people'. These are the people who everyone responds to and recommend or  critique something. In advertising parlance these are the 'cool kids' who others are likely to be influenced by. 

 If you think you want to change opinions you actually target the people around someone.  People ofter look to the social network to get an idea of 'whats normal'.  If two or more people are doing then they are more likely to try it them selves. So from an advertising point of view your much better off targeting a socially connected group of people. From this we can see offering a socially connected group is far more powerful than just a limited demographic. 

Yet in both cases Facebook and Linked-in have failed to capitalise on the unique data they have. My prediction is that it will one day happen. 







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