The Long Tail and social networks

In Chris Anderson’s best-selling thesis “The Long Tail” , he lauded online businesses that go to market with niche offerings, positing that a sizeable (and profitable) opportunity exists that mainstream businesses typically ignore.  Last week, Anita Elberse, in her HBR article titled “Should you invest in the Long Tail?” countered that argument, citing data that showed that mainstream demand continues to trump obscure, niche interests for wallet share.

While a healthy debate has ensued online between the authors, clearly both notions are plausible. Indeed, their relevance even impacts the strategies corporate decision makers pursue when deciding on how best to participate in online social networks.

At mainstream social networks like Facebook, My Space and Orkut, millions of members connect with friends to communicate and share experiences, forming clusters of people who have either something they identify with, or someone they know, in common.  Individual clusters expand and combine to form thriving online communities, where, as in the case of Facebook, over 250,000 new users sign up every day to participate.  The network effect inherent in sites like Facebook has challenged marketeers to embed their brands in the social experiences of their members.

The Long Tail theory applies spectacularly to online social networks too.  No matter how obscure your interest, idea, or obsession, there is likely a niche social network waiting to sign you up.  And where none exists, it is effortless to start one of your own, thanks to open platforms such like Ning (which had over 275,000 social networks as of May this year).

Niche online social networks can become a potent force, when they transition to full-fledged multi-sided platforms.  Consider LinkedIn, a professional networking site with more than 19 million members that renders the traditional Rolodex obsolete. Adding people to your LinkedIn network is akin to collecting business cards, except you get to view the person’s work history, and get a sneak peak at their network of contacts. And, whereas a business card is useless the moment a contact changes jobs, LinkedIn profiles are assiduously updated to ensure no achievement or career transition goes unnoticed. LinkedIn is well positioned to transform into a multi-sided platform serving the needs of individuals, recruitment firms, and employers.

As in the euphoric dotcom years, it is once again web start-ups who are rewriting the rules across industries. Still, significant opportunities do exist for traditional brands to extend their reach by embracing social networks, whether they participate in a mainstream social network like Facebook, or create their very own niche network. Last year, I posted a blog on how Choice magazine (a not-for-profit consumer reviews publication based in Australia) had squandered an opportunity to extend its brand online and tap into the collective wisdom of online Australians.

An equally compelling opportunity exists for another Australian publication – Vive magazine. This bi-monthly magazine for “women who mean business” has carefully cultivated it’s brand. Ambitious, sophisticated, and an astute sense of balance aren’t just Vive’s brand attributes -they could just as easily be traits their niche audience aspires to. The publishers of Vive have a tremendous opportunity to extend their brand values online, and to become an influential online destination for their key demographic. A hypothetical Vive online social network for women could allow members to comment on articles; authors and contributors could blog more frequently and initiate discussions on various topics; and, clusters of interest could emerge around subjects as varied as ‘working mothers’ to ‘starting my own business’.  Even the potential for advertising revenues would be amplified given the target audience at the site. 

There have been attempts by incumbent industry leaders – albeit limited in scale and ambition -  to extend their brands online via social networks (examples include Ernst & Young’s Facebook group to start a conversation with new grads, the HSBC Business Network, and Amex’s Open Forum). Perhaps the debate ignited by Elberse’s rebuttal of Chris Anderson’s The Long Tail will inspire corporate decision makers to revisit their own online social networking ambitions, and, who knows, maybe the next LinkedIn or Facebook will be the wilful foray of an old world company, attempting to rewrite the rules online.