Monetizing social networks

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Social Networks are the key to viral grow and monetization of your business on the Web. To understand why, it is important we understand the work of David Reed. Reed's Law in its simplest terms, states that the value of large networks, particularly social networks, can actually scale exponentially with the size of the network. The justification for this claim resonates with the large number of possible sub-groups among the network. As network benefits grow based on the combinations of these sub-groups and the total number of many-to-many possible connections, we move beyond the one-to-one possibilities contemplated in Metcalf's Law, thus the value of the network increases as does the growth in the networks second derivative. For those of you not versed in Calculus, the first derivative is the rate of change; the second derivative is the rate of change of the rate of change. The second derivative is key to understanding how our monetization efforts are progressing, it provides us a benchmark. When a network is reaching a point of diminishing returns (the point at which the second derivative slows) it is an early indicator that problems are on the horizon. Very little has been written on this topic, but I can assure you that a company's ability to monetize any particular network or sub-component of a network is directly proportional to the applicable underlining second derivative.

Suppose your firm's revenue model is based on advertising and on average, you made a penny a click in the early years, but as your network reached critical mass you were able to drive your revenue incrementally to .05 cents a click. As your network's second derivative slows and reaches an inflection point (the point in which the second derivative turns negative), It is clear your average revenue per click will trend back down toward the .01 cent level as you experience the pain of the Negative Network Effect. In order to continue to increase the value of your network, you must find new ways to monetize your network, reigniting the positive network effect. So how do we design a business model that maximizes the network effect? Let's take a look at the process.

Monetizing Network Effects on the Web ideally requires a dynamic Web 2.0 business model with multiple revenue streams, significant growth potential, and the strong balance of revenue, expense, and capital outlay. In order to maximize your Return on Investment (ROI), you must understand the interdependencies of revenues, costs, and capital investment on your Network Model. First, let's examine some of the most common Web 2.0 revenue models.

Advertising based - Perhaps the most successful and popular business model. Well know companies like Google and Yahoo give away search and sell a wide variety of advertising options to monetize their networks.

Subscription based - Very successful model where users pay a fixed fee at regular intervals. Fees can vary by type of account such as basic or premium service level or by options such as advertising or no advertising, etc.

Syndication or Licensing - A growing model as technologies such as RSS feeds (Real Simple Syndication) and content distributors grow. The user typical pays a fee to use or resell the product. The fee charged is often driven by the type of user, i.e. non-profit, business, individual, etc.

Unit based - The user simply pays a unit price for your product or services. If you buy a book or CD on Amazon, you are making a unit based purchase.

Transaction fee -This model has the user pay a fixed fee per transaction or a percentage of the sale. If you selling anything on Amazon or eBay, you will pay a percentage transaction fee based on the sales price.

Revenue Share - A popular model when distributing items requiring large inventories like DVDs, CDs, etc. In this model, the distributor may pay the content originator a small upfront fee and then share a percentage of the actual product sales. This model helps keep the initial acquisition costs low and allows time for your network to develop and reach critical mass.

Cross-network - A new and innovative model that involves strategies such as freemiums and n-sided networks. Freemium is a term that was coined by the combining of the words Free and Premium. The idea is to give something away and acquire a lot of clients or users, then offer premium value added services to monetize this base. The concept has been used extremely effectively by firms such as Adobe, Flickr, LoopNet, MySpace, and many others. Cross-network strategies simply target complimentary but different user bases. The classic example is the demand for gaming software titles when new gaming hardware platforms are released.

Now that we know how we can generate our revenues, we must understand our Critical Cost Drivers (CCD) and how these CCD will respond as our network expands. For each cost driver, we must understand the nature of the cost- is the cost fixed, semi-fixed, variable, one-time, or recurring in nature. This understanding allows us to construct a Cost of Support (CoS) model. The CoS model identifies the relationship of each of our costs to a base unit of revenue growth in relation to a fixed, but sliding network point. The fixed network point continuously moves as your revenues move along a J-curve or similar benchmark. The J-curve is typically most appropriate as businesses initially start to spend significant money on personnel, infrastructure, inventory, systems, and marketing during the start up phase. As your network starts to grow, revenues expand in relation to costs and the curve starts to decline at a slower pace, then flatten, and eventually start to climb. Understanding these interrelationships will assist you in maximizing your networks ROI.

Once we have identified our sources of revenues, our cost, and the relationships of our underlying costs to those revenues, we must model the appropriate J-curve to ensure our CoS model is accurate. In order to do this, we start by taking a look at our revenue positioning strategy. The typical strategies include one or more of the following:

o Loss Leader - Your network utilizes multiple streams of income that individually are not all profitable, but the losers drive traffic and subsequent purchases of other profitable products and services.

o Single Product or Service - Your network relies on a single revenue stream derived by one product or service.

o Multiple Product or Service - Your network receives multiple revenues from at least two products or services.

o Interdependent Product or Service - Your network promotes one set of products or services to drive demand from another set of products or services.

Your revenue positioning strategy will dictate your anticipated timing of revenues and thus the necessary underling CoS structure. Armed with this knowledge, we can adjust our modeling based on our revenue tracking metrics. These metrics may be things like average revenue per search query, average revenue per page view, average revenue per subscriber, or some similar metric. I have simplified this for ease of communication, but in actual application, we must use complex algorithms to differentiate the "life-time" value of different types of network participants, users, or customers. These calculations are based on the relationships between the numbers and type of network members and their interaction as frequent contributors, active members, influencers, etc., it stands to reason for instance, that an active blogger offers significantly more life-time value than an inactive member. Also, a particular user's distance from an already established high life-time value user can significantly impact the value of that individual user. When I am referring to distance from one user to another, I am really talking about degrees of separation. In the late1960s, Stanley Milgram investigate what became coined "small world phenomenon." He conducted an experiment were he attempted to find connections or links between people by asked random individuals in Nebraska to deliver letters to particular individuals in Massachusetts. The basic rules were to give the letter to someone you knew who in return would give it to someone they knew and so on and so on with the objective being to get the letter delivered with the fewest connections.

Through numerous tests, Milgram found that, on average, it took five or six connections to get each letter delivered. This study provided the basis of the theory of "six degrees of separation." In the past, the initiator likely would not know anyone past the first or second connection, but with our online connections, we literally can jump the network and direct connect to the targeted party, via our existing network relationship. Analyzing and understanding these relationships and degrees or distance from our highest life-time valued is critical to maximizing the monetization of your network. As you can see, the monetization of networks is a complex task, part science, part art, part trial and error. However, by applying these fundamental strategies to your business, you greatly increase the odds of maximizing your network ROI.

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Social networking-can assist your company going?

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Twitter. Facebook. YouTube. If I said these words to you years ago you would have looked at me like I was crazy! The aforementioned are websites used to fuel the social networking phenomenon. In case you are not aware of how social networking sites function, people use these sites to form associations with others that share the same personal or professional interests. Millions of people are using these sites to keep in touch with their families and friends.

Now companies are jumping on the bandwagon and incorporating social networking sites into their marketing campaigns. Although, social networking is relatively new, it is gaining status as a new way for companies to effectively market their products and services because of the following:  


  Interactive
  Cost effective
  Ability to market 24/7

Interactive

The main purpose of a marketing campaign is to promote your product or service to your target market. What better way to reach your target market than on their own turf? Years ago the typical marketing campaign would have consisted of direct mail, print advertising, and if you could afford it TV or radio ads. One thing all of the aforementioned mediums fail to do is to encourage participation.

Social networking sites enable you to instantaneously connect with your target market and receive feedback regarding your product and service. Regardless of what social networking site your company decides to join, all of them will enable you to foster a closer relationship with your customers-the degree in which this is accomplished rests solely upon your company. Consumers are already doing what they intended to do on these-connect with family and friends-you (companies) are the new kid on the block so it is up to you how you want others to perceive your brand.

An organization's objectives for how to incorporate social networking into their marketing campaigns often differ.   For example, Beth Bridges, Membership Director of Clovis Chamber of Commerce states that, "Our objective in using social networking is to create a trusted community and to increase awareness of their events within the community. We also use social networking sites to have more personal interaction with members who we might not see at regular networking activities and reach more of the younger business owners in the community who are using social media much more extensively to promote themselves and their businesses." 

It is a safe bet that the majority of companies that are new to social networking may be tempted to mention their product every five minutes on these sites-it is in your best interest not to do so. I realize that many organizations's main objective for using social networking sites is to promote their product. I am not telling you to abandon your objective-just alter the method in how you choose to do so.

People use products and services for different reasons and you will never know any of them if you do not take the time to foster a relationship with your target market. Many have been conditioned into thinking that companies could care less about their customers so it is up to your company to prove them wrong. Those who successfully do will reap the benefit of loyal customers. These customers will then share your product or service with their family and friends. It is more effective if you let your target market promote your product for you.

Word of mouth continues to be an important factor in whether consumers and businesses purchase a product or service. Many people consult with family and friends before purchasing a product or service they have never used. People are always asking others for advice on products and services on Twitter. Not too long ago, I went on Twitter to get feedback on software I was considering purchasing and got a response within seconds. This person not only commented about the software I was considering purchasing but recommended alternative software that was cheaper and more robust. Everyone desires to feel confident about the purchases that they make and although they may conduct some research of a product or service (i.e. Consumer Reports) it does not carry as much weight as family or friends.

Cultivating a relationship will enable you to stay ahead of the competition-provided you are listening to your target market. Social networking sites allow you the ability to gauge if you are effectively promoting your product or service to your target market. Based upon conversations in the forums you have the ability to find out what needs are not being met and create a service to meet that need. Social networking enables you to discover opportunities.

For example, you own a coffee shop near a college campus and have established an account on a social networking site. Students are complaining about not having a place to study during final exams and how they love your coffee because it not only tastes great, but helps them stay awake. How could you use this information? A savvy marketer would find out when final exams take place and expand their hours in order to meet the needs of their customers. It is a win-win situation for all involved. The students have a place to study while drinking your excellent coffee and you have the opportunity to increase your profits while further developing your customers' loyalty to your coffee shop. This opportunity was brought to you by social networking. If your company had not taken the time to interact with your target market using social networking sites your company would have missed out on a golden opportunity to fulfill a need not being met by other coffee shops.

Armed with the knowledge of who you are trying to target, you will be able to determine which of the most popular social networking sites your target market will be found chatting with their family and friends. Although all social networking sites enable you to be interactive, the degree to which you are able to do so is based upon the application you choose. Some of the most popular sites companies are using to advertise their product are as follows:

-Twitter: This is an online micro blog website that integrates with your computer, cell phone and other online social networking sites. Twitter simply asks you, "What are you doing?" You are able to share your thoughts (also known as "tweets") provided they are under 140 character restriction. People can choose to "follow" you based upon your tweets.

-Facebook: This website allows users to create customized profiles sharing information, photos, videos etc. and has applications that are designed specifically to their site. Facebook users can see only the profiles of confirmed friends and the people in their networks. Friends can look at each others pages and comment on their "wall" (this is a spot where comments can be viewed by others.

-MySpace: This website allows you to stay in touch with friends and meet new people. You have the ability to add new friends based upon the information posted on your space.

-YouTube: A popular site that allows users to upload and store videos to be shared for private or public viewing.

-Brazen Careerist: An online site comprised of Generation-Y (ages18 to 30) that displays blogs written by the community that generates thought provoking discussions.

All of the aforementioned sites will enable you to interact with your target market. Some companies make the mistake of becoming apart of as many social networking sites as possible. As with all things in life-quality will always win out over quantity. Meaning, it is better to invest your time building your relationship with your target market on fewer social networking sites if it means that you are able to truly listen to what is being said and share your industry expertise with those on the site. Joining numerous social networking communities and contributing nothing to them will leave people with the impression that your only there to promote your name and could care less about getting to know them-an impression no business can afford to leave.

Cost effective

Companies are always looking to save money and often zero in on marketing expenses (which is the wrong move to make, but that's another article!). Social networking can be implemented into your organization's marketing campaign because it is free. There is absolutely no reason why companies should not be incorporating social networking into their campaigns. The only investment required from companies is their time. After all if you are not willing to learn more about your target market and how using your product or service benefits them-then why should they (your target market) buy your brand?

Social networking sites save time and are cost effective for both companies and their customers. Companies can use social networking sites to gain instantaneous feedback regarding product launches. You can gauge the success of your launch based upon the comments you see shared online. Some companies are even starting to handle their customer complaints on social networking sites. This is a great medium to handle your complaints. People want their issues resolved accurately and quickly-what better way to do so than on their terms? Your customers are more at ease because they are doing something they already enjoy networking with those who share similar interests, family, friends, etc. It is more expensive for companies to attract customers than to retain them, so it is imperative that companies maintain a delicate balance.

Twitter is one of the most popular social networking sites for businesses. Zappos, the world's largest online shoe retailer, is an excellent example of how companies should use social networking sites. Zappos is constantly being recognized for providing quality customer service. Tony Hsieh, CEO of Zappos, along with his employees use Twitter to interact with customers, handle service issues and monitoring comments being made about their company. Comcast and Dell also have customer service people on Twitter who search for and address complaints online. Companies are always searching for fast, accurate, and cost effective methods used to monitor their brand and social networking sites enable you to accomplish these goals.

Ability to market 24/7

In today's fast paced world there are many people who do not log online during "normal" business hours. In fact, many times people log on these sites during unconventional business hours to connect with family and friends (i.e. friends and family overseas). Social networking sites enable you to continuously market your product or service even when you are not online. The time you have spent in cultivating your relationship with your target market will be evident. Companies who have built great relationships with their customers can rest assure that their customers will continue to "spread the word" about your product or service when your not online.

The aforementioned reasons demonstrate why social networking is an effective marketing technique. Some companies feel that social networking is even more effective than "traditional" marketing techniques (i.e. print advertising, direct mail, etc.).  Holly Homer, Founder and Editor of BurbMom.net which is a website for moms in the North Dallas/Fort Worth area rely solely on social networking sites. "We started out with an advertising budget of zero.  I wanted to see how far we could get by just doing free things. Our website has been online for 3 months and last month we had over 4800 hits-over 60% of those were local.  One hundred local moms have joined our online social network.  We have not spent a dime on advertising. I really don't think we could have accomplished this much in this short of time through traditional advertising with money."

Bridges said, "Social networking is absolutely more effective in reaching people who are using social media than the traditional tools-they are going to pay more attention to a message, email, or posting from you if you have established a relationship with them. By following you (or linking to you, joining your group, etc.) they are asking you to keep them informed, unlike a random postcard mailing or newspaper ad."

Companies cannot afford to dismiss social networking just because it is a relatively new marketing technique. Companies that do not engage in social networking are missing out on opportunities to interact with their customers while simultaneously saving money. Social networking requires your organization's time and energy to cultivate relationships with your target market that will go along way in fostering loyalty to your brand. In today's economy, social networking is the one investment you can expect to see a return.

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Why most financial professionals just don't get it when it comes to social networking

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Four Key Reasons Most Financial Professionals Don't "Get It" When It Comes To Social Networking

Most of the Financial Professionals I have talked to seem to be saying the same thing: "I really don't get this social networking thing". Well if you don't get it, my strong suggestion is...YOU BETTER GET IT!

Why? Because there are two things we know to be true:

1. PEOPLE TALK

2. WE KNOW EXACTLY WHERE THEY ARE TALKING THESE DAYS

All you have to do is take a look at these eye-opening growth statistics and you can clearly see why this new opportunity for your business simply cannot be overlooked or ignored:

Facebook has over 300 Million users, and about 600,000 join every day

50% of Facebook users are online every single day
The two fastest growing segments are people ages 35 to 55 and women ages 50 and older

LinkedIn, MySpace, and Twitter have over 150 Million users
Twitter's growth rate is currently over 750%

IT JUST MAKES SENSE:

If you take a look at the business relationships you treasure the most, they mainly consist of your family, friends, loved ones, co-workers and many other people who directly or indirectly support the growth of your business. The truth is that one of the key ingredients to a successful business is the ability to build and maintain high-quality, meaningful, and credible relationships with their clients and within their community. I'm sure this sounds familiar, because THIS IS THE ESSENCE OF SOCIAL NETWORKING!

WHAT'S IN IT FOR YOU AND YOUR BUSINESS?

If used properly, social networking becomes an excellent supplemental marketing strategy, serving as the perfect complement to your existing business plan. The reason why is because it is an extremely low-cost way to expose yourself and your business to the most popular places on the Internet, which directly connects you to the various communities, organizations, and groups that you care about.

From what I can conclude, there are essentially five key benefits:

1. Increase your business exposure and visibility

2. Improve your reputation and credibility

3. Increase brand identity and recognition

4. Enhance awareness of your products or services

5. Provide the opportunity to build a network of people and see this network exponentially growth...because PEOPLE TALK are constantly hearing from and talking about YOU

NOW FOR THE BAD NEWS:

Many studies, including ones in which I have personally conducted, prove that most financial professionals simply don't have what they need to be truly successful in Social Networking, and I have broken all of these details that should hopefully help each of us:

FOUR KEY REASONS MOST FINANCIAL PROFESSIONALS MAY NEVER REALLY "GET IT"

1. DESIRE:

Most financial professionals enjoy doing key things in their spare time that they are passionate about, such as their careers, hobbies, family, faith, sports, traveling, or whatever makes them genuinely happy.
Surveys show that Social Networking is at the bottom of this list of passions.
Most professionals today lack the time, skills, and most importantly, the inclination (or that "burning desire") to build, cultivate, and maintain a successful social network...particularly on an ongoing basis. In other words, this is not something most financial professionals "choose to do", but rather they feel like the "have to do it".
Every Social Network expert will tell you that success is largely driven in social networking through your ability to constantly offer new, valuable, and useful information and ideas. In fact, this is by far, their biggest challenge in working with their clients, since most don't have enough content and materials to continuously educate your social networks.
The reality is that most financial professionals are not gifted or skilled writers or editors, not only for their own industry, but particularly in designing pieces that fit well within the guidelines and purposes of social networks
Also, most financial professionals are not familiar with exactly what to write about, what topics to write about, how often to write about new topics, and how often to submit this information to these networks.
2. TECHNOLOGY:

Studies prove that most professionals who are 40 years old or older are at a big disadvantage, mainly because we didn't grow up in the "computer era". Therefore, we were never afforded the luxury of growing up in their early years to capitalize on the advent of the Internet and the every-growing capabilities of computers and technology.
The reason this makes this particularly challenging for most financial professionals is because most social experts will tell you Social Networking requires at least 10-15 hours of work each week, along with the aforementioned high level of computer and Internet skills.
Purchasing and maintaining all of this technology and computer equipment can be very expensive, as it almost always includes things like training, software, security, database backup, tech support, etc.
There is a never-ending need and requirement to ensure you are constantly staying updated on the newest and most innovative state-of-the-art technologies, which can also add to additional time, expenses, and training.
These social networks are growing exponentially in size and complexity. In fact, today there are over 70 Social Networking websites. This poses two big challenges:
1. It makes it much more difficult to keep up with all of the latest technologies associated with each social network, like blogging, tweeting, uploading, scanning, managing databases, navigating software, keyword tagging, search engine optimization, filtering spam and viruses, and much more.

2. It becomes vitally important that you know which of these Social Networks are worthwhile for you and your business, and which ones are not a good fit. This is an extremely important, and yet often overlooked, point about the number of social networks you belong to.


Many financial professional think they need to be involved in "as many of these networks as possible so they can get the most exposure" when it fact, the reality is the most important focus should be on the quality of these social networks...and NOT the quantity"!
3. INTEGRATION:

If you can believe this, even though most of us have heard of Facebook, Twitter, LinkedIn, and maybe a few others, there are approximately 70 different Social Networking websites today...and growing by leaps and bounds!
The good news is that this has brought about many new strategies and cutting-edge technologies that are specifically designed to help integrate and coordinate these social networks...which essentially allows them all to be able to "talk to each other", and share information. This is being made available because it helps to minimize your efforts to send a message out to multiple networks, and also attempts to eliminate mass-duplication of content.
The bad news is that, with the exception of a tiny minority, most financial professionals are simply not interested (or capable) of investing the time, training, resources, to keep pace with all these new tools.
The other harsh reality is that most financial professionals simply don't have the time, desire, and/or the quick and easy access to keep up with all of these new tools that can help them coordinate their efforts among this wide range of social networks.
One thing we know for sure is that one of the most critical ingredients to Social Networking success is making sure each of your multiple networks are working in harmony together, saying the same message at the same time. Given the current and future levels of growth in these networks and technology, this dramatically decreases the probability that financial professionals are likely to create the best possible results from these social networks unless they are all simultaneously working together.
4. TIME

The truth is Financial Professionals are not any different from other professionals. They too have a huge struggle to find that "perfect" balance between their everyday life events such as their career, marriage, friends, social events, kids and their multiple events, health and fitness, hobbies, sports, email, etc.
Today's difficult economic environment has clearly played a big factor in making it even more challenging for Financial Professionals to find that "proper" balance in our lives between family, work, and other "life events". These restrictions even further limit our ability to set aside a few hours each day to work on these social networks.
The harsh reality is that Social Networking requires a serious and dedicated effort and many hours of your personal time every day as a result of these sophisticated networks, technologies, and constant communication with a large number of changing people.
Among some of the extremely time-consuming Social Networking tasks are: regularly writing emails/blogs/tweets/updates, constantly creating target marketing campaigns, joining a large number of groups and networks, contributing regular and valuable information to these groups and networks, learning how to adapt to unique groups of people, regularly researching and provide new and current content, closely monitoring and managing an increasing group of friends or followers, working in harmony with the many different social networks, keeping up-to-date with the newest and most innovative technologies, etc.
IS EVERY FINANCIAL PROFESSIONAL DOOMED FOR SOCIAL NETWORKING FAILURE?

Of course not! However, unless you are one of the rare few financial professionals with an extensive background in technology, a vast array, access, and the ability to keep updated with the newest and most innovative technology tools and resources, an extensive understanding of all these 70+ social networks, and which one is right for you, a large amount of free time, and a burning passion to become a social networking expert, your best bet is to choose one of two routes:

1. Set your expectations low, work at often as you can, and just have fun.

2. An alternative is to seek the help of the wide array of social networking companies who can help do the large majority of this for you. This frees up much of your time, gives you the ability to maximize your results and efficiencies, and can also dramatically expand your social network and business opportunities.

MY PERSONAL SOCIAL NETWORKING STORY:

I decided to take advantage of the second option above. I hired a professional company who does this for a small monthly fee. Like many of you, I am busy and cheap, so my focus was on paying a small monthly cost, having NO long-term commitment, and having almost all of the work done for me. And so far, I have been extremely pleased with the professional support and progress I have made!

Granted I've only been doing this for about two months now, but if you look at the number of connections I have made, the people I have been introduced to or connected with, and the people that have contacted me, it is truly amazing. Other benefits include joining multiple networks of people and groups, "branding" my name/firm/products/services, and also developing partnerships and relationships that are extremely valuable.

HOW DID I FIND THE "RIGHT" PROFESSIONAL HELP?

I performed extensive research on what types of professional Social Networking Companies are out there today, and who are among the industry leaders. I looked at everything including cost, contractual commitments, what would be required on my part, and what could I expect. I finally chose a company when I saw an impressive interview with their President on Fox News who worked as a Business Coach and Social Media Specialist for major celebrities and corporations for over 25 years..

I strongly suggest if you decide to seek professional help that, like I was, you do some extensive research on your own. With the geometric growth potentials that lie ahead in this great new business opportunity, this is an extremely important decision. Or, in an effort to save you valuable time, I am happy to provide each of you the findings of my results, the company I am currently using, as well as several companies I would also suggest you look into, and which I feel comfortable recommending. So by all means, please don't hesitate to call or email me if I can help in any way.

I hope I was able to help you see why most Financial Professionals not only "don't get it", but even if they think they do, it is very unlikely they are "getting the most out of it". And if you go back and reread everything I talked about above, it should be very easy to understand why most financial professionals are simply not cut out for this kind of stuff...for a wide variety of reasons.

I can honestly tell you that for me personally, this whole Social Networking world has opened my eyes to a new way of growing my business that has extended far beyond my wildest dreams. And the truth is, just a few months ago I really "didn't get it" at all.

So the morale of the story is this; most financial professionals are just like me. They don't really "get" how social networking TRULY works, they probably never will, and their best bet is to work with a professional. As the saying goes, you get what you pay for.

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Social networking-the truth about social networks for socially encouraged entrepreneurs

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Conversation is natural, for some at least, and social networking should be just as natural but it seems as though we've lost the art of conversation somehow. True, there are those amongst us who prefer a quiet book, a walk alone in the park or a shack in the middle of a wood or high on a mountainside somewhere but most of us would like to think we knew how to network and how to be social wouldn't we?

For others the thought of social networking sends a painful shiver down the spine and if this is sounding a little like you this roadmap should help to point you in the right direction.

I hope you will take something new and valuable from this and add it to your networking know-how to become the social networking superstar you always wanted to be and if centre stage isn't for you, then perhaps a supporting role with damn good backing vocals that people will remember for years to come is more your social networking story..

We define conversation as an informal talking together, and that is exactly what social networking is all about sharing our voices, visions and personalities across the social web. People enjoy sharing what they are doing, reading, watching and offering their opinions, finding out about what others are doing, thinking and feeling as one with a community of like-minded people, in the new way of communicating online.

But many times there is an underlying collective purpose to this sharing. It is a participatory effort. The social aspect reflects that people have something in common, and the networking brings those people and their ideas together. Social networking, because it is made up of two words, can have many meanings, and using this form of communication can only compliment the way you do business and how you build relationships.

Businesses all over the world can have their name spread in a positive or negative way through social networking, depending on how interested people are in the business, the topic and the product or service on offer but don't be fooled, this new media conversation is a powerful marketing toll if tuned and channelled correctly.

This type of networking builds social awareness and potentially, more visitors to a site or location. The social side of networking is an excellent way to stay connected in relationships and build new ones across the world.

Social networking is the new way to inform and to be informed, and its influence is growing every minute like a modern day Bible.

Social media as a whole transcends age, race and religion in a way nothing has ever done before. Teenagers can have much more in common with twenty somethings, thirty somethings, middle agers and even old guys like me these days. They are all, for the most part, using the power of conversation through Web 2.0 sites and cell phones.

The simple truth is that people want to know what other people are doing, and people like to tell others about it. But social networking is not just about finding out that someone just took a shower or finished gardening the yard. It's about setting up a strategy to expand your reach in relationships, business and life in general.

The opportunity to set up social networking links abounds on the world wide web today and yet in many of today's social networking site URL's, there is no longer the "www" of the past, and therefore no websites, or not as we once knew them.

Getting set up on one or many of the networking sites requires you to input content, but becoming a member of a social network is easy and generally free.

Plugging in all your information like name, email and any info and choosing a password all form part of the process of registration and have to occur but most of the larger sites are now connected so it's fairly easy to transfer data from one site to another with a few clicks of the mouse.

After that, you just have to figure out how to navigate around the site itself in order to start to build your network of contacts and friends. Click on all the links, connect with a few friends, post a few messages, and you're on your way to being a social networking superstar.

Once you feel confident, choose more than one site, maybe in different social networking channels to be connected in several different ways and with different groups of people.

So how are people connected and what can it mean for business?

Here's an example of how social networking sites can work for business..

Joe may be looking for a new car, Sue is going to the beach and Dan is searching for a job. If they're all communicating on a common channel such as Facebook, Twitter or LinkedIn, there's a possibility that they can all help each other. Joe has a friend that needs an employee, Sue sells cars, and Dan needs a ride to the beach. Then, Bob comments on the cars Sue is selling, Mike mentions that he works with the company that Joe's friend works for, and so on. Sounds simple but it works.

The networking brings them all together with sites that meet each of their different needs. Now, it's not every day that social networking can make such breakthroughs, but the possibility to connect with others through social networking is very possible with consistent use and knowledge.

Your networking reads and posts can reveal all sorts of new data you might have never encountered before. As a business owner, you can listen in on what your customers are saying about you. As an individual, you can do the same. With both, through social networking you may defend yourself, thank someone for a comment, or remain silent but you are always informed provided you listen!

Some sites connect people from around the world in different ways through shared content such as articles or photos, for a viewer to peruse and comment on.

HubPages, Squidoo and LinkedIn are such sites that are easy to read through and superb communities, as well as potential sources of additional income.

Squidoo features a massive array of topics where people create "lenses," or individual pages of information on particular topics. It's a fun site to visit to get answers to almost any question, and provide a space to influence others through social networking stories, ideas and offerings of well researched content.

HubPages offers advice on many different topics and rates pages with reader input as "Hot," "Best," and "Latest," with photos and videos to round it out. LinkedIn is a more professional site, with a network that goes around the world and represents nearly 200 industries.

These sites can also be a forum for either positive or negative activity and input. A communicator may post on his HubPage that he loves a particular new milkshake at McDonald's, or that he despises it. Depending on the creativity of the post (a clever song, a YouTube event with sound effects, or outrageous writing, graphics and photos), it can be widely read all over the world, impacting millions of potential buyers on a social networking platform, or it can be a "dud" with only ten viewers. This social networking voting process can be valuable to a business, or a challenging encounter. The handling of the particular case is what matters, and there's plenty of advice out there on social networking sites on how to deal with it.

But staying on one "channel" when social marketing doesn't have to be your end all. You go to Facebook to post and read up on the social activities of all your networking friends. The question is, will you connect with more than one site? I'd say you will. You'll see a connection to a group of photos on Flickr, a photo social networking site, so you link to it. Or, a YouTube connection is sent to you by a buddy on Twitter and you pursue that. Many of the sites are interlinked and a part of the social networking strategy that good marketers have in place is to cross-reference targeted content across these different social networking sites.

It is all interrelated, this thing we call social networking business, and when you want to pursue it, you can go deep, spending hours reading and posting, or you can limit yourself to a set amount of timeeach day. Either way, learn how to tame it or it will drag you off into the jungle never to be seen again.

The beauty of social networking is that you can get as close to people or stay as far away as you want or need to so don't hit the panivc button if the threat of social networking activity is looming and you're simply not the social type. You can be an observer only, scrolling through masses of text on various Web 2.0 sites, or commenting and participating as a social person who likes networking with those from around the world.

There are similarities in social marketing media and traditional media such as radio, television and print. Both are evolving in technique and delivery. Both have various channels with which to communicate. The notable difference between social networking media and traditional media is that with social networking, the audience plays a much bigger part in what is portrayed. There is still the factor of "truth," as a reporter may show a particular slant that is not completely true in traditional media, and a post on a social networking site may not be completely true either. It can be an outright lie, in fact. But the difference is, with social media, this will quickly be exposed by the people who use the site, as the social networking reader may make his own opinions and then comment and input on the topic him or herself and others in their network will follow.

There is not necessarily an "overlord," a "commander-in-chief" or a designated leader in social marketing, which is a positive and interesting way to look at it. You'd like to participate, go ahead. State your case. Social marketing is most effectively used with participation and influence and not through controls (although some sites are designated as "family friendly" and lewd and rude content are discouraged).

Make your comments and voice your compliments or concerns in a way that is natural and honest and people will start to trust you and value your input. Social networking is there for the creator and for the commentator. If and when you are passionate about a topic, create your own hub, blog or video. In addition to the social networking sites mentioned here, there are many others, on a wide variety of topics.

What is the goal? You might ask. Social marketing is not about the content itself sometimes, but a way to get connected and to observe the results of the conversations themselves. These various social networking strategies and activities are weaved together to use as business tools and entertainment. It allows people involved in Web 2.0 networking the capacity to become not only content readers, but also, if they wish, content creators and publishers.

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That each financial institution should know about social networking

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The aim of any business is to be successful and profitable throughout the lifetime of the organization. The evolution of communication technology in recent years has helped make this possible by improving a business's ability to network with its existing and potential customers. What once required face-to-face conversations and the physical exchange of contact information can now be done in an entirely virtual environment with just a click of a button.

Advances in communication technology, such as texting, blogging, emailing, media sharing and gaming, have created new social norms and revolutionized the way people communicate. It is no wonder, then, that the financial services industry is beginning to use various forms of Computer Mediated Communication (CMC) to enhance customer service and improve current products and services. The most popular form of CMC are social networking websites such as Twitter, Facebook, MySpace, and LinkedIn, which are used primarily to maintain or build connections among users.

Social networking sites represent a large market with tremendous growth potential that can be easily targeted by financial institutions if they know how to use these sites to their advantage. Like many organizations that have already experienced the benefits of using social networking sites to enhance their business, financial institutions are beginning to understand and embrace the power of social networking as it relates to their day-to-day business activities as well. Whether educating customers on new services, boosting customer confidence, increasing sales outreach or personally connecting with their customers to meet their banking needs - social networking is a vital communication tool that financial institutions can utilize in many of their customer business interactions.

Understanding Social Networking

Social networking is a form of collaboration and networking where individuals develop groups and associations, often forming a virtual community. While social networking is possible in a face-to-face setting, such as on a college campus, it is most often seen online in a CMC environment. The size and popularity of the "communities" created by MySpace and Facebook and other social networking websites have experienced substantial growth as more and more people invite their acquaintances, co-workers, friends and family members into these virtual communities.

The traditional roles of the sender and receiver involve delivering messages in a clear and concise way and providing feedback to achieve agreement of a particular subject. Social networking uses these same basic building blocks but accomplishes the end results in a slightly different way. The cues that help facilitate understanding in a face-to-face environment (e.g., intonation of voice, body language, facial expressions, physical distance, etc.) are often removed in a social networking environment. Though some websites offer an audio visual element, social networking is largely text-based, relying on "digital gestures" to demonstrate emotions and add emphasis to a message, such as:

? Forwarding.

? Recommending.

? Sharing.

? Tagging.

Social Networking Applications for Business

Networking has always been a key success factor in the business world. Networking involves linking together individuals who, through trust and relationship building, become walking, talking advertisements for one another. Traditional networking often takes place face-to-face at business lunches, conferences or exhibitions, where people are able to meet and establish mutually beneficial working relationships.

Online social networking offers many of the same benefits as traditional networking, while allowing bankers to more easily network with the average consumer as well as with their colleagues in the financial industry. Used appropriately, online social networking offers businesses the opportunity to develop meaningful, long-lasting customer relationships.

A study of the banking industry and the ways in which several banks' board members networked with others showed that though these professionals are interested in using networking to secure new customers and to maintain and develop existing customer relationships, they also want to use networking to represent their banks in community, professional and trade organizations and to procure market trends and competitive information.

To achieve the goals identified in this study, board members and other bank employees must first understand what social networking is and how it can be used to position their banks above others in the industry. If properly trained, these employees can use social networking to achieve their banks' organizational goals and place their banks in the top positions in the industry in the following five ways:

? Community building.

? Product research.

? Customer service.

? Marketing and promotion.

? Transparency.

Social networking is currently being used to bolster the reputations of the financial institutions that use it, providing information both internally and externally. This type of information sharing builds consumer confidence and helps employees understand the importance of their roles within their banks and how they should strive to achieve the highest standard of customer service.

Challenges of Social Networking in the Workplace

One of the first challenges of integrating social networking with the workplace is helping employees understand the importance of using this technological tool. The next challenge is in addressing the training needs of the organization to bring all employees up-to-speed on the etiquette, functionality and general norms of such a medium. This means determining who will be maintaining the websites, how end users will experience the websites, and how policies and procedures concerning social networking will be shared, and with whom inside of the organization. And finally, relationship management in a virtual environment poses a challenge. This last challenge should be a primary focus when implementing a social networking-friendly policy or procedure.

A great deal of the CMC that occurs in social networking happens through what has become known as Social Information Processing (SIP) theory. The theoretician who first introduced SIP, Joseph Walther, stated that the nature of relationships created online can be drastically different from those established in person, particularly when individuals act differently than they would in a non-virtual environment. While Walther acknowledged that the rate at which these relationships are formed may change over time as individuals become more familiar with the technology, he argued that relationships in a CMC environment would take up to four times longer to establish.

To counter this potential limitation, banks might seek to make use of the theory of attribution, which states that individuals link observed behaviors of others with causal explanations to help them understand what type of people they are communicating with. The time to develop relationships can be shortened using attribution theory because bankers can use their observations to make product or service recommendations based on needs that they have established.

Using Social Networking to Connect with Customers

Though social networking poses its own challenges, it can also be used to overcome other challenges that banks may face. For example, social networking allows financial institutions to boost consumer confidence, increase sales, and strengthen customer relationships, which are all areas of concern as they can give a bank a competitive edge over others in the banking industry.

When consumer confidence is low and distrust of the banking industry is high, particularly in times of economic crisis, social networking has allowed for greater transparency and has opened up a conversation with consumers. The public forum created by websites like Facebook, Twitter, LinkedIn and MySpace provide the financial services industry an ability to address customers' banking needs by:

? Acting as a medium for customers to send their questions and concerns to a bank, with immediate feedback from a banking expert.

? Replacing one-sided information dissemination like press releases or bank-sponsored advertisements.

? Reassuring the public of safety and soundness policies and procedures.

? Eliminating skepticism through informative links, text, graphics and audio or visual elements.

? Educating customers about products and services that address specific needs.

Protecting Customer Information

One of the main concerns of financial institutions is the protection of information and financial assets. As technology makes it easier to communicate with people in remote locations or to conduct financial transactions, it also enables thieves to obtain customers' confidential, nonpublic information, putting customers at risk of identity theft and other similar schemes.

Financial institutions have addressed these potential information security breaches by creating Know Your Customer (KYC) programs and prioritizing identity verification and the reporting of suspicious activity. The same precautions and care should be exercised when using social networking websites to ensure that customer information remains protected.

Implications for Legal Compliance and Record Keeping

Once a financial institution's directors and staff understand the implications and proper use of social networking websites, it is important that the institution's policies and procedures be revised to reflect the addition of these new business activities. This ensures that the institution remains in compliance with industry laws and regulations, and it demonstrates to the public that the organization is fair and respectful of customers and employees and that it works to protect its customers' information and financial assets.

The Financial Industry Regulatory Authority (FINRA) recently issued a publication that provides guidance to financial institutions regarding the use of social media in their business operations. FINRA Regulatory Notice 10-06 outlines the necessary recordkeeping requirements that financial institutions must abide by and provides guidelines for the supervision of non-static messages sent social networking websites.

Because social networking websites are fairly new and financial institutions are only just beginning to explore their potential uses, the twelve government agencies that control the financial services industry, in addition to other organizations like FINRA, are continuing to develop and amend regulations. For instance, the use of social networking affects advertising requirements for financial institutions, as stated in Regulations Z and DD. It also affects Federal Deposit Insurance Corporation (FDIC) membership, Federal Housing Administration (FHA) and non-deposit retail investment and fair lending implications. It is the responsibility of each institution to be aware of current regulations and how their use of these websites affects their compliance current law. Management should also understand the risks of noncompliance and be sure that their policies and procedures are updated to reflect these changes.

Final Word

Financial institutions must consider the risks and rewards of using social networking tools in their everyday business operations, and ensure that these tools conform to policies and legislation, while meeting the needs of their customers. Because customers are the driving force for success in the financial services industry, the key to protecting them is through employee education. It is imperative that bank employees are appropriately trained before and during the use of any type of social networking tool. Understanding how this new form of communication impacts the organization in the long-term can help a financial institution plan for and attain future success, while focusing on keeping customer relationships strong and information and financial assets secure as social networking becomes a more prominent business tool.

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New era-how to use social networks to build a business network marketing

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At first the only social networks were free to join major networks like MySpace and Facebook. Their networks are open to absolutely everyone from anywhere and they have grown like wildfire across the web. Even network marketers joined these networks and still do in order to market their opportunities or products through these sites. It is definitely smart because it is a great free way to get that extra exposure even though the audiences of these networks are not necessarily targeted. In recent months social networking has become even more so a big topic, and especially among network marketers.
However, the value of marketing on Myspace and Facebook is quickly dropping. This is due to the massive release of new and niche focused social networks. The fact is that this year alone I have seen an increasing number of professional social networks geared towards network marketers launching and becoming increasingly popular. To name a few: TalkMoola, Zenzuu, Friendswin, Yuwie, and Wowzza. A couple older ones are DirectMatches, AdLandPro, and even Ryze. Honestly I wouldn't even be the least bit surprised to see a few more start-up this year - that is how much it is catching on! It is also obvious why they do become so popular among network marketers, because there is no better advertising than targeted advertising. Exposing your business opportunity, system, or product to other network marketers is simply the most effective thing to do. Once a network marketer joins you they already have had their foot in the door and are somewhat knowledgeable about the industry and can greatly help your business. However if a random person from MySpace sees and joins your business they are not nearly as valuable to you because they most likely have no idea what they are doing or what network marketing is even about.
So when network marketers are invited with the ability to join a social network full of network marketers it is almost a no-brainer. Just to clarify why I said "almost"... It is because not all network marketers have caught on to the power of social networking yet or how to properly use social networking to explode their businesses. But the ability to further expose themselves and their business to other like-minded people is extremely valuable and profitable for most. The old way of network marketing is out, and I see the future holding tight to social marketing through professional social networks. Even so, many of these new business social networks are offering incentives for those who join. These range from revenue sharing, direct affiliate commissions, and various MLM pay plans. Through this supporting these new business social networks they will experience the increased awareness and exposure that they deserve.
All professional social networks, however, are not created equal. Here are a few things you need to look out for when deciding which ones you will utilize in exposing yourself and your opportunities.
1) Somewhat Targeted or Extremely Targeted?
When looking over your social networks find out if the people involved in the social network are the type of people who would be interested in what you have to offer, or are like-minded to you. This means that if you are a network marketer looking to provide an opportunity to other network marketers then the people involved in the social network should be strictly network marketers. Does the social network you are considering include members looking for a date or love? If the social network includes this or niches totally unrelated to you then this weakens the potential of that network for you. However, if the social network is only network marketers or business opportunity seekers then it is an incredible source for you.
2) Are mass communications possible to your friends list?
Increasing your friends or contact list on social networks is the one major thing you must do in order to maximize your exposure and reach. This means accepting friend invitations from those within the social network and also seeking out other like-minded to add to your network of friends. The larger your list of friends the more active you will appear to be and the more people will take heart to what you have to say. It also means more people who you can send messages to through the social network. Some social networks limit the amount of people you are able to send a message to at once. Let's say you have 200 friends but you are limited to sending to only 30 people per message and you can only send one bulk message per day. Well this is a very negative restriction and even more so if you have a much larger network of friends. On the other hand, some social networks will let you add unlimited friends and you can send them a bulletin or message to all your friends at once anytime with ease. This is what you should be looking for because whether you have 100 friends, 1,000 or even 10,000 you can send them all a message just as easily as if you were sending it to one. This means potentially huge exposure for you. If you want you can even consider it like an instant contact list of targeted prospects! However, I do warn about sending too much unwanted messages to your friends, you should try to connect with them and send them as much quality information as you can instead and then lightly introduce what you have to offer. If you consistently send what they would consider as spam messages they will just block you or remove you from their friends' network, so using the social network properly is important.
3) Are the members free, paid, or both?
The quality of the membership is another factor. If the membership is mostly free then they are less likely to be purchase ready. However, if the membership is all paid and everyone is used to paying to be a part of the social network then these are the highest quality members you can get in touch with because they will have the money to invest in working with you. Mixed is fine though as this factor is not as important as the first two.
4) What are the other site incentives?
Overall this is the least important factor to be discussed. Other incentives could be the pay plan such as revenue sharing, affiliate commissions, or some type of matrix structure. It could also be other services provided with your cost of the membership such as training, tools, or other bonuses. Keep in mind, even if they do not offer great incentives but the rest of the above factors are positive I would still be excited to join.
Right now there is not a huge selection of targeted professional social networks but I am positive that the future will hold true for more and more becoming available. Personally I like to take advantage and join any social network because that is extra exposure for me, and any extra exposure is always a good thing. However when choosing to be most active in select networks you may want to consider the above factors. I have created many strong relationships, learned a lot, taught a lot, and profited a lot from those relationships within social networks. You should take at least some advantage of every professional social network available, even if it is just setting up a profile to gain some extra exposure. If they are a niche social network that have like-minded individuals similar to yourself then you should definitely be more open to actively using that network. The benefits can be enormous.

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Structural holes And Online social networks

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A few weeks ago I wrote about the theory of Social Capital, and how that can be applied to online social networks (see end of article for link). Today I want to talk about a related theory called Structural Hole Theory, and explain what implications this theory can have for online social networks like Facebook and MySpace. First, a little background...
Structural Holes Defined
Ronald Burt's theory of 'structural holes' is an important extension of social network theory. This theory aims to explain "how competition works when players have established relations with others" (Burt, 1992), and argues that networks provide two types of benefits: information benefits and control benefits.

Information benefits refer to who knows about relevant information and how fast they find out about it. Actors with strong networks will generally know more about relevant subjects, and they will also know about it faster. According to Burt (1992), "players with a network optimally structured to provide these benefits enjoy higher rates of return to their investments, because such players know about, and have a hand in, more rewarding opportunities".
Control benefits refer to the advantages of being an important player in a well-connected network. In a large network, central players have more bargaining power than other players, which also means that they can, to a large extent, control many of the information flows within the network.

Burt's theory of structural holes aims to enhance these benefits to their full potential. A structural hole is "a separation between non-redundant contacts" (Burt, 1992). The holes between non-redundant contacts provide opportunities that can enhance both the control benefits and the information benefits of networks.
Optimizing the benefits of networks
I will now look at how structural holes can facilitate the optimization of information benefits and control benefits. There are several ways to optimize structural holes in a network to ensure maximum information benefits:


The size of the network. The size of a network determines the amount of information that is shared within the network. A person has a much better chance to receive timely, relevant information in a big network than in a small one. The size of the network is, however, not dependant merely on the number of actors in the network, but the number of non-redundant actors. The utility of a network with reference to its size can be described by a function know as Metcalfe's Law. Robert Metcalfe observed that new technologies are valuable only if many people use them. Specifically, the usefulness, or utility of the network equals the square of the number of users. The more people use a piece of software, a network, a particular standard, a game, or a book, the more valuable it becomes and the more new users it will attract, increasing both the utility and the speed of its adoption by still more users.

Efficient networks. Efficiency in a network is concerned with maximizing the number of non-redundant contacts in a network in order to maximize the number of structural holes per actor in the network. It is possible to eliminate redundant contacts by linking only with a primary actor in each redundant cluster. This saves time and effort that would normally have been spent on maintaining redundant contacts.

Effective networks. Effectiveness in a network is concerned with "distinguishing primary from secondary contacts in order to focus resources on preserving primary contacts" (Burt, 1992:21). Building an effective network means building relationships with actors that lead to the maximum number of other secondary actors, while still being non-redundant.

Weak ties. In his 1973 paper entitled "The strength of weak ties", Mark Granovetter (Granovetter, 1973) developed his theory of weak ties. The theory states that because a person with strong ties in a cluster more or less knows what the other people in the cluster know (e.g. in close friendships or a board of directors), the effective spread of information relies on the weak ties between people in separate clusters. "Weak ties are essential to the flow of information that integrates otherwise disconnected social clusters into a broader society" (Burt, 1992). Structural holes describe the same phenomena as weak ties because both emphasize the need for entrepreneurs to fill the gap between different clusters and non-redundant contacts. However, structural hole theory goes one step further and stresses that what makes the gap important is not the weakness of the tie but the structural hole over which it spans. Building and maintaining weak ties over large structural holes enhances information benefits and creates even more efficient and effective networks.

To achieve networks rich in information benefits it is necessary to build large networks with non-redundant contacts and many weak ties over structural holes. Some of these information benefits are:

More contacts are included in the network, which implies that you have access to a larger volume of information.

Non-redundant contacts ensure that this vast amount of information is diverse and independent.

Linking with the primary actor in a cluster implies a connection with the central player in that cluster. This ensures that you will be one of the first people to be informed when new information becomes available.
Now, once structural holes are identified and the network is optimized to provide maximum information benefits, an important question is how these benefits can be used to capitalize on the opportunities in the network. Control benefits answer this question. Structural holes not only provide information benefits, they also give actors a certain amount of control in negotiating their relationships with other actors. To understand the role of structural holes in this regard, it is necessary to understand the concept of tertius gaudens. Taken from the work of George Simmel, the tertius gaudens is defined as "the third who benefits" (Simmel, 1923). It describes the person who benefits from the disunion of two others. For example, when two people want to buy the same product, the seller can play their bids against one another to get a higher price for the particular product. Structural holes are the setting in which the tertius gaudens operates. An entrepreneur stepping into a structural hole at the right time will have the power and the control to negotiate the relationship between the two actors divided by the hole, most often by playing their demands against one another.
Where structural holes provide a platform for tertius strategies, information is the substance with which the strategy is performed (Burt, 1992). Accurate, timely and relevant information delivered between two non-redundant contacts at the right time creates an immense opportunity to negotiate and control the relationship between these actors. That is the power of structural holes, and that is why the theory is so relevant for social networks on the Internet.
Implications
The different benefits of structural hole theory makes it instrumental in the creation and development of social capital in networks. The information and control benefits described by this theory can identify and expand the intrinsic value of networks. If we want to find the value of online social networks these three constructs -- social network theory, social capital theory and structural hole theory -- are essential tools.
For example, if we apply these concepts to MySpace or Facebook, we quickly realize it is not the sheer number of "friends" in your network that count, it is the diversity of the people in your network that is most important. If you only have links to people in your immediate group of friends or colleagues, it will be difficult to get new information, since everyone will pretty much know the same things. This is not to say that you have to start adding random people to your network who you don't know, but it does mean that people with who you have "weak ties" will often provide you with new information and therefore more benefits than your "strong ties".
These theory also explains why eBay is such a huge success. By stepping into the structural holes between millions of buyers and sellers, the perfect tertius gaudens strategy was created, and it is arguably the best example of the entrepreneurial use of structural holes in the history of the Internet. If you think about it, every Facebook App is a tertius strategy -- some are good, some are not. But it shows that there are still a lot of structural holes out there in social networks, waiting for someone to step in and broker the deal...
References
Burt, Ronald S. (1992). Structural Holes: The Social Structure of Competition. Cambridge: Harvard University Press.
Granovetter, M. S. (1973). "The Strength of Weak Ties." American Journal of Sociology 78: 1360-1380.
Simmel, G. (1923). The Sociology of Georg Simmel. New York, Free Press.
[On social capital: http://www.ux-sa.com/2007/09/social-capital-in-online-social.html]

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