When Facebook bought the photo-sharing app Instagram for $1 billion, theories flew as to what it might mean. Was Mark Zuckerberg defensive, worried that his 850 million Facebook users might stop uploading 250 million photos a day? Or was he making a proactive move into mobile, where Instagram’s friendly interface makes Facebook look clunky on iPhones?
The real story is both—and one of splintering social networks that are breaking up the vast, open “social graphs” that give Facebook and others such power. Facebook’s acquisition of Instagram is a signal that smaller, closed networks are growing popular by giving audiences more control over what they share. The networking giants, such as Facebook and Google, will have to allow consumers new ways to build tighter social circles. And marketers will face new challenges in “going viral” among the masses.
For nearly a decade, marketers have been agog over the promise of social networks to provide free advertising, a cascade of word-of-mouth in which consumers act as advocates for a brand or product. The dream is based in part on Robert Metcalfe’s law—the concept by the inventor of the Ethernet that in any networked system, value grows exponentially as more users join. Like the old 1970s shampoo commercial, you tell a customer about your product, and she tells two friends, and so on, and so on, until the world is knocking on your hair-products door. Going viral like this requires massive connections of friends.
Trouble is, Metcalfe was wrong, at least with human networks. In a landmark 2006 column in IEEE Spectrum, researchers Bob Briscoe, Andrew Odlyzko, and Benjamin Tilly showed mathematically that networks have a fundamental flaw if all nodes are not created equal. The authors pointed primarily to Zipf’s law, a concept by 1930s linguist George Zipf that in any system of resources, there exists declining value for each subsequent item. In the English language, we use the word “the” in 7 percent of all utterances, followed by “of” for 3.5 percent of words, with trailing usage of terms ending somewhere around the noun “floccinaucinihilipilification.” On Facebook, your connections work the same way from your spouse to best friend to boss to that old girlfriend who now lives in Iceland.
Human networks, like words in English, have long tails of diminishing usage. New, smaller social media tools are resonating because they recognize we have limits on what we share and whom we listen to. Here are a few:
• Path. This social network restricts you to 150 friends, the exact number that British anthropologist Robin Dunbar suggested was the upper limit on human relationships. While Path users can post images, videos, or locations to Facebook and Twitter, the core appeal is creating a closed circle of high-quality connections.
• Pinterest. This network is the darling of 2012, skyrocketing to No. 3 in usage behind Facebook and Twitter. Users tag, or “pin,” images of things they like and sort into online scrapbooks. While users can follow others and comment on their posts, about 90 percent of usage in my observations has been pins with zero social comments. Pinterest is all about what you like, not how you communicate with others.
• Google+ vs. Facebook vs. Twitter. Google (GOOG) finally got social networking right in 2011 when it gave up on Buzz and launched G+, a cleaner version of Facebook with strong privacy features. Google+’s “Circles” allow you to sort friends into groups, and then share different things with different circles of friends. Facebook rapidly copied the idea by making it easier to post updates to select groups of friends. And while Twitter is open to all, one of its popular features is “lists” that allow you to view updates of only handfuls of online contacts.
• Springpad. This innovative note-taking application allows users to save items they like, via Web or mobile, and appends useful information such as price comparisons or movie times. While you can share items with anyone, the default settings are private, and the app’s slogan is “share and discover with the people you trust.”
• Instagram. Yes, this is an open network that allows liking and commenting on photos. But Instagram is primarily a photo broadcasting tool, and its rapid growth to 40 million users is driven by how easy it is to make your mobile snaps look professional.
• Pair. In perhaps the ultimate narrow social network, Pair builds bonds between only two users. It acts as instant messaging on steroids, allowing photo and video sharing, joint sketching, and a recorded timeline of activity between a couple.
This growing interest in smaller, ego-boosting, privacy-controllable networks was inevitable, as social media reached mass scale. Two-thirds of Americans now use social platforms, according to Pew, and the majority say “staying in touch with current friends and family” is the main reason why. Only 9 percent of respondents told Pew, when asked, that “making new friends” was a motivation.
For marketers, of course, this is a challenge. Word-of-mouth messaging spreads more slowly if audiences are closing off digital circles. For this reason, only Facebook has succeeded among social networks in generating significant advertising revenue—$3.1 billion in 2011—because it has resorted to old-school ad formats. Facebook makes money on cost-per-click ads regardless of whether its users share the content with each other. Twitter, which has tried to embed marketing messages more organically in user streams, had only $139.5 million in ad sales last year, according to EMarketer—a paltry 72 cents per user annually.
The truth is, Dunbar was right: We humans need privacy and intimacy, and we have limits on how many people we want to share with. Marketers can certainly shoot for sporadic viral success, or the click here and there of Like buttons inside Facebook. But for sustained communications in a world of smaller social circles, they may have to try something more aggressive—say, paid advertising.