Prompted by the online networking of the MySpace and Facebook generations, top managers in big companies are rushing to join the online business networks once frequented by client-starved consultants and lonely entrepreneurs. Posting a profile on networks such as LinkedIn could soon be as routine as handing round your business card. The future of financial knowledge-gathering, marketing and recruitment may also lie online.
Online social networks have already become big business: MySpace, bought for $580 million by News Corporation in 2005, has become an advertising goldmine as its active subscriber base climbs towards 10 million, with new businesses springing up to jazz up people's profiles and channel marketing messages to them. Facebook, with greater clout among younger professionals and students (up to 8 million just in the U.S.), is seeking to overhaul the leader by opening its platform to external developers, its rapid rise generating takeover interest for Web giants including which Microsoft and Yahoo. Bebo, still running second with around 9 million users, is defending its position through a marketing alliance with another popular teen refuge, the iTunes music site.
Now big business is switching on to online social networks (OSNs), with those targeted at senior managers entering an equally sharp growth curve.
As in the teen social version, online business networks involve posting a profile of personal and commercial interests, indicating the nature of communication sought, and waiting for approaches from other interested parties, while also scanning the rest of the profiles for those worth swapping notes or sharing drinks with. By signaling special interests, members often form 'clubs' to discuss and develop particular ideas of mutual interest, making OSNs a quick way to establish the 'communities of practice' that are now a popular way to reach beyond the firm in keeping up with cross-industry trends.
Online contact is often followed by offline events where people meet those behind the profile, and establish the rapport required to take their discussions to a deeper level.
The faster growth of newer networks, such as Viadeo (now also establishing networks in Germany, Italy, Spain and Portugal, with others to follow) and LinkedIn (the dominant U.S. player) is due to their offering free basic membership, with little restriction on joining other than the usual requirement to offer a corporate rather than a 'free' (yahoo/hotmail-like) e-mail address. But those who fear a flood of crank and spam mail if they post their details to such a site have several ways to restrict the traffic to those they are likely to do useful business with. One option is to sign up to premium services – taken by around 30% of Viadeo and LinkedIn users – and restrict contact to others serious enough to have paid a subscription.
Profiles can specify the characteristics of those from whom approaches can be accepted, and members can create their own sub-networks for which they select applicants, or recruit by invitation only. "If they don't want to join the public network, top managers can keep their profile in a separate private area so, for example, they're not bothered by job applicants and trainees," says Viadeo's Cunningham. VoIP can be added to these 'community groups,' and blogs fed into them, to broaden the communication options beyond email. Networks can use their codes of conduct to bar members who behave inappropriately online, and stop commercial approaches to members descending into 'spam.' But most say that inappropriate members simply go away quietly when their profiles fail to attract the sort of contact they seek.
By-passing the webmaster
One reason for the networks' growing popularity is that managing a personal profile can generate useful contacts with far less effort than setting up a personal website, or managing the 'contact us' section of a corporate site. "Managing a Web site is not necessarily a good use of managers' time. Here they just have to write their profile - we manage the rest. And on the network they are more likely to get noticed," says Ecademy founder Penny Power, pointing to Ecademy's 50 million monthly hits via Google.
Another emerging use is for senior managers who want to change jobs, but can't dare to let their present bosses know, and don't want to risk the whispered back-of-bar conversations with headhunters. By ticking an 'open to employment opportunities' box on their profile, members can signal their interest in new jobs without formally seeking them, and those seeking to make new hires can track them down without accusations of prying or poaching.
As their membership grows, networks have also become a powerful resource for gauging new markets and deepening customer relationships. Whereas focus groups were once the closest a company could get to finding out how buyers respond to its products and messages, Power observes a growing number of members "doing R&D inside the social network, with direct conversation and feedback." She believes that posting an online profile to a business network will soon be as standard a practice as passing round a business card at offline events, and that online networks are the next destination for B2B marketing as direct mail and email hit diminishing returns.
The new normality?
Those running OSNs believe their exponential growth is set to continue. "We believe fewer than 10% of potential users are currently on any network, and many of those 10% are making very little use of it. There is huge scope for development," says Cunningham. He is not worried about Viadeo's arriving late in new national markets here other networks are already established, pointing to research showing that U.S. managers who have caught on to the trend are members of four different networks on average, with 10% enrolled in as many as seven. Rather than competing, most networks are expanding in complementary niches - for example IFA Life (which grew out of Ecademy) connecting independent financial advisers, Ryze for U.S. virtual workers, and Xing among German expatriates (though it is now pitching for the larger worldwide Spanish-speaking community after buying Spain's 150,000 member eConozco).
The sudden surge in online network membership among senior businesspeople is likely to be part of a generational shift. The present generation of middle and senior executives has been alerted to, and pushed towards, online profiling and posting by the MySpace travels and bulging Facebooks of their teenage children. And as these grow up to be the next generation of managers, they will see it as a natural step to take this method of contact into business. "In a few years it will be normal to be enrolled in these networks, and a surprise if someone isn't," Cunningham forecasts.
Staying in touch with new market trends needn't mean you have to take after Apple founder Steve Jobs and set up a MySpace profile. And there is a danger, admits Power, that managers - like their screen-addicted teenagers - could "get addicted to the social networks and spend unproductive time on them." But posting your details onto Myspace's grown-up equivalent may soon be vital for developing your personal circle, and keeping your company's customers happy. Remember the days when only plumbers and ambitious politicians carried mobile phones....
By Alan Shipman for FinanceWeek