Excerpted from "Social Media and Online Commerce: Birth of Socialommerce™"
Google's buying into social networking and social search in a big way even though monetization remains problematic.
Despite social network traffic increasing eightfold in 2007, social search engines still account for less than 1 percent of total Internet traffic, according to Hitwise. There's huge upside potential.
Google continues to struggle in its partnership with MySpace. Generating robust revenue streams from its $900 million deal with NewsCorp has been a challenge. Many insiders believe Google is losing money on the deal. Even Google co-founder Sergey Brin admitted, "I don't think we have the killer, best way to advertise and monetize social networks yet."
Some Web pundits aren't sold either. "What you have with social networks is the most overhyped scenario in online advertising," said Tim Vanderhook, CEO of Specific Media.
Socialommerce™ is the next big thing. Google product guru Marissa Mayer recently told The New York Times that social search would be a key component in the future of search.
Social commerce harnesses the simple idea that people value other people's opinions. Nielsen reports 78 percent of people trust their peers' opinions. This is neither a new concept, nor new to the Web (e.g., epinions.com).
What is new: social networks make so much easier to disseminate the information. And people want to disseminate information.
Social networks' business models rely on revenue generation from external sources - i.e. advertising. In this way they are like television and radio.But when you think of TV or radio, what one thing do you dislike most? The ads!
With the revolutionary, participatory capabilities of the Web as a medium, is it not possible to form a social network model whose revenue generation - whose demonstrated economic worth - is intrinsic to its virality and thus its success? That rewards all members of the social network for their successful participation in it to stimulate commerce?
This is what we have been aiming at during the development and beta roll-out of YouGottaCall.com, a "Connect-gine(tm)" (Connection engine) which leverages the real world relationships of its members with each other and their trusted local businesses.