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So farewell then Bebo?

April 9, 2010

There will be a Private Eye poem when it eventually happens.

In the meantime, we have to speculate, as many others have, what the possible demise of Bebo means for social network sites and online marketing.

‘Nothing much’ is the answer. Because the story seems to be about AOL’s objectives for the site, perhaps to be a serious rival for Facebook or even to ‘beat’ Facebook in some way. Don’t get misled, that this is somehow about the product itself.

In other words, the AOL management is running out of patience – and/or money – as it tries to work out what Bebo actually does.

There’s no doubt that social sites struggle to make money. There is no evidence that FB is making any and, moreover, no sense in which its size is any advantage at the moment. If it sees off its rivals, it may end up being the only profitable (English language) platform.

The Bebo dilemma also shows that you can’t just make another social site and expect it to work. The old rules of positioning and differentiation still work. I hesitate to say this but even Porter’s generic strategies might apply.

The other point is, of course, one of value. To be specific, customer value.

What is it worth to customers to utilise the networking functionality of a social site? Well, at the moment we don’t have a familiar measure of such value, because the service is continuous (it’s always there when we need it) but it is also the case that each time we use it, it adds a very (very) small increment of value to our lives. There are also costs of navigation andprivacy – some people lose patience with the choices they have to make on Facebook – “the mother-in-law/client” dilemma.

As technologies converge however, there is the potential to leverage some of the customer investment (of time) into social sites to access other information anf entertainment. But my feeling is that, in due course, there will have to be a widely accepted form of micro-payment for some of this content. The Time Online is getting it wrong – but if they were charging a fraction of a penny for access, it could work – especially if this was also accessible on your phone and TV.

The same issue arises for advertisers; they too are customers of social sites. Though here there is plenty of evidence there to tell the managers of the site how much their social ads are worth – there is a fairly pure market in action. If you pay per response, you can work out the return on investment easily. So the challenge for the social site is to manage the response rates – or more probably – to improve the targeting and encourage ‘opt-in’ amongst individual users. This in turn means  a cost to the (individual) consumer of privacy and control.

And herein lise the major dilemma. Whose side is the site on? It’s beceoming increasingly apparent to individual consumers that when they are asked to phone a premium rate line to vote in the X-factor that they are paying for the show. When online consumers face more targeted or intrusive ads…OR they pay micropence for functionality, they will see their position in the market even more clearly. Some of us won’t like it.

If Bebo can hang on, it is precisely in this difficult area that they could differentiate themselves. When or if Facebook decide whose side they are on…Bebo can be the opposite.  If consumers see Facebook as ‘free to air’ then Bebo could become the gateway to higher quality, commercial, content. Alternatively if people see FB as (essentially) American – Bebo could be not American.

But this isn’t a great insight – the fact is that no social platform is capable of saying precisely what it is for and that isn’t a problem until someone – like AOL’s accountants – asks the question.

One Comment leave one →
  1. Nick Wilde permalink
    April 12, 2010 9:47 am

    As always Phil you are on the money. As a regular observer on Facebook, I am not quire sure what value their users get from this site. The number of people posting seems to have fallen and there are an increasing number of posts that show that my FB friends are just addicted to a range of computer games. Perhaps this interest in Farmville might be good for farming and allotments, although I very much doubt it! On a more positive note these types of sites are very useful address books and good for tracking down people. But, back to Phil’s post, it is about value, and if Facebook can’t generate revenue from so many million users, how can their competitors?

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