Niche Social Networks Will Continue To Be Hot In 2008

Late last year I wrote about the future of social networks and how I envision them becoming smaller and more targeted, like aSmallWorld.net, which is a social network for the affluent.

Well the Washington Post had an article over the holiday period about niche social network sites like aSmallworld.net and how that advertisers are flocking to them.

The Post wrote that ASmallWorld.net, which has 300,000 select members has become a magnet for companies that make luxury goods and are trying to reach people who can afford them. The site’s biggest advertisers include Burberry, Cartier and Land Rover. Cognac maker Remy Martin last month threw a tasting party for the site’s elite members, at which its top-shelf, $1,800-a-bottle liquor flowed freely.

The niche social networking market is exploding as thousands of sites have sprang up to cater to specific interests, backgrounds, professions and age groups. Nightclub frequenters can converge at DontStayIn.com. Wine connoisseurs have formed Snooth.com, and people going through divorce can commiserate at Divorce360.com. While small in numbers these sites form intimate communities of like-minded people. And that is what attracts advertisers.

Overall, ad spending on social-networking sites is expected to grow 75 percent next year, to $2.1 billion, according to eMarketer. Of the $920 million spent this year to advertise on social networks, 8.2% went to niche sites, up from 7% in 2006. In 2008, niche sites’ share of ad revenue is expected to grow to 10%.

Large companies are already testing ads on smaller sites. AT&T, for example, recently promoted one of its global cell phones on WAYN.com (short for “Where are you now?”), a social network for international travelers. AT&T is using niche networks, “where your ads are more meaningful — those are the real gems,” said Carrie Frolich, who manages ad placements in social media sites for at MediaEdgeCIA, which is owned by marketing giant WPP.

Frolich said her clients, including Campbell’s soup, Colgate-Palmolive, Paramount and Citibank, are willing to take a chance on smaller sites that could be more relevant to their products.

“Even if they’re just dipping their toes in the water, this is their strategy going forward,” she said.

The smaller niche networks allow advertisers to focus more on ads tailored to these specific audiences.

“Companies are learning that these smaller communities may reach people that are more valuable to their brands. It will someday feel more like information than marketing,” Jeremiah Owyang, a social-networking analyst at Forrester Research.

In September, Robin Wolaner launched a social network geared to people over 40 called TeeBeeDee.com, short for “to be determined.” Wolaner, who founded Parenting magazine 20 years ago, said she saw a need for baby boomers who cringe at the thought of joining AARP. Next spring she plans to find advertisers targeting the middle-aged market.

“You’ve got a really active and hard-to-reach demographic coming to this site, and they’ll all have to make difficult purchase decisions,” such as life insurance and financial planning, said Wolaner. “If we are a safe and trusted place, they’ll come to us when they make these purchases — that’s more interesting than just pure advertising.”

Membership on niche networking sites varies greatly, ranging from a few hundred to a few million. LinkExpats.com, which provides an online haven for U.S. expatriates, launched last month and has about 200 members. Flixster.com has 40 million members who rate movies and gossip about actors

The challenge for niche sites is to continue to grown and attract members and advertisers without making members feel as if the site is overrun with ads. It is a fine line to walk, but the social networks that can walk it will see continued growth in 2008 and beyond.