Wednesday, April 16, 2008

The Emergence of Social Network Intermediaries

At InterneXperts, we've recently come across two interesting companies which reflect an emerging trend within the social networking space. While early social networking sites focused on massing, a large audience (e.g., think facebook, MySpace, etc), the new iteration of social network sites are frequently specialized niche networks, focusing on specific issues, interests and activities. Although their audiences tend to be order of magnitude smaller, their users are very hands-on and highly-engaged. These social network capabilities can either be standalone sites or integrated into a popular, existing destination site.

One thing to keep in mind is that social networks are just the latest embodiment of a function that has always existed on the Internet: Whether they are usenet user groups, blogs, bulletin boards, newsletter lists, forums, or social networks, they represent a collection of users who share a specific interest or avocation. The truisim that "everyone is passionate about something" lives. There are more than 40 million such groups on the Internet today. The challenge is that these groups are highly fragmented; making it very difficult and inefficient for Internet advertising purposes. KickApps and Ning attempt to address this issue by offering a platform on which moderators can construct their own networks, and then monetizing that aggregated inventory that spans the social networks on their platform.

Now, we're seeing the emergence of the social network intermediary. Essentially, these are entities that seek to identify and link all the fragmented user groups for specific constituencies. Similar to the manner in which Federated Media aggregated blogs into an ad network, these new intermediaries strive to build relationships with the group leaders, and then help those moderators either directly or indirectly monetize their groups. The first example is a European-based startup, whose founders come out of the online community development. We’re under a NDA but hope to share more specifics in a follow up post. Essentially, their goal is to provide a range of value-added services for these group moderators.

The second startup is an interesting Cambridge-based startup called WEGO Health, backed by General Catalyst. They are identifying/recruiting health experts in a variety of health information categories. Frequently, these experts are responsible for forums, groups, newsletters, social networks within their specific area of interest. Over time, WEGO Health will likely want to offer tools and resources that contribute to the success of these consumer health advocates. By identifying and linking these experts, WEGO Health hopes to extend the health marketer's branding message, in time, to these distributed and fragmented groups: This would offer a pharmaceutical or health provider marketer efficient access to a very engaged, social media audience on a scale of reach and frequency that is not currently available.

While this is a very early-stage market, the business requirement for aggregating niche community groups and networks remains clear: Brand advertisers need reach, frequency and efficient access to an engaged audience for their campaigns.

InterneXperts, as always, welcomes your feedback and opinion.