Ralf Ahamer, CMO of XING AG, presented on making money from social networks using XING as an example. He showed XING's growth in members and revenue. XING's business model includes premium memberships, recruiting services, and advertising. Social networks provide value by connecting people and information. They have become popular channels for communication and are shifting reach away from traditional portals. Both opportunities and risks exist for companies using social networks, including generating revenue from subscriptions, advertising, and virtual goods. Success requires clear goals and topics for communities as well as engaged members and activity.

1. iStrategy Forum Berlin
Make money from social networks –
example XING
Ralf Ahamer – CMO XING AG

2. 01 XING in Numbers (I)
Members in mio. Premium Members in thousands.
36% 41%
662
635
8,3 606
7,9 550
7,5 513
7,0
6,4 470
6,1
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09
Ralf Ahamer – CMO XING AG

3. 02 XING in Numbers (II)
EBITDA in Mio € Umsatz in Mio €
37%
margin
12,9 *
35,3
6,9 19,6
2007 2008 2007 2008
* Excluding one-off costs for M&A
Ralf Ahamer – CMO XING AG

4. 03 Business Model
The XING Business Model consists of three main revenue streams:
Premium Membership, Recruiting Business & Advertising/ e-commerce.
1. Premium Membership Recruiter Membership
6,95 € mth. 3 Months 29,95 € mth. 3 Months
5,95 € mth. 12 Months 39,95 € mth. 6 Months
4,95 € mth. 24 Months 49,95 € mth. 12 Months
2. Job Board:
0,59 €/ Click on Job Ad Fix-price 395€, 495€ , Corp sol.
3. Advertising/E-commerce
Various models, Best Offers, Enterprise Groups, Opensocial
Ralf Ahamer – CMO XING AG

5. Social Networks – What?
Why? Value?
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Ralf Ahamer – CMO XING AG

6. 01 Social Networks
Social networks don‘t create something new – they just provide an
infrastructure for typical human behavior on the web.
Ideas
Jobs
Contacts
Employees Me
Efficiency
Productivity
Friends
Love
Spare time
Ralf Ahamer – CMO XING AG

7. 02 Social Networks
Social networks don‘t create something new – they just provide an
infrastructure for typical human behavior on the web.
Ideas
Jobs
Contacts
Employees Me
Efficiency
Productivity
Friends
Love
Spare time
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Ralf Ahamer – CMO XING AG

8. 03 Social networks – professional vs. private
Almost 80% of experts and management clearly separate
business from pleasure
Spare time Acquisition
Family Deals
Dating Jobs
Party Sales
Friendship Ideas
Source: Forsa Study 01/ 2010
Ralf Ahamer – CMO XING AG

9. 04 The Case of the Facebook Fairy
Social Networks are a source of information for everyone.
They are comparable to elephants – they never forget...
[Intern at a US Bank]:
“I just wanted to let you know that I will not be
able to come into work tomorrow. Something
came up at home and I had to go to New York this
morning for the next couple of days.”
[Boss]:
“Thanks for letting us know–hope everything is
ok in New York. (PS: cool wand)”
Ralf Ahamer – CMO XING AG

10. Social networks in real life
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Ralf Ahamer – CMO XING AG

11. 06 Viral Gene: Social Networks
The virality lies in the added value that every additional member brings to
the community.
The viral growth in social
networks is a function of:
the added value a member gets
through another member.
Ralf Ahamer – CMO XING AG

12. 07 Value of social networks
The value of social networks heavily depends on two values:
number of members and activity.
Value social Registered
network
= Members X Activity
If one of these is zero – the whole value is zero!
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Ralf Ahamer – CMO XING AG

13. Shift of reach to social
networks
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Ralf Ahamer – CMO XING AG

14. Social Communities – a success story
01
• „Republic“ Facebook is the 4th biggest country behind
China, India and USA. 300.000.000 facebook users change
their status message every day.
• In the last 60 seconds 15 hours of video material has been
uploaded onto youtube. If you add all videos material
together it equals 3.500 years of content (and growing)
• Twitter had 1000% growth last year
Source: Sueddeutsche.de 19.09.2009
Ralf Ahamer – CMO XING AG

15. Social Communities – a success story
02 Search queries reflect demand
Google Search queries reflect trends …
Facebook vs.
eBay
Facebook vs.
Spiegel
Source: Google trends: Graph above shows search queries worldwide. Graph below shows search queries in Germany
Ralf Ahamer – CMO XING AG

16. Social Communities – a success story
03 Back in time 2006 vs. 2009 (1/2)
IVW Page Impressions October 2006: Portals portals everywhere…
Source: IVW, Page impressions x1000 for October 2006
Ralf Ahamer – CMO XING AG

17. 04 Social Communities – a success story
Back in time 2006 vs. 2009 (2/2)
IVW Page Impressions October 2009: Invasion of the social networks
Source: IVW, Page impressions x1000 for October 2006
Ralf Ahamer – CMO XING AG

18. 05 Reach of XING
On XING there are up to 25% of all employees of one
industry in Germany.
Source: XING internal statistics for DE– Q4 2008
Ralf Ahamer – CMO XING AG

19. 06 Usage of Social Networks
Social Networks are already the 2nd most popular entry point to the
web
Internet Usage Frequency
Podcasts:
Micro-blogging Sites:
Social Book-marking Communities:
Brand Communities:
Special Interest Communities:
Photo-Portals:
Video-Portals:
Web-blogs:
Forums:
Social Networking Sites:
Search engines:
Everyday Several times / week Several times / month
Seldom Never / I do not know No Answer
that
Source: Ralf Schengber, 2009.
Ralf Ahamer – CMO XING AG

20. 07 Social Networks – Context to information
Our Friends, colleagues, family give context to massive
information overflow.
Why bother “Google”…. ..when your peers are just a click away?
Unidirectional Bidirectional instantaneity
(search function) (comment & tweet features)
Volume Value
(search results) (recommendation power)
Standard Personal
(Portal site) (personal profile site)
= where information ACCUMULATES. = where information LIVES.
“The cold Internet” “The warm Internet”
Ralf Ahamer – CMO XING AG

21. 08 Exkurs: Community Make or „Buy“ or both
¾ of all brand communities fail. Using existing social networks &
infrastructure could lower costs and increase speed.
- Over 2k Ikea employees on XING.com
- Over 90k users are fans on facebook
Ikea community „Hej“ recently started
Ralf Ahamer – CMO XING AG

22. Chancen und Risikenbusiness
Social networks and von
Social Networks für
models
Unternehmen
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Ralf Ahamer – CMO XING AG

23. 01 Subscription fees: Professional Networking
Professional Networks have a huge (perceived) value that directly
translates into “money”. Members are willing to pay for that.
Consulting
Media -Print
Internet and New Media
Real Estate
Sales Public Relations
Arts and Entertainment
Science and Research
Telecommunications Hotel and Travel
Training
Media - Broadcast Education
Human Resources
Advertising Restaurant and Food
Financial Services Beverage and Tobacco
IT University
Customer Services
Source: >82k tests on mynetworkvalue.com
Accounting
Ralf Ahamer – CMO XING AG

24. 02 Advertising: Web 2.0 in the marketing mix
The value chain of media planning must be disrupted. New scales of
ratings need to be defined.
88-92%
100% 7-12% 30% ca.60-65%
Kickbacks Advertising
Advertiser Media Agency Publisher
medium
Results:
• Marketstructure and value system constrain marketing
• Advertisers have (too) little Know-How for Web (2.0)
• Media Budgets go mainly in “traditional” online media
Ralf Ahamer – CMO XING AG

25. 03 Virtual products
The expected market size of virtual goods (US) is 1,6 Mrd $*.
Social games share will be half of it.
- 90 Mio $ in 2009 with virtual gifts** - 65.000.000 Farmers***
- 26.000.000 are feeding their cows every day for 2 hours
- 100 Mio $/year revenue*
*Source: Business Week
*Inside Virtual Goods - The Future of Social Gaming *** check on facebook feb 2010: 78Mio already
** C’t Magazine 2010
Ralf Ahamer – CMO XING AG

26. 04 Conclusion
1. Clear goal and topic for your community
• „Having influence on your target group“ as a goal leads you in the wrong direction
• Set-up a clear topic for your community – e.g. “Professional networking”
2. Members and Activity
• Value of a social network = registered members X activity
• Viral growth in SN = function of value a member gets through another member
3. Keep in mind: First of all - your community serves its members
• Consequently listen to the community and serve their needs first
• See the community as living organism – it’s a socio-psychological challenge
4. Use existing infrastructure and reach
• Use XING, facebook etc. to leverage your business
• Community work needs resources in your company
Ralf Ahamer – CMO XING AG

27. Thank you
for your kind attention!
Presentation Titel | Author | City, 11/02/2010 27
Ralf Ahamer – CMO XING AG