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Social Media and Online Commerce: Birth of Socialommerce™

qualman-erik
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With all the media attention focused on Microsoft's not-so-friendly takeover bid of Yahoo, a below-the-radar acquisition target proves why social commerce is the future of search.

Google is in talks to acquire Facebook competitor and global social network, Bebo. Along with Hi5, Google social network Orkut dominates the South American social networking landscape. Adding Bebo, which owns 65 percent of the UK market, would fit nicely in the growing Google puzzle of acquisitions and partnerships (YouTube, MySpace, Urchin).

Google and The New New Thing

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."

It's probably no coincidence News Corp's Rupert Murdoch may trade MySpace for a 20 percent stake in Yahoo.

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.

So, if Google and others are struggling with social networks, why would Google waste its time and resources by acquiring Bebo?

Socialommerce and Twitter's Death by Facebook

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 deserves Google's unbridled attention. What is socialommerce exactly? 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. How else can one explain the popularity of Twitter? Twitter is a product that enables users to text their group of friends daily to indicate what they're doing every minute of the day (I'm having an ice cream cone, I'm studying for an exam, etc.). Twitter's popularity, currently relegated to teens, is gaining popularity with adults.

Facebook's status updates are far and away one of its most popular features. Status updates enable everyone to brag, boast, and tell people what's going on in their lives. It helps them stay connected (duh, the social piece of the network).

The need for Twitter? Facebook will make it obsolete shortly. RIP, Twitter.

Facebook allows people to update their activities in real time and informs everyone in their network instantly. Facebook's mobile application makes it even easier to do this.

That's one reason 100 billion stories per day are processed through Facebook's Newsfeed servers.

Socialommerce in Action

Let's take a look at a couple examples of how socialommerce works.

Online Retail: Karen (age 48) just received her IRS refund check for $170. She feels like treating herself by buying something, but doesn't have anything particular in mind. Karen quickly taps into her social networks to see what other people she respects (friends/peers) are buying and whether they like or dislike their choices.

Within five minutes, she decides to purchase an iPod Nano since her friend Sally bought one and she loves it. The fact Sally has one and likes it assuaged Karen's fear of technology since Sally is even more of a technical neophyte than Karen. Knowing this drove 95 percent of Karen's decision process in minutes.

The big social networks will eventually dominate this portion of socialommerce. Sites like ThisNext, Kaboodle, and WishPot, are taking advantage of this market opportunity in the short term by enabling the buyer to quickly share their purchases and reviews with friends.

Travel: Suzy (age 34) has set aside a budget of $1,400 to take a trip this year with her husband. The only thing she knows at this point: destination, South America. In the past she would've performed a search on Google, which would have taken her to some helpful sites like Travelzoo, Tripadvisor, Lonely Planet, and others. She probably would've narrowed down her choices after hours of research. From there, she would then begin the arduous task of finding the best deal that accommodates her schedule and desires.

This process becomes much simpler for Suzy in the near future. She'd simply go to her social network of choice and search for South American vacations. The results would pop up: five of her friends have traveled to South America in the last year. They list their itinerary, hotels and resorts, as well as prices and recommendations.

Suzy sees two of her friends both took a trip to Chile through GoAhead vacations and rated it highly. It's within her budget, and the same package is available. She quickly snatches it up before it's sold out. She saved hours of painstaking research and the fees of a travel agent. Socialommerce gave her peace of mind and the anticipation of an enjoyable adventure.

So you can see why Google is interested in social networks. They just might become the first place where people perform their searches

Have you used social networks to plan vacations or buy gifts? Click here to tell me how it's working out for you.

Next up: Social search transforms social networks. Big brands, you've been warned.


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