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Ads give local networking sites the pass

The success of networking sites may have got many local techies, start-ups and media conglomerates excited, but their indigenous ventures haven’t really been revenue churners.

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Advertisers are unsure of returns on investments even as global social sites Orkut and Facebook prove to be major hits

MUMBAI: The phenomenal success of networking sites like Orkut and Facebook may have got many local techies, start-ups and media conglomerates excited, but their indigenous ventures haven’t  really been revenue churners.

Since the past 18 months, many local social sites such as Yaari, Minglebox, Bharatstudent, Desimartini, Ibibo, Indyarocks, BigAdda and Campus18 were launched. They got their servers ticking, salivating at the sight of India’s newly developed online addiction. And when HT Media acquired Desimartini.com, it seemed social networking had finally arrived on the online media landscape of the country.

None of them have, however, have caught on in the manner Orkut, (or recently Facebook) has managed to do. The biggest challenge is the revenue model, which online marketers say is not easy to work out. Social networking, with around 20 million users in the country, hasn’t really proved a goldmine for advertisers as many may have liked to believe.

Mahesh Murthy, founder and CEO, Pinstorm Ventures, south Asia’s leading search engine marketing company puts it succinctly: “If you look at online advertising opportunities, social networking sites have been a retrograde step. The environment in the site is so immersive, that one doesn’t look at the ads.”

Page views, impressions and click-throughs — three metrics which online marketers swear by — haven’t yet adapted to the social networking environment in a manner that does not encroach upon user experience.

“When you’re on a social networking site, the intent is to network and not see ads. Click-through rates on these sites, therefore are abysmal,” says social media consultant Rajeev Dingra of WATconsult.com. “Moreover, although the sites boast of registered users running into lakhs, frequency of visit and average time-spent are very low. The statistics are not worth sharing; hence advertisers are taking their time to buy into the social networking craze.”

CEO of a leading online advertising agency further adds, “The lack of interest is because none of these sites have differentiating elements. Since technology is cheap, everybody has blogs, videos, forums, photo sharing and customised profiles. Unless sites identify a niche to address, they won’t bag ad revenues either. On the online space, advertisers target niches, not masses.”

Which is why, recovery of investments is a big problem that social networking sites are likely to grapple with in the near future. Unless existing site models or content evolve, a possible shake out is on the cards, say industry observers. “Pump in the initial investment, set up the site, spend on advertising, get in a million users. What next? Recovery of costs is not in the picture,” says Dingra, summing up the timeline of a site.

Raghav Bahl-mentored Tangerine Digital’s site Campus18 is resorting to creation of talent hunt, which it hopes will help attract users.

Puneet Johar, CEO, Tangerine Digital doesn’t rule out the possibility of turning this into a full-fledged TV reality show later. “Since we’re more of a talent-networking site, we’re creating our own branded properties, starting with ‘Digistars—War of the Videos’ where we’re hunting for the best 3-minute video.”

Ibibo.com, meanwhile, is using cross-media promotions for a TV show ‘Public Ka Vitt Mantri’, where it is inviting users to blog about their ideal budget to be judged by former finance minister Yashwant Sinha.

However, People Group’s Fropper.com, which has matured from a dating website to a community website, has had the early mover advantage in the business. “We’ve developed customised ad solutions for Airtel, ICICI, L’oreal, MTV apart from conventional banner advertising,” said Navin Mittal, business head, Fropper.com. The site also has a paid-dating service.

Interestingly, Orkut, which attracts the second largest number of users from India, isn’t really a money-minting machine either. It will attract revenues once Google’s much-awaited Open-social platform allows third-party developers to create application programming interfaces (API) which, when intelligently merged with brands, will set Google’s cash registers jingling.

Ditto for Facebook, which post its $15 billion valuation by Microsoft, has got its act together to monetise its 50 million users, by opening the site to third-party developers and creating sponsored items called ‘social ads’.

Indian advertisers like ICICI Prudential, Fast Track, Simplymarry.com and Yellowjobs.com amongst others have already put up banner ads on the site.

Apart from developing their own ad solutions, website bosses are betting on Google’s Open-social to save the day. But by the look of it, it is seems some of the local social networking may go bust in a few years if a revenue model is not put in place soon.

“Shut down your business or start something really innovative, rather than operating sites which are attracting null traffic,” says Murthy, who claims that Pinstorm is building online destinations for advertisers, rather than advertising on networking sites.

Dingra is more optimistic. He says, “Advertisers will see value in the need of social media marketing. Customisation will be the key.”

However, many website bosses say it’s still early to think about ad revenue. The focus right now is on getting more users and ensure stickiness.

Websites like Reliance ADAG’s BigAdda.com and Ibibo.com, which have hit the 1-million user mark, claim to have something in the works for advertisers but the approach is experimental.

BigAdda COO Siddhartha Roy says, “We are putting in place customised solutions for advertisers. This could be branded addas (informal) or hubs wherein we will try to integrate the brand and user experience in a seamless manner.”
 
Meanwhile, Minglebox.com co-founder and CEO Kavita Iyer expects her business to break-even in two years and asserts that a lot of advertisers have “shown interest in the social networking space.”  “The advertising hasn’t yet been tweaked around in a manner that doesn’t intrude into the networking space. Minglebox.com is more of a campus website. The TG is brand conscious, but its early days yet, since the advertising platform is new.”

c_arcopol@dnaindia.net

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