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A rhetorical question worth answering.

R ic h a rd E dwa rdsS e nior R e s e a rc h Ana lys t

B utle r G rouprich a rd.e dwa rds @butle rg roup.com

quality data expert analysis innovative deliveryAnalysis without compromise

“Are ‘Friends’ Electric?”

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Its cold outs ideAnd the pa ints pe e ling off of my wa lls

The re s a ma n outs ideIn a long coa t, g re y ha t, s moking a c iga re tte

Now the lig h t fa de s outAnd Im wonde ring wha t Im doing in a room like th is

The re s a knock on the doorAnd jus t for a s e cond I thoug ht I re me mbe re d you

S o now Im a loneNow I c a n th ink for mys e lf

About little de a lsAnd *is s ue s *

And th ing s tha t I jus t dont unde rs ta ndLike a wh ite lie tha t n ig htOr a s lig h t touch a t time s

I dont th ink it me a nt a nyth ing to you

S o I ope n the doorIts the `frie nd tha t Id le ft in the ha llwa y

P le a s e s it downA ca ndle lit a s ha dow on a wa ll ne a r the be d

You know I ha te to a s kB ut, a re `frie nds e le c tric ?

Mine s broke downAnd now Ive no one to love

S o I find out your re a s onF or the phone ca lls a nd s mile s

And it hurtsAnd Im lone ly

And I s hould ne ve r ha ve trie dAnd I mis s e d you tonig ht

S o its time to le a veYou s e e th is me a ns e ve ryth ing to me

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The Proliferation of Social NetworkingThe Proliferation of Social Networking

• Take-off: 2004Take-off: 2004

• Barriers to entry non-Barriers to entry non-existentexistent

• Very big and very smallVery big and very small

• Rich and restrictedRich and restricted

• Competing for attentionCompeting for attention

• 25 million UK users25 million UK users

• Value chain evolvingValue chain evolving

• Plateau: 2012Plateau: 2012

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Participating in the MarketParticipating in the Market• New entrants: decide on New entrants: decide on

your target audienceyour target audience

• New media firms should New media firms should track aggressivelytrack aggressively

• Brands should consider Brands should consider build, buy, or partnerbuild, buy, or partner

• Technology providers Technology providers should aim to add valueshould aim to add value

• Consultants and Consultants and Systems Integrators Systems Integrators have a role to playhave a role to play

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Mobile InternetMobile Internet

• 24/7 access to social 24/7 access to social networks, particularly in networks, particularly in the ‘third space’the ‘third space’

• Flat-rate taking over from Flat-rate taking over from PAYGPAYG

• Social Networking seen Social Networking seen as a ‘killer app’ for mobile as a ‘killer app’ for mobile InternetInternet

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Global Social NetworkingGlobal Social Networking

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Regional VarianceRegional Variance

S ource : Da ta monitor a nd Ale xa

Unite d S ta te s

F ra nce

Hong Kong

54 m

11m

6 m

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Analysis without compromise

Social Networking SitesSocial Networking Sites

• People-basedPeople-based sites are sites are defined by the desire of users defined by the desire of users to maintain and extend to maintain and extend connections with friends and connections with friends and acquaintancesacquaintances

• Content-based Content-based sites are sites are defined by the desire of users defined by the desire of users to consume, exchange, and to consume, exchange, and promote contentspromote contents

• Special-interest Special-interest sites are sites are defined by the desire to share defined by the desire to share experiences with like-minded experiences with like-minded othersothers

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Key Elements of Social Networking SitesKey Elements of Social Networking Sites

• People-based sites:People-based sites:– Critical mass of users– Multiple small, sustained activities– Privacy filters, anonymity– Strong identity-focused search

• Content-based sites:Content-based sites:– Critical mass of content– Easy, reliable design, plenty of storage– Recommender systems and content-focused search– Rights management

• Special-interest sites:Special-interest sites:– Critical mass of users– Keyword or topic-based search– Profiles– Structure

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The Big PictureThe Big Picture

• Virtual communities and online social networking sites Virtual communities and online social networking sites are providing a new, powerful and extremely popular are providing a new, powerful and extremely popular medium for human connection and interaction. medium for human connection and interaction.

• In the last two years, there has been explosive growth In the last two years, there has been explosive growth of both content and users, and established players are of both content and users, and established players are making their bets now.making their bets now.

• Some players might be betting on the wrong game. Some players might be betting on the wrong game.

• In the near term, infrastructure providers, mobile and In the near term, infrastructure providers, mobile and wireless companies, and media firms stand to profit.wireless companies, and media firms stand to profit.

• Enterprises are social entities too, and so enterprise Enterprises are social entities too, and so enterprise social software has the potential to make a huge impact social software has the potential to make a huge impact in the workplace.in the workplace.

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www.butlergroup.comrichard.edwards@butlergroup.comrichard.edwards@butlergroup.com