Does Facebook’s Overseas Growth Matter?

Earlier this month, I shared with you my post that called for a big wake-up call for Social Networking sector, thanks to the presence of too many me-too players at a time when recent traffic trends are showing signs of hitting a plateau. Hitwise recently reported that in the US, MySpace and Facebook ranked 1st and 2nd had 95% and 93% repeat visitors for the month.

The May 2008 traffic data from comScore furthers that argument. Another interesting finding of the May 2008 data – Facebook is doing much better than MySpace in the overseas markets.

Nevertheless, of late, I have stopped taking traffic on face value, and instead almost always juxtapose it to how much money you make off those page views. (Dave McClure recently chastised me for thinking too much in the short term.)

Matt Brezina, co-founder of Xobni earlier pointed out that Facebook will take in $265 million and MySpace will bring in $755 million in 2008. So unless the overseas (and overall page view) growth translate into real big dollars, our friends at Facebook (and MySpace) have problems. Experts believe that the answer is in better relevance in display advertising – still the dominant form of advertising on the social networks.

Facebook vs Others

The traffic trends have to be troubling for for geographic hits such as Orkut and Friendster. The overseas growth of Facebook also calls into question the veracity of the decision by AOL to pay $850 million for Bebo. Some data crunching by Andrew Chen (using the newly announced Google Trends) shows that Facebook is making big headway in markets such as UK, France, China, and India.  Orkut is very popular in India, while as the map shows Bebo is big in UK and other European countries.

I think it is these guys who need to worry the most with Facebook’s march & MySpace’s rear guard action. I suspect, if Facebook continues to grow, MySpace could opt for buying market share.

But if you take a larger view,  Chen’s conclusion, that “Social networks have weaker network effects than previously speculated,” is quite prescient. As someone once noted, social networks are like night clubs – there is always a cooler, hipper, funkier joint being planned by someone.

Over past few years, generally described as the golden years of social networking have led to the sector’s giants resting on their laurels. The fundamental nature (and utility) of social networks hasn’t really changed. The platform-ization of social networks has led to the rise of social apps that are best described as time wasters. You can be fascinated by vampire bites and what not but in the end, there is a finite amount of time you can waste.

In other words, Social Networks need to find new purposes for people to come back every day and be loyal. I had argued in my previous post that the world of social networks is going to be divided into two – the big players (MySpace, Facebook) and niche players (Dogster, Dopplr etc.)

In a recent chat, Ning CEO Gina Bianchini pointed out that they are adding 2000 new niche social networks every day and are now upto 315,000 networks. The niche is allowing the company to get even good non-optimized, straight-up average eCPMs from AdSense. She pointed out that they are about 3 to 4 times better than the average for general one-size-fits-all social networks. “This is because the social networks on Ning are organized around well-defined topics and interests – skiing, smart cars, diabetes, etc. As a result, contextual advertising works more effectively for Ning than it does for other general social networks,” she said.

Photo Courtesy of comScore via C/Net’s The Social