Consolidation Needed in the White Label Social Networking Industry

I’ve been tracking with great interest the “White Label” (meaning you can rebrand as your own) Social Networking space with great interest for some time. When I first started the master list, it was at about 20 companies. Now it pushes 70 companies, and even spills over to collaboration and insight lists too.

I’m expected to know this market (it’s in my coverage area as an Analyst) and quite frankly, it’s very, very hard to keep track. I can only imagine how interactive marketers and web strategists feel. In fact, every other day I get an email or comment to message asking me for my opinion.

Today, Mzinga Acquires Prospero, who are both in the space. I actually had Mzinga in my insight community list, and Prospero on my white label list, so if all goes well for them, they have the opportunity to match features up. They aren’t the only ones, last month ONEsite Acquires Social Platform, and you can expect more of this to happen.

I’ve been chatting with Mark Hendrickson of Techcrunch, who’s also on point to watch this vertical, and I shared with him my thoughts on where this industry is headed. Read the interview at More Consolidation in the White Label Social Networking Space: Mzinga Acquires Prospero.

We should expect other players on this space to start consolidating, to strengthen their offerings, increase customer base, reduce overlapping costs, and to prepare to battle as others start to team up.

By the way, in Q2-Q3, I’m slated to do specific research on this market, to segment the market so interactive marketers will be able to make a decision on who to choose. Stay tuned.

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  • http://www.awakenedvoice.com Rob Safuto

    Jeremiah,

    Your post doesn’t support the statement in the title. Why is consolidation ‘needed’ in the white label social networking industry? I don’t think that a whole industry segment should have to consolidate because, as you state, “quite frankly, it’s very, very hard to keep track.” I looked over at the TechCrunch article and saw that you also stated, “the software technology provided by these companies is mostly a commodity – and that ordinary customers can’t distinguish between the many variants”

    I don’t think that those two reasons compel the industry to consolidate. After all, there are thousands of small web shops across the world providing a variety of services across many platforms. Their success does not hinge on the uniqueness of the final product. Rather, it hinges on their ability to deliver quality services as defined by their clients.

    Do you have any other reasons why this industry needs to consolidate?

    Regards,

    Rob Safuto

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  • http://www.kickapps.com Michael Chin

    You know, I’m in this space and I have a hard time keeping track ;-). Looking forward to your report.

    I think the consolidation is driven by maturity in the space. Which means that winners (leaders) are emerging. Which means…winning formulas, models and approaches are emerging. It’s interesting, 6 months ago, we’d see literally dozens of vendors being evaluated as real options by clients, now, we see an average of 3-4 in each engagement. At the end of the day, competition is good for buyers.

  • http://www.web-strategist.com/blog/ jeremiah_owyang

    Rob

    Thanks for the request for more. Consolidation is a normal part of early markets moving through a maturity phase.

    As Michael states, as leaders form, other companies will band together to improve their offerings, client list, and to reduce costs.

    To your point, segmentation can still occur, yet it is different than small customized web shops, these are more akin to the CMS portal industry of the late 90s.

    Following that model, the consolidation lead to large players, some which were acquired by large companies, and then lead to successful product suites.

    Lastly, to truly engage large customer clients, the resources, reputation, services, and brand name is needed to engage the large corporations.

    I’d love to hear your side of the story, why do you think 70 players is healthy and sustainable?

  • http://mzinga.com/aaron/ Aaron Strout

    Jeremiah – this will be an interesting space to watch over the next 18 months. My bet is that we will continue to see a number of additional players added to the space before we see real consolidation. However, I agree with Michael of KippApps – we too are starting to see the same 3-4 competitors pop up over and over again.

    Thanks again for the coverage. It helped spur a lot of interesting dialog on Twitter today.

    Best,
    Aaron (@astrout)

  • http://www.kinlane.com Kin Lane

    I would add there needs to be some consolidation in niche social networks deployed on white label networks.

    There is a lot of redundancy and maybe some of them can partner and become a growing concern.

    I see this a lot in the activism and non profit social network space.