The news that Twitter is (allegedly) for sale and LinkedIn is (definitely) floating, means social media is set to become a lot more commercial. Claire Weekes reports
First Twitter was for sale, now it’s not. LinkedIn has filed for an initial public offering (IPO), while potential buyers circle News Corp’s Myspace, which it is openly keen to dump. Facebook? Well that’s just been quietly continuing on its path for world domination.
Social media platform owners do not rest on their laurels for even a second. And while they’re all busy growing, competing, looking for new rounds of funding and trying to buy each other out, marketers are left trying to keep up, not only with all of this news, but with the impact these actions might have on them.
Take a potential sale of Twitter, for example. Rumours surfaced of a possible takeover by Google or Facebook; the same rumour mill also speculated that the micro blogging site was worth $10 billion. This figure left a lot of people scratching their heads because Twitter doesn’t actually make any money. But if it were to be bought at such a price tag, this would surely change. “Under new owners we would expect to see an increase in paid-for premium services and commercial sponsorship,” says Jason Bacon, head of digital at PR agency G2 Joshua.
If Twitter were to be bought by either of the Internet giants the repercussions would be felt by all three.
If Google was to take home the prize, it would fulfil a long desired aim by the search engine to move into the social media space and give it leverage to square up to Facebook.
If Facebook was to hand over the cash, we’d be living under the wing of an unstoppable social media goliath, which could end up with the majority of the world’s Internet population logged into it at any one time.
At the time that news surfaced of a possible Facebook or Google takeover, some observers commented that the $10 billion price tag was really just what either company would be prepared to pay so as not to let the other have it.
But all of this is of course hypothetical, since Twitter’s founder, Biz Stone, quite stringently denies.
A double-edged sword
What cannot be denied is the fact that social networks are becoming increasingly commercially focused. This could create something of a double-edged sword for brands and marketers. On the one hand, commercial focus offers increased opportunities within these networks for advertising and targeted selling. On the other hand, sites such as Facebook may end up pushing things too far and irritating its users with a persistent advertiser presence.
A recent study by market research company Foresee suggests that customers are massively turned off by the idea of being ‘targeted’ via social networks. Only two per cent said they’d be happy to receive promotional messages from retailers via social networking sites, compared to 64 per cent who prefer to be contacted via promotional emails.
What do statistics like these mean for the future success of social commerce? Facebook has seen a surge of brands set up ‘shop’ within its pages, allowing users to browse, recommend and buy items without leaving the site. It’s not just the worry that Facebook users may not respond well to the commercialisation of its platform – but that brands that go down this route risk losing a certain amount of their own control.
“The main repercussions of social networks becoming more commercially focused is the loss of control in identity and management of individual relationships – in your own site you can be responsible for your customers,” warns Bob Pike, chief operating officer at social network for business company, Site Forum. “Brands are essentially renting space from social media platforms like Facebook – the platform owns the intellectual property and all of the data on the individuals that join their groups.”
IPO gold rush
Over at LinkedIn, news that the business networking site wants to float is being met largely with praise by analysts. They believe fresh public investment will allow for continued development of its advertising service strategy – something it has been keenly working on. And LinkedIn appears to have started something of a gold rush, with Facebook now also rumoured to be looking at filing for its own IPO.
Maybe both have considered how one-man controllership of a social network doesn’t always work out. Myspace crumbled, despite being owned by a man both rich enough to throw pots of money at it, and influential enough to have the media big-up his own site while belittling its rivals. Incidentally, the latest word on Myspace is that it may be snapped up by social gaming company Mobospace and repositioned as a mobile network for listening to music on.
Whatever the future holds for our major social networks, it looks certain that all of them will continue to hold front-of-mind the ways in which they can use commercial tactics to grow – and if they get these tactics right then it can only be a coup for marketers.
“The major social networks started a long time ago to turn their minds to maximising ad dollars. Let’s not kid ourselves; the entire development of these networks is centred around maximising ad revenue, and Google mastered this from a very early stage,” says Steven Leith, senior manager, digital media at Grant Thornton.
“All these companies are on the lookout for the next big thing, the next differentiator, be it location-based services, micropayment mechanisms or strategic alliances. It doesn’t matter, the ad dollars are everywhere, the marketeers are queuing up to buy the space, and the social networks are increasingly finding ways to take their money. Twitter may not be making a whole lot of cash now, but how much is 130 million eyeballs a day worth do you think? $10 billion supposedly”.
As much as talk of commercialisation and billion dollar ad deals fly through the air, maybe social networks would do well to remember their roots, or else risk losing sight of what made them attractive to users – and advertisers – in the first place.
