Cover

Riding the social networking wave

Indian social networking startups, some backed by large corporate houses, are doing their bit to get a piece of the global social networking market. To take the attention away from global players, they will need some extraordinary thinking and localization. By Kushal Shah

Man is a social animal—a fact proven time and again by people of different age groups and mindsets from different cultures. The present fad of social networking is one supreme example of the same old habit, which when coupled with advanced usage of available technology and some business sense, is helping some people make a fortune.

Technology is easy to adopt once exploited, but what matters is how you use it innovatively with unique business models to survive in an extremely dense and competitive Web 2.0 environment. Hundreds of startups are coming up every year to use the power of technology to build another ‘social networking’ venture with the help of small time VCs or their own capital, but there are few that are able to survive in the long run. Not all social networking ventures have been able to make as big a name as Facebook, Orkut or LinkedIn.

All these startups began with a different approach to social networking. Orkut on one end started with the phenomenon of scraps and later, Facebook made a big bang with its open application platform as a means to interact. LinkedIn, on the other hand, had an absolute, no nonsense business networking approach. All of them were unique in the way they started and this is what is needed at the time when tens of Indian companies are jumping onto the social networking bandwagon with intentions of catching Indians initially, and a global foothold in times to come.

The buzz

It’s a trend, it’s a habit, and it’s an addiction. This is how social networks are impacting the everyday lives of people—mostly youngsters. Finding old pals, making new friends, blogging, sharing photos, hunting for jobs, using games and applications and as a marketing tool; all these activities have emerged as reasons to use these Web sites and new uses are coming forth with each innovation. Roughly 5-6 million Indians are involved in this social affair, but the India-specific market is still in a nascent stage for most players. However, with the growing popularity of social networking sites in India, the concept of “chilling” and “hanging out” is fast changing. “Today, more young people spend an increasing number of hours on the Internet and have also developed hobbies that are derived from the Net. We are in the early stages of this phenomenon. It will take off with the evolution of broadband,” said Siddhartha Roy, Chief Operating Officer, BigAdda.com—a Reliance ADA venture.

According to a study done by AC Neilson across males and females between the ages 13-35 years across the country, users spend an average of nine hours per week on the Internet, only for personal purposes, and of these nine hours, approximately 25–75% is spent on a social networking site. Among the top reasons for being on a social networking site, 65% of the survey respondents cited ‘connecting with friends’ whereas ‘making new friends’ was quoted by 20%. Some of the most popular activities for Indians were ‘keeping in touch with friends’, sharing photos and videos and building and joining a community.

User generated content and niche purposes of ventures are heating up the Indian social networking scenario. New players such as BigAdda and Ibibo are geared up to compete with established brands such as Facebook and Orkut in India, and it will be interesting to see how they fight with brands backed by Google and Microsoft.

The Indian features war

Every company is on the lookout for something that will enable it to stand out from others to capture market share, be it Indian or global; all have their own niche areas. Those who are not very different are backed by smart management to prove that their brand better. Established players are continuously evolving themselves to keep their hold on the market. An extreme overdose of features is adding to the choice basket of subscribers as well as confusion and sometimes they end up spamming their friend’s mailboxes with tons of requests to join the new social networking site on the block.

The Indian scenario is far more fragmented than the global one, and some of the interesting features available for Indians by Indians are worth evaluating. “Ibibo is about the discovery of new friends. The joy is in interacting with people you could have a lot in common with but could well be living thousands of miles apart from,” said Vivek Bahl, General Manager, Community Marketing, Ibibo Web Private Limited. For instance, a feature on Ibibo, called as ‘Sawaal’ which resembles Answers of LinkedIn, where you can get an answer to a pressing question on any subject, from another Ibibo user. In this, every individual in the network, directly or indirectly, can contribute to the query and acts as a tool to bring people closer. The Indian touch to these features becomes of paramount importance to attract locals and to relate to their tastes. BigAdda is also one such example which is focused towards Indian youth and would make use of media to connect people via all the platforms.

Another Indian early mover in this space, Fropper.com, has a couple of means of attracting people. It has ezBlogs—a spin on blogging that de-emphasizes English and invites people to write via simple templates; and authenticated groups—real people, real discussions and customizable personal pages called Zones. Further, adding some more value to the subscribers, it has SMS social networking via the service called MobiFun. “It allows one to be connected with friends through mobile SMS and access Fropper.com on the move. Going forward, we will also make Fropper.com available via GPRS,” said Navin Mittal, Business Head, Fropper.com.

Another startup, Campus18.com is focused at Indian students and allows them to interact on the basis of common talent and can show-off their skills and creativity. This even works as a platform for some of the students to grow. Puneet Johar, MD, Tangerine Digital Entertainment (Campus18.com) explained, “It’s a great opportunity for young creative people to connect with similar-minded young people from all over India. The talented young people are rewarded with bigger opportunities in their respective field which allow them to showcase their creativity to a wider audience.”

On the other hand, a couple of Indian initiatives are focused at providing business and information and connecting with each other to this end. Working in user generated content, Sulekha.com provides online consumer–to-consumer local commerce in India by integrating both classifieds and yellow pages at a local city level. On the other hand, the newly launched LimeExchange connects people for business purpose and builds on the outsourcing principle, allowing people to outsource and take on projects. “By simplifying the contacting, contracting and controlling of projects, LimeExchange gives small and medium-sized businesses a place to go shopping for outsourcing services; and it gives outsourcers a place to sell these same services,” explained Pawan Agarwal, Head of Indian Operations, Limespot.

Changing international styles

Some of the global players are upgrading themselves to have a dominant position in the social networking space. Orkut, arguably India’s most popular social networking site, owing to the global competition from Facebook, is giving its features a face-lift. Well-known for its concept of scraps and testimonial features, Orkut faced some setbacks due to lack of innovation. Some of the limitations were—open scrapbook, limited photo sharing capacity and lack of privacy. All of these shortcomings were tackled with care by Facebook.

Orkut has now added security features of its own for testimonials, scrapbook and audio-video. It has even upgraded the photo capacity to 1,000 from 12 earlier. Further, Google recently announced its OpenSocial initiative that provides a common set of APIs for social applications across multiple sites—so that there are no site-specific APIs that a developer must learn. OpenSocial is aimed at making the Web more social and developers would soon be able to add applications on Orkut and a number of other social networking sites. “OpenSocial allows local developers to create locally relevant applications and also makes it possible for Orkut users to enjoy applications that are popular in other geographies and social networking containers,” said Vinay Goel, Head of Products, Google India.

Another leader in its space, LinkedIn, is also going through some changes in its offerings. It is building support for OpenSocial applications and will be supporting other applications that want to exist on the LinkedIn platform, provided that these applications are of value for the site’s professional audience. To enable further reach and resultant popularity, other sites are building support for LinkedIn applications. For example, BusinessWeek.com will go live shortly with a feature that allows one to quickly identify connections at companies mentioned in BusinessWeek.com articles. LinkedIn has even gone onto mobile platforms for unlimited access on the move.

These are just two examples of how global giants respond to competition. This competition is sure to grow once the market becomes more vibrant and in order to compete, out-of-the-box thinking is the way to go for local brands.

Making business sense socially

Apart from making use of social network for fun and interaction, organizations are making use of these social sites for more than one reason. The largest player for professional usage is LinkedIn, which provides recruitment support for most large organizations. “Many companies, such as Microsoft, SAP, Oracle, and others use LinkedIn to post jobs and identify and contact potential candidates on LinkedIn. Once they have found the right candidate, they also use LinkedIn to reference check the employee within their network,” explained Liz O’Donnell, Director–International, LinkedIn.

Even for students, youth-related social networking sites are beneficial for their careers and this is exploited by some organizations. “Professionally, social networks are being used to create databases, being actively used by placement agencies, head hunters and advertisers to better understand demographic profiles and consumer behavioral trends for targeted advertising,” said Vishnu Vardhan Induri, MD & CEO, Social Media India, owner of Bharatstudent.com.

This apart, companies are using social networking to build their brand. A lot of brands are experimenting with the power of viral marketing on a networking site. A viral which connects with its audience will automatically achieve the desired effect as the person viewing will be moved by the message and will forward it to his friends. This domino effect is what the marketers find attractive, and look at tapping into.

Further, many companies encourage their sales and business development people to use services such as LinkedIn. These people also use social networking to research their prospects, so that when they do meet, they can more quickly establish a rapport based on common background or interests.

Making money

The means of making money is more or less the same for Internet ventures. Primarily, they revolve around advertisement-based revenue and paid subscriptions. The latter model does not seem to be working unless the user sees a real great value for the service. In India, Sulekha and Fropper follow paid subscriptions for higher quality services and on a global level the same is practiced by LinkedIn for professional services, primarily in the area of recruitment.

In terms of advertisement-based revenue and various strategies of advertising, Google and Microsoft have various solutions for these Web sites. To be specific, Microsoft digital advertisement solution recently launched an India-specific ad solution for Facebook which will cover country-specific advertisements for Facebook in India and will even have branding option for companies which will cover the application for a particular brand on Facebook.

Following Google’s footsteps, with the help of Google Adsense, bloggers of a social networking site are sharing revenue with the site making it more lucrative to bloggers from India, wherein they get to interact as well as earn some money. There are not many revenue options for this area of business and it would be interesting to see who can make more money and not who can attract more subscribers.

Choosing the leader

Social networks have almost always shown a tendency to rise like meteors and fall just as fast. Friendster, Orkut and MySpace are examples of social networks that were in white-hot vogue at one point and have since fallen out of favor. Who is leading the market is a subjective call when it comes to social networking Web sites. Currently, India has tens of social networking sites catering to various sections of society. Orkut, which made a name for itself in 2005 seems to be losing its lead to Facebook. Indians seem to prefer Facebook applications to scrapping each other. Still, when it comes to numbers, Orkut still leads the show. So when Indian companies are claiming to have X number of users, it does not necessarily mean that they are successful or the leader, what matters here is which site is continuously bringing back registered users for more.

For that matter, Indians have a long way to go. One might have an account on most of the Indian social networking sites due to their big budget marketing campaigns, but people still go on Facebook, Orkut or LinkedIn for regular access. What the site owners need to understand is the fact that they need to do a lot more than the global established players and do something different which the big players cannot do. The negativity with respect to local player success is prevalent and is an obvious concern for the industry.

Big multinational players like Facebook and Orkut will prevail as they are capable of investing vast sums to innovate and provide free services sustained by advertising networks such as Google. “I don’t think local companies that seek to take a Facebook head-on are likely to succeed as they will always be outgunned. To succeed, one has to play by a different set of rules and seize other opportunities where the big players cannot pursue,” said Satya Prabhakar, CEO, Sulekha.com. It is not about being the leader in the segment, but it is more about the ability to provide world-class connectivity and being able to connect with local needs, which will eventually give a greater user base and far better revenue to compete with global players operating in India.

Improved localization, special attention to security issues, innovative use of Web 2.0 technologies and some out-of-the-box entrepreneurial skills could pave the way for Indian startups in this field to capture local attention.

kushal.shah@expressindia.com