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Social networks’ “value”?

Michael Arrington talks about a new model he created to assess the market value in online social networks. As hard as it can be to place a market value on a person, it’s almost more complicated to place such a value on an online social network. Arrington looks at MySpace, Facebook, Bebo, Hi5, and LinkedIn, among other sites, and creates a model that includes the number of unique visitors the site gets, the number of worldwide users, and the site’s total revenue.

He points out that one of the issues with his model is that each social networking site is different in its focus; I would add to this that each site has a very different user base. (He does point this out for LinkedIn, which is purely a place to connect virtually and not a site on which you can play games or babble back and forth.) I have profiles on all the sites I listed above (which is partially because I used to be a high school teacher and partially out of personal interest), but Facebook is definitely the only one I use with some regularity. There is obviously a lot of money to be made from advertising on the sites, which in turn might make some people interested in actually purchasing the sites, but it still seems shaky to equate any “values” between sites since they are all so different in nature. People on each site have different buying powers, people spend different amounts of time on each site, people go to each site with different motives, etc.

I should add here that I am part of one of Andrew’s projects on political polarization, and we ran a survey on Facebook as part of that project. It’s not cheap to target Facebook users; it is, however, a nice way to target users with specific interests because they list their interests in their profiles. Then again, Facebook users are overwhelmingly within the same age range and at a similar level of education, so it’s not a hugely diverse or population-representative respondent group. We paid for it though, and maybe that’s exactly the point.

6 Comments

  1. marcel says:

    Completely off topic, but here's (http://bp0.blogger.com/_nTCQ4ihGgUU/SF8hpAs3slI/AAAAAAAAADA/CMSFV4LuiwE/s1600-h/zzzBUSHINDEX_24497_image001.gif) a nice graph (which I discovered via a link at Mark Thoma's links for today (http://economistsview.typepad.com/economistsview/2008/06/links-for-20-22.html), where he labeled it "Stuart Thiel knows why people are unhappy (about George Bush) – Richard Green" (http://real-estate-and-urban.blogspot.com/2008/06/stuart-thiel-knows-why-people-are.html)

    This would be a lot more readable if I could use the html tag "a href=" Ah well.

  2. Is this (sampling certain user groups) something Facebook itself has monetized? Depending on the cost I have a couple projects in development that could really benefit from that.

  3. James says:

    I'd love to learn more about the Facebook survey that you ran. Where might I find details about that project?

  4. Juli says:

    We're still in the beginning stages of the project, but I will post more details as we move along with it.

    As to the sampling, yes, Facebook has monetized targeting user groups. You can choose to send to users with certain interests listed. I'm not sure how granular it can get, but even that gives it an edge (for advertisers or researchers) over other social networking sites, as far as I know.

  5. Andrew says:

    some of my dissertation research (in marketing, at Columbia) is related to this issue. feel free to check out a working paper on ssrn : http://papers.ssrn.com/sol3/papers.cfm?abstract_i

  6. Anonymous says:

    How in the world do you feel that Facebook with far less commercial areas (ie advertising) is worth more than MySpace? Or that twitter with almost zero revenue is worth more than LinkedIn?