Collaboration Cast

Rock You (www.rockyou.com) a company that develops social media applications including a multimedia slideshow creation tool popular on Facebook and MySpace has secured $17 million in series C funding. To date they have secured $52 million in funding.

The funds will primarily help Rock You develop applications for PC and mobile devices in Asia-Pacific. They also plan to open new offices in New York, Los Angeles and Detroit, and look for potential acquisitions.

The funding of Rock You at this time validates that social media is mainstream and has great potential not only in the US, but internationally. The Asia-Pacific market is a hot bed for social media and social media companies should seek alternative global markets that are still growing.

Recently, Appssavvy, a social media company that connects advertisers with social networks, secured $3.1 million in funding. Appssavvy claims they provide a platform that that lets advertisers launch advertising campaigns on popular social network sites such as Facebook, MySpace, Bebo, and hi5.

In total they suggest that their platform can help marketers market to 50 million users and not have to worry about dealing with different vendors for multiple social networking platforms.

Some example of the work they have done includes building Facebook applications or helping advertisers sponsor existing applications. Here are a few of their projects:

Kohl’s Back to School Custom Application in Facebook

VO5 Ultimate Flirt Custom Application

Startship Troopers 3 Armies Sponsorship

The 2 Coreys - A&E Mesmo Sponsorship

My Boys - TBS Mesmo Sponsorship

Made of Honor Wedding Book Sponsorship

Funding social media companies even in a down turn market makes sense. Consumers today are spending more and more time on social media sites. Recent studies show how people are now spending more time on social networking sites than on pornography sites, which have been for a long time the second most sought after content on the web. Also, marketers are realizing the value of social media and many plan to reduce their spending on traditional media and focus more on social. As economic times get worse, companies will be looking at spending less and finding ways to reach their target audience at lower costs and social media is a perfect venue for such targeted lower cost marketing investment.

So in my opinion social media marketing spending will continue to grow in a down turn market and Appssavvy one of many companies positioning themselves to be successful in this down turn market.

As the web becomes more social we are seeing an increasing number of companies adding ratings and comments to a piece of content or product. The question people ask me all the time is, why should I add ratings and comments to my website and what value will I receive?

The good thing is that a lot of research has been done on the value of ratings and comments. Bazaar Voice, a social software company, has specifically focused on ratings and comments for eRetails. From an inside source I hear they are doing very well with revenues of about $30 million. So there are companies out there seeing the value in ratings and commenting.

The following statistics show the value of ratings and commenting:

• The Number One Functionality Desired By Internet Users - Forrester Research conducted a study showing that user ratings and reviews was the number one feature requested by US internet users.

• Makes a Site More Credible - According to a global Nielsen survey of 26,486 Internet users in 47 markets, consumer recommendations are the most credible form of advertising among 78% of the study’s respondents. (Nielsen, “Word-of-Mouth the Most Powerful Selling Tool”)

• People Trust Peer’s Opinions More Than Advertising - Online social network users were three times more likely to trust their peers’ opinions over advertising when making purchase decisions. (“Social Networking Sites: Defining Advertising Opportunities in a Competitive Landscape,” JupiterResearch, March 2007)

• #1 Aid To Buying Decisions - A consumer survey by the JC Williams Group ranked consumer content as the #1 aid to a buying decision, cited by 91% of respondents. (JC Williams Group, 2006)

• Reviews Makes Your Website a Top Destination - When asked what sources of information they are “very likely” to consult before making a decision about their entertainment options, 62% named Web sites with user reviews as their top choice, even beating out a knowledgeable friend (59%). (Marketing Sherpa, July 2007)

• More Likely to Buy - Two thirds of UK social networkers (66%) are more likely to buy a product as a result of a recommendation, compared to 52 per cent of non-social networkers. (Royal Mail’s Home Shopping Tracker Study 2007

• Influences Purchase Decisions - More than eight in 10 (82%) of those who read reviews said that their purchasing decisions have been directly influenced by those reviews. (Deloitte & Touche)

• Pay More - Consumers were willing to pay between 20 to 99% more for a 5-star rated product than for a 4-star rated product, depending on the product category. (comScore/Kelsey, October 2007)

• Drives Higher Spending - Reviews usage drives higher spending: 27% of users report an increase of 5-10%; almost 7% report an increase of 20%+. (Avenue A/Razorfish “Digital Consumer Behavior Study,” October 2007)

For those companies who have adopted reviews and are posting fake reviews, I would recommend to stop doing. Number one it is not ethical. Second if you do not cover your tracks and consumers find out, your consumers will surely create a PR nightmare for you. Just look at what happened to Slide, a Facebook application company, who fabricated their own reviews. TechCrunch picked up the story, there were 92 comments about the story, and at least 7 other bloggers picked it up.

Besides just a PR nightmare, I believe it could be possible that fake reviews could also end up in a lawsuit. Just look at Sony, who promoted fake reviews about one of their films and got sued for $326,000 in 2002 and again in 2005 for $1.5 million.

In summary, reviews are very beneficial for companies and companies should stay honest in their review and posting practices, while allowing customers to speak openly about the company’s products and content. In the end of the day, if a company is listening and improving their products to meet customer needs, they will be successful.

Volusio, an eCommerce vendor, announced that they have enabled their eCommerce customers to add their products as widgets to Facebook and Myspace for sale.  Facebook and Myspace users can now see a product on a friends page and quickly make a purchase.

This new functionality should now enable Facebook and Myspace’s 80 million unique visitors to not only socialize, but also make purchases.

Volusions’s extension of eCommerce is only the beginning, I am sure people will next add stores to Myspace and find viral ways to sell products through Facebook.   Also, I believe people will not only add products, but they will also find ways to sell Facebook or Myspace templates, friends, widgets, games, affiliate programs, and even advertising.

I wonder if social software users will eventually get paid for advertising or adding eCommerce widgets to a personal home page. It will be interesting to see how eCommerce vendors develop Facebook and Myspace’s eCommerce engine.

The future of eCommerce and social software looks very interesting and for sure we will be covering the social eCommerce space here at Collaboration Cast.

Today, Nokia announced that it will be acquiring Plazes, a social software company.  Plazes allows members to post their activites and location from a pc, mobile, phone, or sms.  I would call this multi-channle service a more advaced form of Twitter.  Plazes has become more popular in Europe.

 The goal is to make Plazes available to millions of Nokia customers.  I am sure the business case showed potential high dollars in advertisment and also cell phone charges. 

The power of a mobile social network will be the location connection.  Nokia expects over 400 million devices to be GPS enabled.  This will allow for location based advertisment, which becomes a very powerful tool for advertisers.

 Vodafone was the other company to recently acquire a social software company.  They acuaried ZYB, a Danish company. 

The market is hot and growing for social software.  As stated in my previous blog: The Future Market Opportunity for Mobile Social Networking, the mobile entertainment market is supposted to grow by 36% and recahc $80 billion by 2011.

It will be very interesting to see what social networks become dominant, like Facebook and Myspace on the mobile phones.