Social networking is the gathering of individuals into specific groups, according to their interests or background. Social networking is possible in person, for example in the workplace, universities or high schools, but it is more popular online. It is because if to compare to high schools, colleges and workplaces, the internet is used by millions of people who want to meet other people, to gather and share first-hand information and experiences on different topics (What Is Social Networking?).
Social networking websites work like an online community of internet users. Depending on the topic of website, people share there common interests in hobbies, religion, politics and other spheres of their lives. As soon as you sign up, or register on a site, you get access to reading profile pages of other members and possibly even contacting them (What Is Social Networking?).
People can use social networking in order to communicate with current friends, keep in touch with old friends or find new friends according to similar interests. They also can share their interests with other accomplice members in groups and forums. There are also networking that can also help their members to find a job or making business contacts (Social Networking Websites Review. 2010).
A lot of social networking websites also offer additional services. In addition to blogs and forums, members of these sites have an opportunity to reflect their personality by designing their profile page. The most popular additional services include music and video sections. So members have an opportunity to read information about music artists from the artist’s profile page, also can listen to their songs and watch clips (Social Networking Websites Review. 2010).
The most popular social networking websites of 2010 are Facebook, MySpace, Bebo, Friendster, Hi5, Orkut, PerfSpot, Yahoo!360, Zorpia, Netlog, Twitter, LinkedIn(Social Networking Websites Review. 2010).
Facebook is a very popular social network site that in the begging was only for college students, but now it is free and anyone can join it. Now it can be called a cultural phenomenon that is widespread. It became an undisputable leader amongst social networking sites. This site consists of many separate networks based around schools, enterprises and regions. The site is still mainly focused at college and high school age. Profiles allow members to post pictures, write comments, blogs and apps. Also, its privacy option is one of the best the best in Internet. (Social Networking Websites Review. 2010).
LinkedIn is a business-oriented social networking site. It is used for professional networking. In January 2010[update], LinkedIn had more than 55 million registered users, in more than 200 countries and territories worldwide (LinkedIn. 2010).
The main purpose of LinkedIn is to give an opportunity to registered users to create a list with information about people they know and trust in business. Such people in the list are called Connections. This list of connections can later be used in different ways of ways. It can be used to find jobs, people and business opportunities recommended by someone in one’s contact network. Also employers can post jobs and look for potential candidates. Job seekers can check the profile of hiring managers and find out which of their current contacts can introduce them (LinkedIn. 2010).
Twitter is considered to be an ultimate micro blogging tool for social networking. It is a free social networking providing microblogging service that gives an opportunity to its users to send and read messages that are called tweets. Tweets are text messages that consist not more than of 140 characters showed on the author’s profile page and delivered to his subscribers. Senders can limit delivery only to their circle of friends or allow open access. Users can follow lists of authors. The users can send and receive tweets through the Twitter website, Short Message Service (SMS) or external applications. The service itself costs nothing, but accessing it through SMS may include phone service provider fees. So Twitter helps people to connect with each other (Twitter.com – A Detailed Review. 2009).
What are the Revenue Models for Social Networking Sites Themselves?
Social networking sites are dominating in Internet now. People often find themselves updating their status on Facebook, or sending messages on Twitter or downloading new photos to their page on MySpace. There are a lot of social networking sites that allow users to create profiles without charging them. But how can these sites make enough money in order to support millions of users?
One of the ways how social networking sites make money is using investments from venture capitalists. These investors are significantly making a bet that the site they’re investing in will become popular and will bring a profit. Starting such business from the very beginning can mean a big payoff at the end. The world knows several examples when big corporations buying Internet startup companies for billions of dollars (Jonathan Strickland. 2009).
At the end of 2007 it was a boom of venture capitalism. It was common for businessmen to invest money in promising Internet projects. Such service as Twitter wouldn’t exist without these investors. But because of economic problems, venture capitalism became careful with investment; they are still investing, but became pickier about their choices now.
So, now social networking sites need to hope for one of these results: convince a bigger company to buy the site or to manage to make money.
The most popular way for Web sites to earn money is to offer companies to put advertisement on the site. Probably it is difficult to believe but advertising in Internet is still an emerging market. Experts in Marketing are still trying to find the best way to involve advertising into the Web experience without negative reaction of users.
So, the more popular the site, the more money it can bring through advertising. Such sites like Facebook have millions of users. That is why advertisers are ready to pay more for an ad on this site than for the same ad on a smaller social networking site.
The other opportunity to earn money is to charge users for membership fee. Even if most social networking sites try not to use such strategy; some managed to use it rather effectively. A lot of dating sites hide key information from users until they choose to pay for a premium membership.
Other new business models will appear when social networking sites will grow and become more popular. Other strategies may include special premium accounts for companies. Companies will be able to use such sites as an advertising platform. It is known, that the founders of Twitter have discussed such a business model that would make companies to pay a special fee in order to create an official company Twitter profile.
We see it clearly that social networking sites have become a big part of people’s social life. They are used by millions of people and developers create profiles that depend on these sites. But they will need to earn more money if they’re going to stick around (Jonathan Strickland. 2009).
How are Businesses Using Social Networks?
Social Networks are very useful for businesses, because they can be used for advertising of business on it (Linda Roeder. November 12, 2007).
Companies have an opportunity to create profiles and write information on their profile pages. So when companies` clients, customers or vendors need information about the company, they can simply check profile page and see it; they shouldn’t spend time making calls or sending emails and waiting for response.
We should also mention that social networking sites are a great way to inform employees on what’s going on in the company. Companies have an opportunity to send group emails to all their employees at once or write news on the blog (Linda Roeder. May 25, 2007).
Social-media sites, such as Facebook, Twitter, YouTube and a lot of other sites, have made a great effect on how millions of Americans, especially young ones, cooperate with others, shop and view brands. Such sites area is a real-time digital lifestyle influenced by smartphones and netbooks.
Marketers have paid attention to this. Social-networking services indeed are required business tools. According to Forrester Research survey of 1,217 business decision makers all over the world last year, 95% use social networks somewhat. And 53% of 300 marketers were planning to enlarge social-media marketing spending in the nearest time.
Twitter has about 40 million users who create a big amount of tweets. Users of this site spend more than 300 million minutes on the site per month.
Just now, consumers don’t search for services and products. Better even to say that services come to their attention using social media, says Erik Qualman, the author of Socialnomics, the book in which author explains how companies do business and how they use social sites (Use social networking to reach customers. August 27, 2009).
Social-networking businesses help social-media clients to:
•Add customers quickly.
“Social (media) is one of the key trends driving our business,” says Kira Wampler, social-media marketing leader at Intuit. “It’s more than pure marketing. It’s about fast connections with customers and building an ongoing relationship.” (Use social networking to reach customers. August 27, 2009).
Famous pizza company Papa John’s added 148,000 fans in November through marketing activity on Facebook. The company offered a free pizza to everyone who signed up as their fans on Facebook. Such promotion gathered several thousands of users and drove its traffic on Web up to 253%. Just now this company has more than 300,000 fans and plans to have 1 million fans at the end of this year.
•Word-of-mouth marketing. Best advocates of companies are their customers sometimes. Such companies as Best Buy and MyFICO, built special online communities where their clients could freely evaluate products and services.
According to a recent survey of 25,000 people held by Nielsen, nine of 10 customers, trust their peers more than marketers.
•Enhance customer service. The company Comcast has used Twitter more than for a year, to talk directly to customers. The Twitter page of the company has 28,000 followers.
The company Lenovo had got 20% less calls to their call-center in theUSAduring six months because nearly 50,000 clients checked the community website, reading information about laptops.
•Speak directly to customers. Such sites as Twitter, Facebook or Blogs, can be an perfect forum for CEOs to offer users a wanted viewpoint (Use social networking to reach customers. August 27, 2009).
Here are some interesting facts:
Facebook : Over 10,000 websites use Facebook Connect, the service that allows users of Facebook to log in to adjacent sites using their Facebook profiles and wrack information from those sites with their friends on Facebook.
Twitter: Twitter users spend about 66% more dollars on the Internet than those who don’t use twitter (according to market researcher ComScore).
LinkedIn: This site has over 365,000 profiles of companies. And more than 12 million small-business professionals are members of the site.
MySpace: Over 1 million people and small companies advertise their services and goods on the site (Use social networking to reach customers. August 27, 2009).
Social networking sites have become am important part of people’s life. People use networks to keep in touch with friends, share views, meet new people, find jobs, establish business contacts and just enjoy time communicating. Companies use such sites in order to advertise their goods and services, become closer to customers.