make money from social networks | ralf ahamer, xing | istrategy, berlin

iStrategy Forum BerliniStrategy Forum Berlin

Make money from social networks –example XING

Ralf Ahamer – CMO XING AG

7,07,5

7,98,3

Members in mio. Premium Members in thousands.

36% 41%

01 XING in Numbers (I)

470513

550

606635

662


Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

6,16,4

7,0

Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

470513

12,9 *35,3

02 XING in Numbers (II)

EBITDA in Mio € Umsatz in Mio €

37% margin


2007 2008

6,9

2007 2008

19,6

* Excluding one-off costs for M&A

03 Business Model

5,95 € mth.

6,95 € mth. 3 Months

12 Months

Premium Membership Recruiter Membership

The XING Business Model consists of three main revenue streams: Premium Membership, Recruiting Business & Advertising/ e-commerce.

39,95 € mth.

29,95 € mth. 3 Months

6 Months

1.


5,95 € mth.

4,95 € mth.

12 Months

24 Months

Job Board:

0,59 €/ Click on Job Ad

Advertising/E-commerce

Various models, Best Offers, Enterprise Groups, Opensocial

39,95 € mth.

49,95 € mth.

6 Months

12 Months

Fix-price 395€, 495€ , Corp sol.

2.

3.


5

Social Networks – What? Why? Value?

Social Networks

Ideas

Jobs

Contacts

Social networks don‘t create something new – they just provide an infrastructure for typical human behavior on the web.

01


Me

Contacts

Employees

Efficiency

Productivity

Friends

Love

Spare time

Ideas

Jobs

Contacts

Social networks don‘t create something new – they just provide an infrastructure for typical human behavior on the web.

Social Networks02


Contacts

Employees

Efficiency

Productivity

Friends

Love

Spare time

Me

7

Dating Jobs

Deals

Acquisition

Family

Spare time

Almost 80% of experts and management clearly separate business from pleasure

03 Social networks – professional vs. private


Dating Jobs

Ideas

Sales

Friendship

Party

Source: Forsa Study 01/ 2010

The Case of the Facebook Fairy

[Intern at a US Bank]:“I just wanted to let you know that I will not be able to come into work tomorrow. Something came up at home and I had to go to New York this morning for the next couple of days.”

04

Social Networks are a source of information for everyone. They are comparable to elephants – they never forget...


morning for the next couple of days.”

[Boss]: “Thanks for letting us know–hope everything is ok in New York. (PS: cool wand)”

Social networks in real life05


Viral Gene: Social Networks06The virality lies in the added value that every additional member brings to the community.

The viral growth in social networks is a function of:

the added value a member gets through another member.


through another member.

Value of social networks07

Value socialnetwork

Registered Members

ActivityX=

The value of social networks heavily depends on two values: number of members and activity.


12

network MembersActivityX=

If one of these is zero – the whole value is zero!


13

Shift of reach to social networks

01 Social Communities – a success story

• „Republic“ Facebook is the 4th biggest country behindChina, India and USA. 300.000.000 facebook users changetheir status message every day.

• In the last 60 seconds 15 hours of video material has beenuploaded onto youtube. If you add all videos material together it equals 3.500 years of content (and growing)


Source: Sueddeutsche.de 19.09.2009

together it equals 3.500 years of content (and growing)

• Twitter had 1000% growth last year

02 Social Communities – a success storySearch queries reflect demand

Google Search queries reflect trends …

Facebook vs.eBay


Source: Google trends: Graph above shows search queries worldwide. Graph below shows search queries in Germany

Facebook vs.Spiegel

03 Social Communities – a success storyBack in time �� 2006 vs. 2009 (1/2)

IVW Page Impressions October 2006: Portals portals everywhere…


Source: IVW, Page impressions x1000 for October 2006

04 Social Communities – a success storyBack in time �� 2006 vs. 2009 (2/2)

IVW Page Impressions October 2009: Invasion of the social networks


Source: IVW, Page impressions x1000 for October 2006

On XING there are up to 25% of all employees of one industry in Germany.

Reach of XING05


Source: XING internal statistics for DE– Q4 2008

Usage of Social Networks

Brand Communities:

Social Book-marking Communities:

Micro-blogging Sites:

Podcasts:

Internet Usage Frequency

Social Networks are already the 2nd most popular entry point to the web

06


Source: Ralf Schengber, 2009.

Search engines:

Social Networking Sites:

Forums:

Web-blogs:

Video-Portals:

Photo-Portals:

Special Interest Communities:

Everyday Several times / week Several times / month

Seldom Never / I do not know that

No Answer

Social Networks – Context to information

Why bother “Google”…. ..when your peers are just a click away?

Our Friends, colleagues, family give context to massive information overflow.

07


Unidirectional(search function)

Volume(search results)

Standard(Portal site)

Bidirectional instantaneity(comment & tweet features)

Value (recommendation power)

Personal(personal profile site)

= where information LIVES.“The warm Internet”

= where information ACCUMULATES.“The cold Internet”

Exkurs: Community Make or „Buy“ or both

¾ of all brand communities fail. Using existing social networks & infrastructure could lower costs and increase speed.

08

- Over 2k Ikea employees on XING.com

- Over 90k users are fans on facebook


Ikea community „Hej“ recently started

- Over 90k users are fans on facebook


22

Chancen und Risiken von Social Networks fürUnternehmen

Social networks and business models

Subscription fees: Professional Networking 01Professional Networks have a huge (perceived) value that directly translates into “money”. Members are willing to pay for that.


ConsultingMedia -Print Internet and New MediaSales Public RelationsScience and ResearchTrainingHuman Resources

Real Estate Arts and EntertainmentTelecommunications Media - Broadcast Advertising Financial Services IT

Hotel and Travel Education Restaurant and Food Beverage and Tobacco University Customer Services Accounting

Source: >82k tests on mynetworkvalue.com

Advertising: Web 2.0 in the marketing mix

100% 7-12% 30%

88-92%

ca.60-65%

The value chain of media planning must be disrupted. New scales ofratings need to be defined.

02


Advertiser Media Agency PublisherAdvertising medium

Kickbacks

Results:• Marketstructure and value system constrain marketing• Advertisers have (too) little Know-How for Web (2.0)• Media Budgets go mainly in “traditional” online media

Virtual products

The expected market size of virtual goods (US) is 1,6 Mrd $*. Social games share will be half of it.

- 65.000.000 Farmers*** - 26.000.000 are feeding their cows every day for 2 hours- 100 Mio $/year revenue*

03

- 90 Mio $ in 2009 with virtual gifts**


*Inside Virtual Goods - The Future of Social Gaming** C’t Magazine 2010

*Source: Business Week*** check on facebook feb 2010: 78Mio already

Conclusion04

1. Clear goal and topic for your community• „Having influence on your target group“ as a goal leads you in the wrong direction• Set-up a clear topic for your community – e.g. “Professional networking”

2. Members and Activity• Value of a social network = registered members X activity• Viral growth in SN = function of value a member gets through another member


3. Keep in mind: First of all - your community serves its members• Consequently listen to the community and serve their needs first• See the community as living organism – it’s a socio-psychological challenge

4. Use existing infrastructure and reach• Use XING, facebook etc. to leverage your business• Community work needs resources in your company

Thank youfor your kind attention!


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make money from social networks | ralf ahamer, xing | istrategy, berlin

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