by C.G. Lynch

Year Ahead in Social Networks: Facebook Will Still Be King, but Don’t Count Out MySpace and LinkedIn

Dec 12, 2007 5 mins
Consumer Electronics

Social networking experts say all three will focus on continued application development and new advertising initiatives.

In the fast growing world of social networks, the past year belonged to Facebook. The fast-growing social networking site made headlines at every turn. Its CEO boldly turned down a billion dollar offer from Yahoo, a rebuff once believed foolish but later validated by Microsoft offering up $240 million for 1 percent of the company, valuing Facebook on paper at $15 billion.


Microsoft Buys Minority Stake in Facebook

LinkedIn Opens Site to Developers, Jazzes Up Design

Privacy Concerns Prompt U-Turn at Facebook

But the year didn’t end well for Facebook. Its Beacon program, which allowed advertisers to broadcast the purchase of a Facebook user to that person’s friends, angered privacy advocates. The lack of an opt-out feature drew the ire of progressive political groups like The incident caused Mark Zuckerberg to tuck tail with an apology to his approximately 55 million users a week ago.

But after the New Year, expect Facebook to hunker down, says Oliver Young, a Forrester analyst. “They’re going to settle down and crystallize a lot their innovations around advertising,” he says. “They need to monetize more of the users they have.”

While analysts say it’s unrealistic for people to expect Facebook’s influence to wane in 2008, the company’s main competitors, LinkedIn and MySpace, are by no means dead. Expect them to rev up their operations to grab more users and advertisers in the consumer space. Analysts expect to see greater innovations in all three of the big social networks around the third-party applications that run on top of social networking pages. And some of these applications, they hope, will hold value for the business user.

Here’s a look at what to expect in terms of their business goals of each social network and the technology surrounding them.

Facebook: Make Money, Don’t Alienate Users

The Key for 2008: Make Ads Pay

The past year has been a whirlwind for Facebook, and it’s time to think how it can start turning substantial profits (for real; not just venture capital investment). Beacon, while a botched attempt at leveraging the power of Facebook’s vast social network, was the first step. In 2008, Forrester’s Young expects more advertising initiatives.

In addition, the company must show a consistency in their business model that makes advertisers comfortable to do business with it (the erratic Beacon was a misstep they won’t want to repeat). “If they continue to really change things so dramatically, it’s difficult for advertisers to figure out what they’re doing and what they get from doing business there,” Young says.

Technology: Make Widgets Matter

When Facebook opened up its platform to third party developers in late May, it saw an explosion of applications to run atop the site (known commonly as widgets). But picking out the applications that are business worthy can be pretty tricky. The majority of applications have trivial uses, such as people sending each other fake hamburgers and drinks over a widget; they don’t do much to boost productivity.

According to Stowe Boyd, a Web 2.0 expert who runs a consultancy, The Messengers, and pens a technology blog, we might expect to see developers start creating apps that serve business purposes. “Creating ones that will be more professional in their orientation will be important,” he says.

The bottom line: As Facebook’s user base becomes both a consumer and business channel, it needs to provide useful services that advertisers will want to support.

MySpace: No. 1 in Users, No. 2 in User Experience

The Key for 2008: Monetize User Minutes

While MySpace wasn’t the darling of the media this year, there’s no sign its rate of user adoption faltered. It claims some 70 million users who spend 200 minutes or more each month on the site. “If you look at the adoption, MySpace has been going as well as they ever have,” says Forrester’s Young. In terms of actual monetary growth, it’s hard to know how well it does because it’s buried within News Corp’s $28.7 billion in financial data.

For MySpace, the question will be how it can leverage those eye balls and turn them into dollars. One way might be to take advantage of the media outlets of its parent, which include Fox News and soon, The Wall Street Journal.

Techology: Time for Extreme Makeover.

MySpace needs a makeover. If one goes to set up a homepage, he will find a chaotic, loud mess that has limited choices in configuration. And the whole is thing much less flexible than Facebook. “Where as Facebook has a very sparse and subtle design, MySpace feels like Times Square,” says Young.

LinkedIn: Could It Be Cool to Be Square?

The Key for 2008: Playing Catch-Up on Third-Party Apps

LinkedIn is in a unique spot as they approach 2008. While they don’t have the glitz and glamor of a growingly diverse Facebook user-base, the site’s constant attention to maintaining a professional feel could help monetize its business in more ways than just ads.

According to Young, LinkedIn can explore the idea of helping sales representatives and job recruiters leverage the platform for lead generation. That said, he says LinkedIn lost its edge by being late to opening its platform to third-party application developers.

Technology: Opening Up Platform, But How Much?

When LinkedIn opened their platform for third-party development in December, [/article/163601] some seven months after Facebook, Boyd questioned if it was too little, too late.

“LinkedIn is long overdue here,” Boyd says. He also notes the innovations that can occur atop LinkedIn’s platform are limited given its narrow focus. “It’s a big catalogue of resumes and not much else. It isn’t incredibly social,” Boyd says.

The other thing that could hinder application development will be that LinkedIn might put tight restrictions on what apps it makes available to its users. Facebook and MySpace have adopted a liberal approach to this trend.

“They’ll be heavy handed about what makes it on to LinkedIn,” says Young. “But I expect the command and control mentality to relax over time.”