In the last few hours two associates both pointed me to David Beisel’s post on Vertical Social Networks. Based on my previous post, obviously I agree with David that we’ll start to see niche or vertical social networks. I wanted to address David’s question about the monetization of these vertical social networks:
So the more niche and limited audience a given subject area, the less able the network is able to take advantage of this exponential effect. But Iâ€™ve also argued that in the long run, the value of the network is not only determined by the number of nodes in it, but in the ability for the network to monetize those nodes. The question then is that if thereâ€™s a greater ability to monetize niche subject areas than more general ones because of the passion and interest-level involved in some of them. The answer is probably that it varies from vertical to vertical, subject to subject.
I have data on these things that most observers probably don’t have handling thousands of publishers advertising, and I can say that general social networking sites can’t monetize each “node” or user as well as a niche site can monetize each one of their users. As an example, let’s take two sites with similar unique visitor and ad impressions that I have permission to talk about in detail.
The first is Whoomp.com. This isn’t a social networking site, but it’s got a similar demographic and general audience who’s interested in humor and entertainment. A lot of this site’s links come from social networking sites where people are sharing funny videos with their friends. This site averages somewhere between 1-2k in ad revenue a month.
Let’s contrast that with Wakeboarder.com. This is a specific vertical based on a sport/hobby, so the userbase is very focused in their interest. As I mentioned above, it has a similar unique user and impression level to Whoomp.com, but it will average about 4-6k in revenue from advertising. It also has other specific monetization such as ecommerce which is much harder to pull off on a less focused site.
While neither of these sites are social networks, if we changed these to Myspace vs. Wakeboarding Social Network Site, I can guarantee you that each user is worth more on the more focused wakeboarding site.
The lesson here is that specific niche social networks will not grow to the size of Myspace, but they don’t need to still be a viable business.