Larry Dignan asks this question over on ZDNet. For me, this breaks down along three dimensions:
- Ability to acquire new eyeballs.
- Ability to get eyeballs to spend more time with a service.
- Ability to monetize the eyeballs.
Social Networks can bring some of each to the table, but based on some of the information I’ve seen I would say the greater value is in gaining more total eyeball time, with the ability to gain new eyeballs coming into second place, and the ability to monetize the eyeballs coming in dead last.
Based on that, I see the strategy question falling into a few segments depending on what the Giant needs:
Google already owns enough of the Internet and have achieved lock-in for that fraction that they don’t really gain much buying an existing Social Network. They’re not going to suddenly get people who’ve never used Google. They may like the idea of getting eyeballs to spend more time, but really, isn’t this a question of their Personality Space footprint? Or, to put it into more familiar terms, isn’t it a case of giving the eyeballs something interesting to do that takes a little longer? Covering all the Personality Space boxes by creating new offerings under the Google umbrella would make a lot of sense. They have a huge number of developers and it frankly isn’t that hard to build the stuff. They can also come off looking like heroes if they make their world open and satisfy the crowd that wants Open Social Networking. For Google, the Internet literally is their Social Network.
For a Yahoo or a Microsoft, its harder. They own significant traffic, but I wonder what the stats would be on whether they can benefit from new eyeballs? Yahoo, in particular, has quite a few properties, but they seem rather disjointed. What is the umbrella that could unite them and help them to leverage off one another?
For these Lesser Giants, buying a property like Facebook makes more sense. Their biggest issue is becoming irrelevant before they can fix their problems. Buying Facebook buys them time and keeps them relevant. It’s a short term strategy though, and no panacea for their problems.