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Mobile Space To Challenge Social Networks

pascal_network.gifA thoughtful piece by Colin Gibbs over at RCR Wireless News discusses the expected future evolution of mobile social networks compared to internet social networks. Expect the mobile versions to grow in popularity and usage, but a question remains about their financial viability!

Users of existing social networks are more and more frequently using mobile to access their messages and friends. Facebook and MySpace are the #2 and #3 mobile destination in the US according to information from Opera (the mobile browser company).

Plus, there is an entire new group of mobile focused social networks has sprung up and seem to be prospering. These include itsmy, Buzzcity, Peperonity, and Newbay. According to conversations I’ve had with some of these companies, a large percentage of their users are mobile only, indicating that they are tapping into a new market.

But these companies may be facing a serious financial squeeze sometime soon. Several factors will contribute:

  • The rapidly growing number of mobile social network sites means that the ad inventory in this area is expanding very quickly.
  • Ad inventory on the mobile internet overall is growing rapidly, leading to a reported general lowering of cost per impression rates.
  • Advertising budgets at many major companies this year will be flat at best, or shrinking, making it hard for them to put much money into newer, less proven areas such as mobile social networks.
  • Finally, the global economic picture also means that most venture funding sources are tightening up, making it more difficult for small social network companies to raise additional financing.

So long term this should become a very active area, but short term we might expect some consolidation due to financial issues.

Read the full article on RCR Wireless News.

05.01.2009    Tags: ,
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