1. ADTELLIGENCE GmbH
Mannheim, Germany
www.adtelligence.de
info@adtelligence.de
“Cashing in” on Connections – Monetizing Today’s Social Networks
White Paper (2009)
Chapter 6 – Summary and Conclusions

2. Contents
6. Summary and Conclusions
www.adtelligence.de
www.adtelligence.de 2

3. The importance of Social Networks
will persist in the future
Lately, Social Networks have become
some of the most visited sites in the
1 Internet and will be even more important
in the future
Social networks not only could replace The importance of
2 email and chat but also provide a Social Networks is
platform for all internet-services still growing
In Social Networks, otherwise anonymous
Internet users reveal a great deal about
3
themselves and talk about their interests
www.adtelligence.de 3

4. Who is the Winner?
Depends on “Global vs. Local” and
“General vs. Specialized”
Global/International
 It has been demonstrated that
technological innovation is the number
one factor if you want to succeed
 Global or local and/or general or Facebook,
specialized: Social Networks need to LinkedIn
continue to concentrate on technological MySpace
innovations
 Since fast innovation depends on capital,
Specialized General
capital coverage will have the last word
and two things play an important role:
 1) The perspective that investors see in a
network and with it, the readiness to
XING,
allocate more money
StudiVZ WKW, QQ
 2) The actual situation of income of a
Social Network, i.e. with positive cash flow
as in the business networks
 No matter what, the business model should
be focused to key monetization factors
Local/Regional
www.adtelligence.de 4

5. Is there a trade-off between
growth and monetization?
?
■ Popular Social Networks, such as national networks in Germany,
propagate trade-off between growth and monetization
■ The growth model of the past which aimed at getting new users through
network effects will become more and more difficult through disruptive
competition
■ The frontiers of the traditional growth model are already visible in most of
the markets
■ The focus on growth will be substituted by the focus on innovation, since
that’s the only way to keep current users and gain new ones
■ Only the future will tell if MySpace has made a mistake with setting the
focus on monetization, as some people claim
www.adtelligence.de 5

6. Only Innovation Power and Monetization at
the Same Time can ensure Success
Innovation
power
Success-
model
Monetization
www.adtelligence.de 6

7. Social Networks that successfully promote
innovations, could help monetize one
another
 Numerous users permit the implementation of innovative platforms for Social Networks
!
 Sponsored models build the basis
 Virtual currencies and E-Commerce-Integrations could become a second pillar
 Abo-/Freemium-Models could provide a price advantage for the user but the barrier of
implementation is high
 There is still a long road to reach a business model with various pillars, therefore
quicker solutions are necessary.
 In the specialized area innovations go hand in hand with monetization
 Good examples are XING events or LinkedIn Premium Webinars
 “Semi-specialized” Social Networks like schueler.cc or StudiVZ either have to expand their scope
or have to use targeting approaches to distinguish their quite undifferentiated user group.
 The more specialized a network is the more important are quality, individuality and
exclusiveness as distinguishing features
www.adtelligence.de 7

8. Social Networks can use Topics such as
Advertising, E-Commerce and Market
Research to achieve Fast Monetization
Possible Revenue Models of a Social Network
Indirect Direct
Virtual- & e- Market
Advertising Subscription Freemium Virtual Goods
Commerce intelligence
 The major pillar of  Not only an affiliate  Integration  In competitive & fast moving  Very interesting in
every online model but real possible relatively markets direct monetization the long term
Community integrated e- & v- quickly through subscriptions or paid  Already cash cow
 Great potential Commerce shops  Great potential content are possible. in online gaming
with targeting with personal & with new  But they make sense only in and some
 Online social technologies niches like “decision makers” or communities like
Communities can recommendations communities with specialized Netlog or QQ
leverage  Quick implementation focus groups & with high vendor  The better
competitive possible lock-in effects alternative than
advantage  Digital Goods like  Local communities could use subscription
through detailed games, music & offline monetization through through pay as
audience targeting videos could become events etc. you go &
& reporting a second major  Nearly impossible for mass micropayment
income stream market  ad revenue model is
more attractive
Targeting Technologies will help to gather “low hanging fruits” in
the field of indirect monetization
www.adtellience.de 8

9. New targeting methods rapidly help
achieving profits in advertising and leverage
other revenue streams
 In the short term, advertising will continue to be the main income
Sophisticated targeting, model of a social network – and in the long term the indirect pillar
recommendation & that gets more and more important
collaborative filtering  Through advanced targeting, the advertiser can access attractive
target groups and gain higher revenues
technologies are key to
individualizing high
 Also virtual goods and E-Commerce integrations can benefit
considerably from targeting methods: Which user gets which
traffic Social Networks product offer?
for a sustainable  The yet untouched area of market research approaches gains
development and a importance through targeting - clients get access to tailor-made
meaningful business target groups
model  Finally, targeting is a way to optimize the entire social network – to
decide which user gets delivered which contents and information,
and can be made considerably efficient.
 Users of Social Networks likely to discuss their wishes and interests –
data that has to be collected and evaluated in order to gain insight and
to minimize the risk of false strategies
In addition, indirect monetization models have a competitive advantage so that
companies like Google (as they just did with the navigation sector) could not attack the
business model through a “free” offering).
www.adtelligence.de 9

10. However, …
...there is no universal or perfect business model
Remember…
success lies in the
appropriate combination of
different revenue models
and continuous innovation
and development!
www.adtelligence.de 10

11. Get Connected!
info@adtelligence.de
www.adtelligence.de
Phone: +49 (0)621 87204066
ADTelligence GmbH
Julius- Hatry-Straße 1
68163 Mannheim