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The first development hit a couple months ago when Facebook opened up it's platform to third-party developers, allowing them to build mini-applications that can run on Facebook user's homepages. This was a fundamental shift in social platform development, since historically, the company that owned the platform, owned all the apps that ran on it. 1,000s of new Facebook apps have since been developed. Some popular example applications include Graffiti, a simple drawing application where users can draw etch-a-sketch type pictures and post them on their friends home pages; another is Foodfight, where virtual lunch money buys you food to throw at friends home pages; another is iLike, an app that scans your music and video library and posts it's contents on your home page so your friends can see it.
So what's the big deal? Facebook is allowing third-parties to make money off of their applications. Go to the Graffiti drawing palette and you'll see targeted web advertising based on your Facebook profile; a friendly "feature" in iLike allows you to click a song title in a friend's library and have the option to purchase that track (with a 5% kickback to iLike of course). And what options do you have for your virtual foodfight? Well popular branded fast food, courtesy of corporate sponsorship!
The opening of Facebook's platform to third party commerce seekers has encouraged an incredible amount of innovation and added functionality, inevitably increasing Facebook traffic 5-fold from last year.
Meanwhile, Google is shut out. What do I mean? Since you have to log-in to view any Facebook content, Google's web indexing spiders can't reach it. All that content, all that potential targeted advertising, all those endless hours users are spending on that site, and Google can't reach any of it. Also, Google's social networking platform, Orkut, is not nearly as popular as Facebook's (unless you're Brazilian) and shows no signs of catching up. So what should Google do? Throw in the social networking towel? Well there is a reason Google's market cap is approaching Berkshire Hathaway's, there are some pretty smart dudes/dudettes that work there. Read on. . .
The second development came out a few days ago when Google announced the launch of OpenSocial. OpenSocial is a Google sponsored programming standard that allows third-party developers to build an application once, and have it run on "any" social networking site. This is attractive to developers since they only have to develop their app once, versus having separate versions of the code for MySpace, Friendster, etc. The other carrot is Google is offering to host these applications for free. This saves developers money, another huge incentive. If you look at the OpenSocial home page you can see the list of social networking platforms getting behind the standard: Engage.com, Friendster, hi5, Hyves, imeem, LinkedIn, MySpace, Ning, Oracle, orkut, Plaxo, Salesforce.com, Six Apart, Tianji, Viadeo and XING.
No mention of Facebook. Interesting. Also, the fact that Google is willing to host these apps isn't just a nice gesture. Google knows if they host the app, they gain some insight into the data the app is pushing and the people that are using it. They regain some control. And so Google moves the chess piece and says, "Check".
Now, obviously Google invited FaceBook to the party. It couldn't be called "Open"Social if they didn't. But Facebook's got a good thing going right now and they're not about to hand over the keys. But I think Google's figured something out we all should pick up on. They know that the future of social networking isn't in the platform itself, but the apps running on those platforms. The relationship building features and the act of "connecting" on all these sites is becoming commoditized (hence the long list of social networking sites above). The apps built on these platforms that use these connections to encourage knowledge sharing (product referrals) and discussions of common interests (targeted marketing) is where the real innovation is. As developer's flock to the OpenSocial platform it's only a matter of time before Facebook folds and adds their name to the list. And so Google will move the chess piece and say, "CheckMate".
The third development is somewhat unrelated but a factor to consider nonetheless. It came as an article appearing in the Wall Street Journal last month announcing Pfizer's partnership with the medical social networking site, Sermo. Sermo is the home to over 50,000 registered physicians. Doctors use the site to share knowledge and ask questions about patient cases, various treatment options, up and coming trends and pharmaceuticals, etc. Pfizer was pretty smart here. Instead of trying to reinvent the wheel and create their own targeted social network, they found one that was already bootstrapped. By partnering with Sermo, they gained access to the Sermo site and could "listen" to the conversations the users were having. They could be a fly on the wall while doctors talked about their products and their competitors products. Through this partnership they can even pose targeted questions for the community to answer. This obviously gives Pfizer a huge competitive advantage.
Pfizer realized they didn't have to create their own social networking platform in order to consolidate their target market. They realized that the power wasn't in owning the "connections" or the relationships, but in the information that was being shared between the users.
These three developments are starting to demonstrate some important trends for companies to consider as they develop their social networking strategy. As you prepare to make the investment in social networking for your company consider these trends. Don't feel like you need to start your own social network when one that houses your target audience might already have been created. This will allow you to focus on developing apps for the platform instead of building yet another commoditized platform for "connecting".
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