Social Networking Monetization – What India Can Learn From China?
Social Networking as most know is one of the really hyped and also one of the most used applications on the Web today. Social Networking is not a fad but more a global phenomenon thats getting more engrained in the social behaviour of people in general.
While the numbers for Global social networking giants like Facebook, Myspace, Orkut and Bebo are large they are still not making the tonnes of millions of dollars that a Google is making via search or a Yahoo is making via its properties. This fact begs the question whether Advertising is the right business model for social networks? Im sure Indian social networks like Bigadda, Ibibo, Indyarocks and others are already asking themselves this question.
The question that also arises is that are any of the social networks globally making tonnes of money? Well the answer is yes and its India’s Neighbors China which is the answer!
Techcrunch has an indepth analysis on the chinese social networking market and its monetization strategy. Here are key points from the post:
Social Commerce bigger than Ads?
‘12% of Qzone – A Large chinese social network (Probably the largest in the world) revenue stems from online advertising with the rest coming from virtual item sales such as applications and avatars.’
The above statement is shocking to say the least and now consider this.. The total revenue of the company that runs Qzone is over $1 billion in 2008. Now then Are we missing the point somewhere? None of the Indian social networks have even attempted social commerce. A mind block or is India different to China?
Are Chinese a Different lot? What’s their demographic?
There are 300 million Chinese online users and 66.7 % of them are younger than 29 years old and 35.2 % of them are teenagers. Well if Im correct India’s demographic would be similar if not the same given that India too is a very young country. So what else could be the issues? Credit cards?
App Economy and Monetization
The Chinese social networks seemed to have aped the Facebook open api app economy fairly well and guess what they have introduced payment api which means developers pay the social network to build apps. Infact there are three montization models for apps – shared ad revenues, income through virtual currencies, and customized development for branded applications.
Now again none of the social network have introduced apps Bigadda, Ibibo, Desimartini, Bharatstudent, Minglebox none have any app platform. Makes you wonder if there is too much dependency on ad revenue.
All in all there is a clear lack of innovation is seen in the Indian social networks when it comes to monetization. They are still pursuing ads and to some extent social branding as the only mechanism to earn revenue. If these social networks need to survive in the longterm they would have to look at more options in terms of monetization and the Chinese options might just be a starting point to learn adapt and make your own.
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E-commerce hasnt taken off in India. People still arent confident to spend money online(maybe secuirty reasons)and majority has gotten into the idea that internet means free so I doubt people will invest money to buy virutal items as in the case of China which was the major source of income for the social networking sites theres.
In India social networks try to acquire users even from spamming…like the pop-up campaigns of bharatstudent through ISP’s, sites…..cheap techniques of ibibo by sending fake women profile visitors…..these techniques could attract users but not hold them for long unless they innovate the product….forget monetization for a second….They themshelves don’t know what problem they would be solving by being in existence…their main aim is to make many users and get good valuation….now comes the money part….social networks will never be able to command premium valuation atleast in third world countries unless they apply new advertising techniques…like blending ads into their mediastream..as far as virtual commerce goes the biggest hurdle(atleast for India) is the acceptance of debit cards online which many portals don’t allow…cos even I want to buy a hosting and couldn’t do it cos I have 10 debit cards but no credit card to complete transaction through google checkout–now who told getting credit is bad!!! …Virtual items could also sell in india if they are blended well and priced well cos don’t expect to sell 1$ items in India….Those product should instigate emotional and aspirational desires……
Though you gave a reference to social commerce in chinese SNS you didn’t mention what 88% of ad revenues comes from cos not all of it would be through ppc
Social networks in India have not tried to be creative at all. They’ve just picked up the ad revenue model of existing SNS and tried to apply it here. They care more about the quantity of hits on the websites and not about converting them into users. A SNS here is about reading celebrity blogs, not about using it as a tool for a wider network of friends. I wish they would really tap into what the youth wants rather than just assume that all they want is to scrap and poke each other.
The telecom industry has a good example, Ringtones, where people have taken to it so fast. I think if there is a good product hesitance to spending money online will reduce.
I agree with Sandeep. India is yet to see the emergence of ecom in a holistic sense. Micro transactions are also a big pain thanks to lack of confidence in and access to payment options.
having said that, we at Indyarocks have been enabling transaction services regularly for our users. We currently are the no.1 web partners for our service providers in online movie ticketing and photo printing space. More transaction services are on way which will make sense on a social net like ours. We are learning and building a strong case.
I would love to see an indian group crearted on Beaver.com. I am the founder of Beaver.com and asking for an indian blogger to form a group and blog on http://www.beaver.com.
I agree with sandeep too but then if you are right then there is practically no business in social networking in India. What are the other possible revenue streams if its not commerce?
The applications is something which we (ibibo) are very much into, in fact step ahead because we develop these applications basis the campaign carefully mapping the core brand attributes & needs.
The default senseless parking of the application on the site is something we are purposely keeping away from because over the period of time it only dilutes the overall efficiencies.
The advertisers then when associate with any such application or builds another one for some other campaign it only adds to reduced ROIs because of reasons like
- fatigue setting in
- application not being discovered
- multiple applications for same purpose (Nokia Music vs. Sony Ericsson Walkman Phone Music vs. Sony Walkman Music so on & so forth)
>> On the other hand we at ibibo try to work with brands basis brief to conceptualize applications mapping core needs & attributes.
>> Such applications are then developed in-house at no cost to client.
>> We seed these applications within ibibo eco-system for Users to engage with it unlike others where brands have to start spending money to get the users
>> By default the actions are recorded which then our smart viral feed engine picks up and forwards to all friend’s taking it to next level.
Some of the applications that we executed -
> Free SMS application for VIRGIN MOBILE
> Show ur Desipan application for Kurkure
> Idea of the Day application for Idea Cellular
> Sing ur Dil application for Cornetto
> Motion Gaming Application for Sony Ericsson
> Musical Blurbs for Nokia Express
and many others…
The response to these applications have been higher than the overall average CTR of the campaigns and were much appreciated by clients.
I have personally met many clients who have done applications on facebook and got very little to little response (reasons above) and here we offer the complete solution which indeed is ROI driven.
The acceptability of internet and within internet branding and that too on applications will take it’s own course but we are here to make it all better with guaranteeing performance…
Qs?
Anubhav Sharma
mail4anubhav@gmail.com
Well you are right in pointing out that 300 million chinese use the web. The chinese SNS are bound to get a larger chunk of this online users as most of the chinese dont know english. So they get most of their users for themselves, the international competitions losses its grip before it even begins.
Internet penetration in India is very less, even if there is internet connectivity they spend less hours online compared to their chinese counterpart.
There is no lack of innovation in Indian social network market, just that indians prefer a facebook or an orkut to home made ones.
IndianBee allows applications,videos,blogs and forums.Plus it has a very privacy settings, infact you can even turn off email notifications completely. No emails No spam.
Lack of innovation cannot be an answer why indian social networks dont get popular.