Blogged, the blog directory that we introduced last February, has launched a news portal that aspires to hand-pick the most interesting stories from across the blogosphere. The company has employed a team of editors to identify trends and popular stories from around the web, which are presented in categories that include technology, entertainment, politics, and sports.

Unfortunately, Blogged will have to deal with one little problem - there are over one million blogs in its blogging directory, and (by their count) over 100 million live blogs across the web. With a staff of ten editors, there is obviously no way for them to keep tabs on every blog, even if they restrict themselves to the “top blogs” from each category. And the stories that are picked will be subject to personal bias.

This isn’t to say that Blogged won’t be able to keep their news page fresh - they’ll still be able to identify important stories just by watching a few top blogs. They’ll just have a hard time monitoring where the important discussions are occurring, or when the story broke in the first place. And without that, Blogged won’t have much credibility. But for readers who don’t particularly care where they get their news from, the Blogged homepage will work just fine.

There are already a number of well-established blog aggregators, most notably Techmeme, which is generally recognized as the definitive resource for hot stories and trends across tech blogs (the site has similar offerings for politics, sports, and gossip). Techmeme uses an algorithm to track upcoming stories, and is therefore able to effectively monitor many more blogs than a team of humans ever could.

http://www.techcrunch.com/2008/07/02/blogged-tries-to-make-a-human-powered-techmeme-for-everything/

SocialMedia, a San Francisco company trying to find compelling ways to advertise on social networks, is offering advertisers a new product: Something called “FriendRank.”

The company scans data about your activities on Facebook and other social networks, infers who your best friends are, and ranks them. Then the company exploits that ranking to serve you relevant ads.

It does so with something it calls “social banners,” which insert references to your best friends within advertisements.

The idea is that showing you ads that reference your friends will attract your attention and thus make the ads perform better.

I sat down with SocialMedia cofounder Seth Goldstein last week, who told me that the response rate to standard display advertising on social networks is abysmal. People click on ads about 0.02 percent of the time, he said, because people have started ignoring ads.

Thus the deperate need to interject your friends — to knock you out of your efficient browsing routine.

CNET uses the following example of a movie advertisement to explain how it works. Instead of simply showing you the movie ad, this product invites you to interact with the movie by inviting you to contact your friend about it.

[The] social banner would ask which of your close Facebook friends, among a short list, you’d like to invite to see the movie. Or a social banner might inform you that a friend Jim just ranked Iron Man with three stars, and it might ask to “click here to buy tickets at Fandango.”

The word FriendRank is a play on Google’s PageRank, which became the breakthrough technology in the late 1990s to rank Web pages in results when you searched for things on Google.

The word FriendRank is not new. Notably, former Yahoo employee Jeremey Zawodny was talking about “FriendRank” more than four years ago; it’s also notable that Zawodny has gone to Craigslist, an advertising company well-known for its dismissal of Web 2.0 hype. Will Zawodny help Craigslist cook up something in the social advertising arena? Don’t know. But Zawodny, back four years ago, used FriendRank to focuse on the concept of “influence,” as opposed to simply who your “closest” friend is. It’s clear that sometimes you can be influenced by friends who aren’t that close but who you perceive as being more hip or important.

SocialMedia’s execs say FriendRank will look for positive reinforcement. If you tend to click often on an ad featuring a particular friend, that friend’s ranking rises within SocialMedia’s algorithm. Also, someone you don’t interact with at all won’t be part of your FriendRank. While your parents may be influential in your life, if they don’t interact with you much on Facebook, they won’t count for very much in SocialMedia’s algorithm.

SocialMedia finds out information about your friendships by watching who you play games with on Facebook or MySpace, or who you otherwise communicate with using other applications on those networks. SocialMedia is in a good position to get this data because it serves ads on hundreds of applications, which in turn can access certain profile data of the people viewing the pages.

The company said it has filed a patent on the algorithm it uses to aggregate interactions on social networks to determine what friends to display in its ads.

I’m unaware of any competing products. Facebook has used its own news feed to display advertising to users and is said to be working internally on using your friendship network to serve ads, but it hasn’t offered any feature with an explicit friend ranking like this. Myspace, in turn, offers what it calls hypertargeted ads, but it doesn’t go as far as tracking your friendships. Lookery, another ad company on social networks, says it targets demographics but also hasn’t articulated anything about friendship relationships.

Goldstein said the company now gets exposure to 20 million users a month via its placement on applications.

He also provided first signs about how the company is doing financially. He said his company had awarded $8 million to applications developers on Facebook and OpenSocial in the year through May 2008. SocialMedia is quiet on the exact percentage of the revenue it keeps from advertisers before passing it on to developers, but generally ad networks keep at least 20 percent, and sometimes they can keep as much as 50 percent. That gives SocialMedia at least more than a million in revenue a year, so it’s turning into a real business.

The company, which has taken $4 million in financing from CRV and angels such as Marc Andreessen and Jeff Clavier, is now profitable, with 25 employees in two offices, Goldstein said.

Goldstein said advertisers are still largely in an experimental mode placing ads on social networks but predicted advertising would increase strongly next year.

SocialMedia was earlier called Appsaholic, when it became the first advertising platform on Facebook. It allowed developers to promote their applications by letting them place ads on other applications (essentially a way to purchase traffic from other applications). While SocialMedia still lets publishers buy ads promoting “installs” across its network of application clients, the company has expanded into other forms of advertising. They include video, banner ads, branded sponsorships, and virtual currency.

He said the company is emphasizing brand advertising, not direct-response performance based ads.

In testing, the product showed users are two to three times as likely to click on the ads, Goldestein said.

Nick Gonzales, former writer at Techcrunch, is now working at SocialMedia, evangelizing the company’s products at the company’s blog. He said the company is taking security and privacy seriously.

The company provides consumers with a notice and a choice to opt out of sharing their information within the social network. From a privacy page, it also lets users opt out of the ad itself by clicking on a “what’s this” text.


http://venturebeat.com/2008/06/23/are-social-ads-getting-too-much-try-friendrank/

Why Facebook is now the number one social network in the world, and why this matters

“At first we were worried about MySpace, but then we realized that people use it differently from our site,” an employee at social network Facebook told me over a year ago. What he meant is that Facebook is a place for people to put their real lives online, providing factual information about themselves and having trusted interactions with their friends. Meanwhile, rival MySpace is more of a place for people to live out their fantasy lives online, borrowing celebrity photos for their profile pictures, adding far-fetched biographical information and such — MySpace uses the term “self-expression” to describe this behavior.

These cultural differences are, of course, not true across the board but are generally obvious to anyone who uses both social networks. And they’re a huge deal, even though most coverage I’ve seen doesn’t acknowledge it.

Facebook’s global user numbers have boomed from around 40 million monthly unique visitors in April, 2007 to 115 million unique monthly users this past April, with 62 million new users coming from outside the US.

Compare that to MySpace, which counts 73 million of its global users in the US and is now globally a close second to Facebook, having hardly grown anywhere over the past year. In fact, another traffic measurement firm, Nielsen Online, says that MySpace had 4.7 million U.S. visitors in April, down 30 percent from last year.

Taking a deeper dive into Facebook’s growth in regions around the world, it’s important to note that in many places MySpace has never been dominant. For example, another social network, hi5 — which has an interface more similar to MySpace’s, has been the market leader in Spanish-speaking Latin American countries for years. And while hi5 is still growing fast, Facebook has been busy catching up to it in a matter of months, especially after Facebook released a Spanish-language version of its site in March.

How Facebook is keeping it real

Facebook’s growth is global in more ways than one. While it continues to have a relatively white collar, college-based user population in the U.S., it has seen uptake across all demographics in other countries. For example, when the site took off in Canada in the winter of 2007, two-thirds of the entire city of Toronto quickly joined, not just the rich kids. Facebook employees tell me they’ve seen the same pattern in every country outside of the U.S.

Facebook started as a college campus hit in the U.S., with students using the service to share information like which dorm they lived in, what movies they liked, and who they hooked up with. If they provided fake information, their friends from across the hall would simply leave comments saying so on their profile pages. Facebook built this real-world community aspect into its site through local and regional networks that you join when you sign up — an idea it has gradually expanded on as it opens up to more and more people in the U.S. and around the world.

Now, put yourself in the mind of the average user in another country. You’re joining because you want to hang out with friends around you, or maybe friends who have immigrated to other countries, or maybe you want to meet new people in other countries because you’re human and you’re curious about people in general.

Let’s say a friend who lives near you invites you to join. You see your friend’s real information, you mimic that by providing your own. You start using the site and you see that basically most other users have also added their real information, confirming that you should continue to provide real information on the site. Facebook also asks you to join a local network — which most new users seem to do — and you immediately get access to a bunch of other people a lot like you.

Now, let’s say you start looking around the site. You go to the profile page of a worldwide icon like English soccer club Manchester United, and see real users from around the world leaving comments. Or say you’re using a flirting application and start flirting with real people, also from around the world. In either case, you friend these people because you find you have something in common with them, and would like to see their full profiles (on Facebook, you normally have to either friend people or be in their network to see their full profiles). They friend you back, and pretty soon you, the new user, has a large Facebook friend list that gives you a direct view into who people really are, everywhere.

Facebook users in many Middle Eastern countries and Facebook users in the US have been busy making friends and overcoming larger political and religious differences, as Facebook chief executive Mark Zuckerberg has noted — and as I have personally seen.

Meanwhile, join MySpace, and you’ll encounter bewildering user profile pages dedicated to sub-segments of American pop culture that you don’t understand or care about, that won’t help you easily find old friends and new ones. Even though it lets you state things like what school you’re in and where you live within your user profile, the site didn’t grow based on these definitions, and beyond American high school users on the site, local networks are weak-to-nonexistent.

Blogger Andrew Chen noted the culture issue in an April post looking at Facebook’s worldwide growth rate, although he attributed the difference more generally to Facebook’s relatively simple, “utilitarian” interface and not to the distinct user behavior that the interface and site evolution have together bred.

So, in this context, Facebook’s growth and MySpace’s lack thereof may help explain why MySpace is launching a new, cleaner interface, which you can read about here. However, the changes, which include simpler site navigation options at the top of the site, better search, and more options for profile editing, don’t appear to impact how users perceive the site.

MySpace will likely continue to be a leading social networking destination, especially for people looking mainly for self-expression. It, and other social networks, have already ceded the real world to Facebook, though, and I don’t see them doing anything to change that.

Okay, so what are all these users worth

Social network advertising — which is generally comprised of ineffectively targeted banner ads — isn’t making that much money, and so far, neither have virtual gifts and various other monetization ideas. MySpace has had more trouble making money than it had hoped, as it made slightly less than the billion it was aiming for this past year. However, it’s shown promising success in targeting ads to users based on user’s own profile data (example: If you’re a MySpace user who likes shoes, you’re more likely to see ads for shoes).

Facebook, which is valued at $15 billion, expects to make up to $350 million this year, but that’s at least offset by costs incurred through its growth. It has been looking at fleshing out everything from targeted ads to video ads.

But the fact that monetization methods for social networks haven’t fully evolved yet is no reason to view this segment pessimistically. Web market analysis firm eMarketer released a report last month in which it revised long-term revenue projections for social network advertising downwards from its earlier report. But the report is based on what the firm’s analysts read in the press and what they hear from companies. A large chunk of the projections dip is likely based on the one-off report about MySpace not meeting its own high expectations

With the vast majority of social network revenues coming from US users (it’s currently the most lucrative advertising market in the world), it goes without saying that social network companies are dependent on growing out their US user bases quickly.

And MySpace might be right to focus so heavily on the U.S. market for now. On the other hand, entrepreneurship involves taking risks to be early to new markets and nail them before your competitors. There are plenty of economies currently growing much faster than the U.S.’s, and as social networks catch on in those countries, social network advertising will grow. So, gaining a global user base now is actually a land-grab among social networks, especially for the largest social networks, all of which have substantial funding to back them up as they continue to grow.

If you were a social network, would you want tens of millions of international users now, even if you figure you probably won’t make money on them for years? I would.

http://venturebeat.com/2008/06/13/why-facebook-is-now-the-number-one-social-network-in-the-world-and-why-this-matters/
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