Advertising Causes Social Network Peak?

February 8th, 2008 seph250 Posted in Internet |

Business Week has an interesting article Generation MySpace Is Getting Fed Up suggesting that social networks are being hurt by attempts at monetization. It has some interesting data points to analyze:

The average amount of time each user spends on social networking sites has fallen by 14% over the last four months, according to market researcher ComScore.

I’m skeptical why this statistic is based around 4 months… Was there an odd spike last October? Are these numbers really going down or just fluctuating? Is 14% really that significant? Business Week builds a case that this decline is caused by the increase in advertising, but there are many more things going on that could cause this. When a user first signs up for a social network, there is a novelty aspect to it and the user spends massive amounts of time exploring. However, once you’ve found all your “friends” and stylized your page to your liking, there’s simply less to do on the site. Sorry Business Week, I disagree. This decrease in time online is not due to the advertising - We just became bored with the concept. Another datapoint:

MySpace, the largest social network, has slipped from a peak of 72 million users in October to 68.9 million in December, ComScore says.

First of all, let’s be clear what these numbers are referring to. ComScore bases these numbers on the number of unique visitors to a site over the course of the month. ComScore does not know how many registered users Myspace has. This is not about users canceling their accounts, this is about Myspace users not going to Myspace in December. One argument is that this decline is caused by Myspace users switching to Facebook, or some other social network platform that they like better (I tend to believe this). Another explanation (that Business Week argues) is that users leave the social network site because they get too annoyed with the advertising. But wait a minute, we’re talking about December! This is holiday season when everyone goes on vacation. If you’re not at your desk at work looking for ways to goof off, then you’re not going to MySpace… And like I mentioned before, we’re getting a little bored with what Myspace has to offer and don’t obsess over our accounts the way we used to.

Bottom line, the way I see it, Social Networks are not in bad shape, they’re just beginning to mature. Even Business Week acknowledges

The total number of people on such sites is still increasing at an 11.5% rate, but that’s down sharply from past growth rates.

And it’s not the advertising driving us away, it’s boredom. Social Network sites can’t expect to build an asset and milk it for perpetuity. Constant innovation and improved services will be necessary to keep users attention.