Social networking is extending to mobile networks as online social networking providers add mobile interfaces to their services, and numerous specialist, mobile-centric social networks emerge. Although MNOs benefit immediately from growing data revenue, questions remain for online and mobile-centric social networks that will struggle to create a profitable business in the short term.
To make the most of the mobile social networking opportunity, all MNOs and MVNOs should:
- provide links to popular social networks from their portals
- provide open access to the Internet from mobile devices
- offer simple data tariffs with no hidden charges.
In return, they will benefit from increased data usage by their customers and greater take-up of data plans. The first operators to provide easy mobile access to popular social networks will also enjoy the benefits of service differentiation.
The extent to which operators aggregate mobile social networks, or develop their own, will depend on their relative strengths and weaknesses. For example, operators with popular portals may choose to act as aggregators because this approach will enable them to take control of the way in which users access mobile social networks and to provide additional features, such as tools that facilitate digital media uploads, payment mechanisms, or tools that enable users to customise their interface. The technological awareness of the operator’s customer base and the size of the operator’s market share should also affect its strategy in this market.
Some MNOs are also hoping to tap into mobile advertising revenue associated with mobile social networking. For them, this additional revenue source is mostly seen as a bonus at this stage, but online and mobile-centric social networks typically view mobile advertising as their primary source of revenue. Unfortunately for them, such revenue will be even more difficult to obtain in the mobile market than on the Internet because the mobile advertising market is at such an early stage. In fact, in many markets it is mobile social networks that are leading the way in attempting to create a market for mobile advertising. Mobile social network providers have also experimented with other revenue streams, such as subscriptions and charging for digital content, but mobile advertising remains the favoured model because it supports, rather than hinders, customer acquisition.
Mobile advertising will, eventually, develop into a substantial market, but this will take time and it is not realistic to expect a significant premium for mobile advertising over online advertising. It is likely, then, that many of the vast number of mobile-centric social networks that have emerged will be unable to achieve profitability before they have exhausted their venture capital funding. Providers of popular online social networks have an advantage as they enter the mobile market and bring with them a large, established base of users and advertisers, but even they will find it necessary to form partnerships with MNOs and MVNOs to ensure that their services are widely accessible. Mobile-centric social networks would also benefit from such partnerships, but could also become attractive partners or acquisition targets for device manufacturers or Internet-based companies that want to enhance or differentiate their existing service portfolios. In the meantime, the most obvious and immediate beneficiaries of mobile social networking are the MNOs themselves.
