A Debate: Can the Social Graph be Monetized?

Background info: Social Graph
If you’re not familiar with the social graph, it’s a representation of our relationships in social networks. There’s a movement underway to be able to separate our social graphs from the social networks, so we can ‘transport’ our friends whatever website we decide to use –without having to re add them. Start with Explaining what the “Social Graph” is to your Executives.

Last night, at a roundtable hosted by the Conversation Group and new company called Something Simpler we conversed > debated > argued if the Social Graph can indeed be monetized.

Tom Foremski also fears monetization and suggests that “I think this could be the Achilles’ heel of social networks–if you push the monetization too far–you will lose your networks.” Tom wasn’t alone, as Om Malik suggested that the only way you could monetize the graph was to ‘pimp your friends’.

Yet John McCrea and I agreed, I suggested that authentic, efficient, word-of-mouth can evolve to information no longer being advertising. I’m talking about natural endorsements. How could this work? It happens every day. Many of my friends tell me which brands they like by simply wearing the logos, driving a brand car, to outright telling me what they like. Can this truly be different on the web? Why does it scare us so? I mean just last night, Salim Ismail from Yahoo’s Brickhouse (also on the panel) whispered into my ear, he had questions about my new Nokia N95, I gave him my clear and honest feedback –without being paid by Karl Long, Nokia’s top blogger.

Even if we agreed, aggregating the Social Graph isn’t easy

The challenges continue to mount, besides the fact we can’t agree if we should move forward, trying to implement will be a challenge. Aggregating the social graph (which is what we’re trying to do) has many obstacles, here’s a few from a recent blog post on the topic:

-Social Network vendors scared to open up and let customers and their relationships easily move to other networks
-Agreement needed between all vendors and participants
-Ownership over project and data
-Lack of general market awareness
-User adoption (sadly, I think most users are sheep)
-Likely, a need for a single login
-Creation and costs of third-party silo
-Privacy concerns: many European countries may not embrace
-Multiple security issues
-Legal and government may get involved

[When it comes to friends and marketing, trust continues to be a point of contention. Yet for every free service people rush to use, they forget that they are the ones entering the data, and that companies need to monetize. A balance must be struck as success will require trusted and authentic marketing]

Votes from around the room

If things weren’t cloudy enough, at the close, we went around the room to give our final thoughts and to answer “Can the Social Graph be Monetized?”. Chris Heuer was recording, and I hope he posts it up, yet I took a tally from the attendees.

Votes | Answer
3 – Users must engage with social graph first/ monetization comes later
2 – Brands will benefit by ‘pullling’ social graphs (communities) to their site
2 – Over advertising will kill it
1 – Embed in Value now
1 – Advertising (but must be honest) can work
2 – It can’t be monetized

Your voice wanted
Enough. Let’s turn it over to you. Can the social graph be monetized? Chime in the comments. What would make it work, what are the pitfalls. Can marketers make money in an authentic and trustful way using social networks?

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  • my vote goes wholeheartedly to:

    Brands will benefit by ‘pullling’ social graphs (communities) to their site

    Companies with thousands (millions) of users do want these users to be more involved in the product/service they offer. If the costumers do have “friends” within a corporate site (and also doing activities related to the product/service together), it is much harder for the costumer to change or leave for a competitor.

  • The problem is the sense of economic obligation, of coercion, when I’m recommending something I like but someone’s getting money for the recommendation itself. If I get paid to recommend something, I may stop caring if it’s a good recommendation – or if a service gets paid, they may stop caring whether I actually wanted to recommend something at all (see Facebook defaulting to sharing my purchases).

    As Joshua Porter said on Bokardo: “But if I’m getting paid money to give you that recommendation, then my motivation is in part economic, and that changes everything. You are now suspicious of the gesture…and my reward might actually be a penalty…your opinion of me will most likely deteriorate.”

    Being paid for a recommendation is different from being paid for referrals, though. I have no problem with “I like this, I think you’d like it too, and if you decide it’ll work for you then I’ll get a small reward.” It’s all in the amount of choice the recommendation recipient has.

    When the recipient has a choice, that reintroduces the cost of bad recommendations. A good recommendation helps both giver and receiver, and a bad one hurts both. Removing the imbalance of rewards removes the assumed loss of trust.

  • You will make money when you deliver value to me as a user: Either I accept to look at ads or I will be ready to pay for your service. And/Or I will accept that you are making money somehow with my data (more below).
    The “social graph” is the basis to let information jump from node to node. There is value in push (news about friends activities), there is value in pull (access friends pages; search for products and see those first recommended by people in your network). In this way the social graph is enabling services that deliver higher/additional value. Obviously you can spam my friends network. But also “Non Social Networks” internet service could be used in the past in ways that are/were not in favor of users.
    Those companies that do not understand that they have to provide services in a form that their COMPLETE business model is accepted by users (think about who of us would have used in the past a webmail service that would sell the content of our mails to someone else ) will fail mid/long term. Imho the social graph will be seen at some point as what it is: a data structure (or feature) that will allow successful companies to deliver a better service than without the social graph.

  • Great grey matter fodder Jeremiah!

    For simplicity, if we think of the graph as including simply the connections between friends and across social networks and separate out the activities that these friends participate in (message boards, chat, IM, groups, etc) as simply being social media applications then I can agree that it would be hard to monetize a relationship between people. Though put that way it kind of sounds like the oldest profession! 😉

    However, monetizing the passionate discussions, contents, polls and more has been happening and more and more organizations are leveraging the economics of this model. Quick examples: advertising model at iVillage: http://www.ivillage.com/health/messageboards or sponsorships at ABC: http://abc.go.com/primetime/greysanatomy/page?pn=challenge

  • I don’t know enough (yet) about the social graph, but I do know that even before there was all this talk about monetizing, or word-of-mouth marketing on social networks, I was already sharing anything and everything I found that I thought was neat, interesting or cool. People naturally want to share the treasures they find so it seems to me it’s a matter of facilitating sharing without pressuring people to do so.

  • The connections among friends are already monetized in many ways: bars, parties, yoga retreats, cruises, singles groups, country clubs, even the selection of colleges. We go where our friends or our potential friends are.

    So the issue isn’t whether the social graph can be monetized, but HOW. As long as it’s monetized with the user’s consent, it’s fine. Let’s organize a rafting trip. Someone gets paid for that, so my social graph has been monetized by a river guide company. But I chose to do that, and the people who went with me also chose to do it. If the user retains the power, it will be okay. If the vendor has the power, it’s just like old times.

  • First off I’ll agree with Ralf, companies need to create a service that is valuable to me and my “social graph” and I’ll ether view the ads or pay for the service.

    The bigger issue for me is that companies should focus first and foremost on “value creation” as opposed to monetization. Social graphs have been used brilliantly in the past as “value creation” engines, these include netflix, ebay, flickr, yelp etc. I’ve said it before and i’ll say it again if a social network is not helping create value with it’s community then it will end up going the same way as AOL and friendster. For me Facebook has not solved the value creation question, and have jumped straight to monetization, that is a strategic error in my judgment.

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  • Steven Segaert

    Some observations…

    1) Different brands have different marketing needs, so even if the instrument would be finetuned, I’m not sure enough brands would be eager to take the risk to invest in this. More so because some initial brand-users will probably be considered cool, but the “coolness” factor will most certainly decrease as new brands start screaming for our attention. No company wants to risk giving its brands a bad reputation in this way.

    2) How good is your social network? For many reasons, people in your network are not all people you would see as friends. Some you really know, others you have just met. Some are colleagues who linked you up and to who you didn’t really bluntly wanted to say “no”, etcetera. Your social graph may therefore be a lot less important (and less interesting to marketeers) than you think.

    3) A good hint on how monetising could work can be found in the different additions in facebook. By analysing how they are used and spread (or do not spread), I’m sure a lot can be learned. I’m not sure if this analysis is already being made, or if data for analysis is available though.

    In short: can it be monetized? Sure! But – apart from some experiments – I don’t think it can be modelled into a viable and wide-spread advertising tool without destroying the specific character of social networking sites that makes them interesting for marketing. Logically, social networking that would be interesting for advertising would to an extent have to be specifically designed with that purpose in mind. Which is why “OpenSocial” may be on to something.

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  • Excellent post, Jeremiah! Thanks for providing such great context for the Social Graph discussion.

    I referenced this and your Executives post in a discussion on my own site (the post can be seen at http://itincanada.ca/index.php?option=com_fireboard&Itemid=34&func=view&catid=29&id=153#153). At the conclusion, I added some comments on your monetization discussion, which went something like:

    If I were asked to sum up the current search for value on the Web in one word, that word would be “authenticity”. Many firms looking to engage in social media as a supplement to traditional one-way messaging are trying to build artificial portals into social networks – which is what I think is meant by “pulling social graphs to their site”. This approach will ultimately fail. Advertisers will need to work with and through trusted third parties to set up conversations – look for authentication from the participants – and recognize that unlike in current advertising models, this debate will not allow itself to be scripted. In one form or another, the Social Graph will have to make room for both interpersonal and commercial connections. The extent to which it does so in a manner that is seen as valuable and authentic from both perspectives will determine whether this is indeed “Web 3.0”, or just another awkward buzzword.

    Hope this helps you to advance your discussion!

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