Archive for the ‘social networking’ Category

Take 2: How Social Media Changes Your Business

May 23, 2008

My colleagues Stephen Baker and Heather Green wrote a fabulous update to their 2005 BusinessWeek cover story, Blogs Will Change Your Business.

It’s called Beyond Blogs: What Business Needs to Know, and you should definitely read it.

Since our 2005 story came out, a lot has changed in the blogosphere. Facebook, YouTube and Twitter barely even existed. As Steve and Hetaher write, “Three years ago, we wrote a big story—but missed a bigger one.”

The bigger story, of course, is the rise of social media–of which blogging is just a small but important part.

Here’s another snippet from the story encapsulating the shift we’ve seen the last few years:

“But blogs, it turns out, are just one of the do-it-yourself tools to emerge on the Internet. Vast social networks such as Facebook and MySpace offer people new ways to meet and exchange information. Sites like LinkedIn help millions forge important work relationships and alliances. New applications pop up every week. While only a small slice of the population wants to blog, a far larger swath of humanity is eager to make friends and contacts, to exchange pictures and music, to share activities and ideas.

These social connectors are changing the dynamics of companies around the world. Millions of us are now hanging out on the Internet with customers, befriending rivals, clicking through pictures of our boss at a barbecue, or seeing what she read at the beach. It’s as if the walls around our companies are vanishing and old org charts are lying on their sides.”

Social Networking Throwdown: AOL Acquires Bebo for $850 Million

March 13, 2008

Talk about coming out of nowhere. This morning, AOL announced it acquired the social network Bebo.com for $850 million–the most money ever paid for a social networking site (if you don’t count YouTube).

I actually think is a pretty smart strategic bet–though it comes with its share of risks. This is AOL’s boldest move yet as it shifts from selling Internet access to an advertising-based business model on the open Web. It has already spent more than $1 billion scooping up online ad firms such as Quigo, TACODA and Third Screen Media. And it recently appointed the head of Advertising.com, Lynda Clarizio, to run AOL’s broader ad-network group, Platform A. But this puts a large stake in the ground that AOL intends to be a leading player in the global social media market.

It’s also a good tactical move. As Microsoft and Yahoo! do their mating dance, AOL can use the distraction of a merger to steal a beat on its rivals in the online ad market. Lord knows AOL will need it–as Google just closed its acquisition of DoubleClick.

In fact, this deal could make AOL the most popular Web site on the Internet. Right now, AOL claimed about 109 million unique visitors, making it the fourth largest Web property, after Yahoo! (138M), Google Sites (135M) and Microsoft Sites (119M). Add in Bebo.com’s 40 million worldwide users and that puts AOL on the top of the heap.

“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” said Randy Falco, Chairman and CEO, AOL. “What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.”

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Sure, this deal gives AOL scale. And Bebo’s growth will likely pick up as it “will be featured prominently in AOL’s international expansion efforts after the deal is closed,” according to the press release. AOL is in the midst of a big global push right now. Over the last year, AOL has launched 17 international web sites, and it has plans to expand to 30 countries outside the U.S. by the end of 2008, says today’s release.

But the advertising model for social networks is not fully baked. Growth rates on these networks are slowing. The ads suffer from very low click-through rates compared to other parts of the Web. And the current enthusiasm for advertising on social networks may be exaggerated by guaranteed ad deals and hopeful experimentation. Like MySpace and Facebook, AOL must now figure out how to crack the code of social network advertising. That is the Holy Grail of the Internet now. And AOL just announced it is part of the chase.

Zuckerberg: Being a CEO is “Hard”–enter Google’s Sheryl Sandberg

March 5, 2008

Yesterday, Facebook announced the hire of a new chief operating officer, Google vp Sheryl Sandberg. The New York Times, which buried the story on p. 6 of the Business Section, argued that Facebook’s 23-year-old CEO Mark Zuckerberg was “following the Bill Gates model and holding the top post.”

But you have to wonder how long Zuckerberg will follow the Gates model. He clearly wants to hold on to the reins and he may grow into the role of being a true CEO. But my gut tells me that the company and its investors will bring in a more seasoned exec to take the company public, if and when it goes public. Sandberg, while highly respected and successful, has never been a CEO before and has never taken a company public. And with so much at stake, you’d think the company would want to have someone in the role who’s done it before.

The Wall Street Journal, which gave the story huge play on p. 1, got Zuckerberg to admit that the CEO job “is hard.” Last December, the Journal’s Vauhini Vara reported that Zuckerberg held a meeting with Roger McNamee, a powerful Silicon Valley investor who Zuckerberg considers to be a mentor. During the meeting, Zuckerberg complained about the pressures he felt as a CEO, asking McNamee: “Is being a CEO always this hard.”

That one admission is another sign that Zuckerberg, however brilliant he is as a technologist and visionary, is probably not up to the task of running a multi-billion company with thousands of employees. What did he expect? That management would be any easier than slinging code? The comment just sounds naive.

I see Sandberg’s hire as more of a replacement upgrade for Facebook’s previous COO, Owen Van Natta, who recently left the company to pursue opportunities as a chief executive somewhere else. Van Natta was a former Amazon exec, and he did a fine job helping to grow the company and build a great brand. But Sandberg, the vp for Google’s global online sales and operations, is the perfect person to take the company to where it needs to go next–to create a advertising and marketing model that scales into the billions of dollars.

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Generation MySpace is Getting Fed Up

February 7, 2008

My post about social networks triggered a torrent of commentary and links. Well, here’s what I really think is going on after doing a bunch of reporting and thinking. The story by Spencer Ante and Catherine Holahan will be in this week’s issue of BusinessWeek, and it is called “Generation MySpace is Getting Fed Up.” And it just went up our Web site.


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