'White label' social networking set for shake-up

Scores of vendors are now in the social-networking platform business and the market is ripe for some major acquisitions, according to Forrester Research

Scores of vendors are now in the "white label" social-networking platform business, according to a running tally by a Forrester Research analyst.

Instead of a proprietary platform like LinkedIn or Facebook, such companies offer a framework to enterprises or individuals wishing to build an online community tailored to their tastes and needs. The platforms are being used for everything from marketing and branding to internal enterprise use.

It's hard not to let out a low whistle when you scan this post at analyst Jeremiah Owyang's blog.

"Yup, I'm the analyst focused on this space, and not even I can keep up with the many vendors," Owyang said via e-mail.

"The flood in this market is due to low barriers to entry from easy-to-deploy software, an influx of venture money wanting to get in on the 'so-net' action and media frenzy from existing social networks like Facebook, MySpace and others," he said.

This particular bubble could soon contract, Owyang suggested. "Like the [content management system] industry in the late '90s, expect to see some major acquisitions from major [enterprise resource planning], media, and Web companies ... traditional CMS vendors are currently adding 'social features' to their products -- most without success -- and will resort to acquiring vendors to fill their suites."

Surviving companies will become marketing partners for enterprises, not just software providers, he predicted. "Let's not discount technology completely, it can be an edge, but the ones that will stand out will have a full solution," he said.

Alex Blum, CEO of KickApps, said Owyang has a point.

A successful social-networking site "has very little to do with technology," he said, and "more to do with how you program and nurture a successful community."

The company wrote a white paper, "Nine Steps to a Successful Online Community," that spends only a limited amount of time talking about technology.

Like other companies, KickApps' hosted platform is set up to let customers handle customizations. "We need to have a scalable business on a self-service basis," Blum said. "If we relied on going out and talking to every one of our customers, it wouldn't work. It doesn't scale."

However, KickApps offers tools that run the gamut from a simple-to-use editor for adjusting look and feel, to more robust developer APIs. The company claims that about 14,000 sites have been built with its platform.

In contrast to the relatively new KickApps, which started up in 2005, Sparta Social Networks is a veteran in the space, having formed in 1999.

That seasoning will help the company as the category contracts, said its CEO, Jerry Sheer. "We've got eight years behind us. We understand the space more than these new players."

The company is also banking on its J2EE-based platform, which is ideal for large enterprises, Sheer said.

Sparta will apply advanced analytics and metrics to derive meaning from social networking data. "We're going to do some very interesting things," Sheer said, adding that a social network is essentially a "focus group on steroids."

That strategy ties into a trend Owyang sees: companies offering "insight, intelligence and data" about online communities. There's yet another related category as well, the analyst notes: firms pushing Web collaboration offerings.

From the wide range of choices, G-Unit Records picked Ning, a company formed by Netscape co-founder Marc Andreessen. Ning targets both consumers and businesses with its hosted offering.

Chris "Broadway" Romero, who oversees digital media at G-Unit Records, said Ning was the right platform for rap star 50 Cent's social-networking site, citing its ability to "stand in the background."

"Unless you're an administrator, you don't have to see their name too much," he said.

Romero said Ning "could run a little faster," but mused, "Every time you add someone with the power of 50 Cent, it's going to bend the walls of any system out there."

According to Romero, 75,000 people are members of the site. That growth was driven by person-to-person referrals, not traditional advertising, he said. "It's definitely the way of the future," he said of social networking as a marketing tool. "Everyone should do it."

It may not matter much if enterprises find themselves with fewer offerings to choose from down the road, he suggested: "It's more about the person's vision than the tools, most of the time."

Recommended
Join the discussion
Be the first to comment on this article. Our Commenting Policies