Recently, eMarketer published a chart showing the percentage of people using social networks according to country. The data from September 2007 and September 2008 can be compared. A large majority of countries showed an increased in users from 2007 to 2008 – some substantially. The percentage of internet users who visit social networks could even be higher than what is represented below because the chart excludes traffic from public computers and access from mobile phones and PDAs.

The last post focused on the decrease of users visiting the majority of top applications on Facebook. To clarify, this does not mean that social networks are doing poorly. In fact, as a whole, social networks are growing. Compete.com, which provides user traffic within the United States, shows that between June 2008 and October 2008 Facebook, Bebo, Orkut, Ning and hi5 all had an increase in US traffic. The chart below outlines the US traffic for many social networks, as well as the percent change experienced during the time frame.

This graph shows the percent change of US traffic for each social network.

Worldwide social networks are also growing.

The chart below shows the worldwide growth experienced by social networks for the first half of 2008. Facebook and hi5 had the most new visitors (34,313,000 and 24,939,000 respectively).

According to Mark Zuckerberg, more than two hundred million dollars have been invested in Facebook applications as of July 2008.  But is it a good investment if the number of unique monthly users visiting Facebook applications is decreasing?  I found that the average change in an application’s unique monthly users from September to October was a decrease of 87,997.  All over the internet, people are stating their opinions on what they think is happening to the Facebook platform.  The data that I found, which is illustrated below, suggests that Facebook applications are losing popularity, which could mean a huge loss of money for those people who have invested in the applications, as well as businesses which depend on people using these applications.

A review of a recent one month period showed that 66% percent of the top 250 Facebook applications experienced a decrease in the number of unique monthly users.  Out of that 66%, 16% was a decrease of more than 50%. On September 9, 2008, I entered the number of unique monthly users into an Excel sheet for the top 207 Facebook applications (ranked by unique monthly user).  Then, one month later, on October 12, 2008, I did the same for the top 200 Facebook applications on that date.  Of course, there were some new applications that had not appeared in September, 42 to be exact. To make the graphs and compare the data, I had to fill in data that I did not have.  There were applications that appeared in the October list, but not on the September list.  For these applications, the number of unique monthly users in September was unknown, so I used the value of 200,000.  I also entered 200,000 as the value for the applications that were in the top 207 in September, but did not appear on the top 200 list for October.

The declining traffic that Facebook applications are experiencing is important to the many people who built businesses around these applications and within social networks.  There are many possible reasons for this decline.  A popular opinion is that the decline is a result of the new Facebook design which was implemented in July.  There are so many applications that are very similar, like the ones that focus on sending gifts to friends.  There is not much to these applications and how many flowers, chocolates, hugs and toys can you send to friends before the novelty wears off?  When looking at the top fifty applications in September (ranked by unique monthly users), the one that grew the most, in terms of both number of unique monthly users and percent change, was Causes.  Causes unique monthly users increased by 4,641,318, which is a 156.83% growth.  Maybe people got tired of living a virtual life and instead are spending time online raising money for charities.  Or it could be that giving to charities is becoming popular and people are getting more recognition among their friends for giving money to charity rather than doing well in a virtual world.  Finally, Facebook traffic could just be leveling out. Just in the past year from September 2007 to September 2008, Facebook’s unique monthly users actually increased by over 15 million.  Sooner or later there will not be as many new people visiting Facebook, while there will still be people leaving.

Have a look at this post.

Excerpt:

“Elsewhere on brand republic, someone suggests that WPP is buying another research company because “research is measurable, and WPP likes measurable things”. I would suggest this is the complete opposite of the truth. Research panders to the love of measurement, for sure, but as a marketing activity I cannot think of anything less subjected to rigorous cost-benefit analysis than the money, time and effort squandered, oops, I meant ‘invested’ in researching things.”

Do you agree?

On a side note, buying a company during a recession, regardless of this accountability question, is a smart business move.

People often ask me what Sample 3.0 is and why its important. Sample 3.0 is our social network-based sampling product through which Peanut Labs delivers profiled and targeted sample to market researchers. It’s important because of one very important reason:

Social Networking usage has OVERTAKEN email usage. This data is from 2007, and I’m sure if you do a more recent search through proprietary comScore / Nielsen data the difference between Social Networking and web-email usage will have grown even further.

Advertisers have clearly noticed this fact, and the ad market for social networks is expected to be worth $2.2bn in 2008. People, especially young people and professionals, are using communities and social networks to communicate with each other, keep track of colleagues and friends, and connect with business prospects. This is not just for teens – take a look at Linkedin, Plaxo and Xing. Plaxo was recently acquired by Comcast, and Linkedin was valued at over $1bn by a recent venture financing.

People are clearly hanging out on social networks more and more. And as a result, response rates on email-based sampling are crashing. Have a heart-to-heart conversation with anyone who runs an online panel and they will tell you this. From a purely business perspective, this creates an economic impetus to start sampling in places where there are higher response rates. Peanut Labs gets response rates on average of 29%. I’d love to hear what other firms experimenting with social sampling are getting. In either case, these rates are well above the 0.1% – 3% typically seen on email sampling.

If you’re not reaching people through communities or social networks for research, you are likely (a) getting more professional, “panelized” repeat responders, and (b) you are paying too much.  I often compare the email/social-network transition to the phone/online transition. You have to move now or you risk getting left behind.

Jane Cook, a well-loved researcher and former president of the MRA, is battling against cancer. Please go to this page here and leave her your love and comments. Also has instructions on how to mail her a card.

A few minutes of your time can mean everything to someone battling for their life.

This post is a reply to Om Malik’s review of Facebook Connect, the new Facebook data-sharing system that allows 3rd-party websites to share data with Facebook about Facebook users.

Here is my reply to Om’s post, which was posted as a comment on GigaOm. Text below. I would love to hear your thoughts.

Monetizing Facebook Connect

Om,

While your initial post is insightful, I disagree with your notion that FC will primarily make money by better ad targeting through more profile information. I have done significant advertising as an advertiser, and FB already has enough detailed information to reach almost any kind of audience profile that you are looking for as an advertiser.

The big problem is that online, as in other mediums, users continue to ignore ads. This is especially true in social networks given the high PV / Visit ratio.

Google got around this problem by showing relevant ads WHEN and WHERE people were looking for a particular something. This was a great and natural extension of Google’s main product: search. If you were searching for X, or on a site about X, Google would show you ads related to X.

Search is not Facebook’s forte. The social graph is. So how can Facebook use what it has to get people to care about ads?

The answer is almost wickedly simple: through friends and friends-of-friends. I will care about an ad for X if I’m interested in X at THAT time (Google search) or in that location (Google Adsense), OR if my friends and trusted connections care about it (Facebook). Nobody else on the internet can tell me what my friends are interested in, what new products they are trying, or new services they are using. Facebook Connect will be able to do that.

FC will make money by getting me to “care” about the “ads” and charging advertisers premium rates for higher CTRs and better converting traffic. This works because of the social graph, NOT because FB has 5 new pieces of information about my profile.

Think about the following example: I have 649 friends on Facebook. If I buy a new video game for my Xbox360, and that information shows up in the feed for my 649 friends, the chances for them to click-through and buy the same game are much higher than if you took the same ad and showed it to 649 random users on the Internet. The CTR these days on SNS sites are abysmal – 0.01 – 0.1% on average. If even 1 of my 649 friends clicks on the video game link to learn more through Facebook Connect, FB has just outperformed the entire SNS ad sector by 3x – 10x.

THAT is game-changing. And not in the way you think.

Peanut Labs has been selected as a finalist for the Fast Company’s Fast 50 Award. Peanut Labs joins heavy hitters like Microsoft, Sun Microsystems, and Mozilla. The Fast Company’s Fast 50 Award is the publication’s annual readers’ challenge in search of the most innovative companies in the world!

Please view this link to vote and feel free to pass it around to others who might be interested in supporting the Peanut Labs cause. Voters have until July 15^th, 2008.

http://www.fastcompany.com/fast-50-2008-application/fast-50-2008-application-69

Unless you’ve been keeping your head buried in the sand these past few months, you must surely know what this gadget is. Yes, the Apple iPhone is releasing in less than a week. And I can’t wait. Among other things the new iPhone 3G offers 50% faster internet speeds, full MS Office and Outlook integration, and perhaps most interestingly an expected market of 20 million iPhone converts by the same time next year. Sounds outrageous? Apple expects more. This recent order of 50 million 8GB Nand flash memory chips placed by Apple from Samsung Electronics suggests that they expect the new iPhone to fly off the shelves.

It doesn’t matter whether you hate Apple or the iPhone, or if you’re a crackberry fan. By the end of 2008 Apple will have sold over 12 million of these things (they’re already past 6 million now). This creates a large standardized platform that is incredibly valuable and lucrative for anyone who wants to build a mobile business. What does this mean for mobile market research?

1. Safari.
The 3G high-speed internet, coupled with a powerful, full-featured Safari browser means that you could run exactly the same surveys on the iPhone that you currently run online if you really wanted to. The functionality is all there, including the zoom in/out that allows a user to view complex web pages on a 3.5″ screen. The touchscreen limitation however means that in practise it will be difficult and painful for complex surveys to work well. We can’t expect users to make choices on a 12 x 24 grid of options on a tiny screen. But we can expect them to answer polls, or multiple-choice questions with relative ease. Safari will allow researchers to do more with mobile surveys than they currently can.

2. Apple Notifications API
By using a new real-time notification API researchers will be able to communicate directly to respondents, in real-time, on the device they have in their pocket. Notifying a respondent immediately when a survey is available for him/her is an obvious first application which would significantly improve project delivery times.

3. App Store
Apple is giving independent developers and enterprises the ability to directly reach millions of consumers through the new App Store. And you don’t have to pay anything to Apple if your app is free. I can see some of the mobile research companies developing a free survey app that will be distributed to thousands of consumers at no cost through the App Store.

Greenfield and some of the other companies experimenting with mobile research are excited, as they should be. This could be the big break mobile research has been waiting for. Will the iPhone get 20 million converts by the same time next year? Am I drinking the Apple Kool-Aid? Time will tell.