Helps 63 Users Find A Friend Every Second, Grows Into a Mainstream Internet Service in 2009

2010-02-01 00:00:00

Since springing up in 2008, many Chinese social networks (SNS) have seen rapid growth in 2009.In addition to building open platforms, SNS websites are attracting a rapidly increasing number of users as well as the attention of advertisers. According to a CNNIC annual report, in 2009 the number of Chinese social network users reached 124 million or one-third of the total number of Chinese internet users. The approximate size of the SNS market was one billion yuan in revenue. SNS websites have demonstrated mature growth while becoming more and more popular among Internet users.

From Imitation to Reality

The birth of SNS websites brings a new concept of online socialization that is based upon real identity. The popularity of SNS websites has made real-identity online interaction a daily practice for all Internet users. Blogs, photos, virtual gifts, games and other SNS applications have facilitated real interaction among Internet users. According to Renren’s latest annual report, in 2009 the number of users’ “personal status” updates on reached 700 million and the number of images uploaded reached over 1.1 billion.

Real-identity online communication is clearly a major competitive edge of SNS websites. Through SNS websites, people can interact with friends with real identities more closely. Many Internet industry experts conclude that SNS websites have created a network of real socialization and solved people’s daily communication problems. Solving real life issues and maintaining friendships are the critical factors that ensure the survival and growth of SNS websites. As the reach of SNS websites grows wider, they will influence many more people.

From Individual to Community

While satisfying the needs of the individual, the social networking community has gradually shifted its focus to the broader community. For instance, the new report shows the number of "friend requests" on reached 2 billion in 2009. That means helped 63 users find a friend every second of the year and created 1 billion friendships.

Based on the success of Facebook, Chinese social networks are shifting toward an open and real community. Celebrities, institutions and organizations have gradually become members of SNS websites. Information sharing has become more diverse and the emergence of social games satisfies users' needs for interactive entertainment.

If we review the development of mainstream SNS websites in 2009, we find has been the best practitioner of the "open SNS" model. The open platform, public webpages, and Renren Connect are major features of Open SNS. First, Renren’s open platform "opens" the site to third parties. Second, Renren is currently running a "Gold Partner Project" where public webpages support fan clubs and connect people with the similar interests. Third, Renren Connect provides users with links to high-quality websites and shares useful information.

SNS websites have begun to implement all-round advances in product development, algorithm optimization, user experience, management, and development. These developments keep SNS websites attractive to both users and business partners.

From User Growth to Revenue Models

After gaining users in 2009, the SNS revenue model has gradually grown clearer. According to the CNNIC annual report, 80% of SNS website revenue comes from Internet advertisement, 15% from value-added services (VAS), and another 5% from other sources. Alvin Chiang, CMO of Oak Pacific Interactive, Renren’s parent company, also pointed out that has begun to turn a profit in the second quarter of 2009, with 50% of revenue from advertising and 50% from VAS. To attract potential partners, is currently running its "Gold Partner Project," demonstrating an alternative income channel for SNS websites.

As the real marketing value of SNS is discovered by more businesses, many successful partnerships have emerged. For instance, partnered with MacDonald’s on the "Let’s Meet" project and with Lay’s on the "Lay’s Farm" project. Advertising professionals believe that the foundational properties of SNS websites include participation, interaction, thematic orientation, self-expression, and emotional communication, among others. These properties are the basis of SNS marketing activities, and they will promote the creation of more marketing models.

In addition, there are many more potential revenue models that require further investigation and trials. Partnerships between SNS websites and mobile phone manufacturers and operators are one such example. The new Renren SNS shopping model launched at the end of 2009 and will be a new topic of discussion in business circles.

The development of SNS websites still faces uncertainty in 2010. But a growing number of applications, users and larger markets predict a bright future for social networks.