As Facebook and other social networking sites explode in Eastern Europe, traditional media outlets are struggling to cash in on the trend
One of the oldest post-communist publications in Romania, with a history dating back to 1991, is the satirical weekly Academia Catavencu. It has always been a paragon of innovation, hailed for its bold investigative reports, witty political commentaries, and funny photo collages mocking politicians and celebrities. The paper, whose slogan is "Our readers are smarter than theirs," is these days at the forefront of digital innovation. It is the Romanian brand with the highest number of friends on the international social network Facebook, more than 5,500, according to August data from the online marketing agency Standout.
In their hunt for new audiences and advertising cash, particularly as marketing budgets shrink, traditional media in Eastern Europe are increasingly jumping to new platforms. In Romania again, the local daily newspaper Telegraf recently started to distribute its news on Widgetbox, a self-service web platform that allows users to connect and distribute content via web widgets, small, portable applications that can be embedded in any web page.
But despite this whirl of online experiments, traditional media in this region haven't figured out how to cash in on the new platforms. Many are still sleeping, and those that embrace these platforms do so in a scattershot way, without any clear strategy.
CONNECT AND SELL
Social networking has only in recent years caught on in a big way with Eastern Europeans. Boosted by increasing Internet penetration and a mounting appetite for new forms of communications, social networking is gaining hordes of users across the region. In September, Facebook had 271,000 users in Romania, but Hi5, a competitor, boasted more than 2.3 million users in a country of 21 million.
In the Czech Republic, the number of Facebook users has doubled in 2009 to more than 1.3 million, more than a tenth of the country's population, though that includes people who sign in only occasionally. Facebook, which hit the 300-million-user mark this year globally, registered a 180-percent jump in the number of users in Eastern Europe in 2008 over the year before. In the region, it has the most members in Serbia and Croatia, more than 300,000 users in each country, and the lowest, under 10,000 users, in Moldova and Belarus. In total, the network has some 1.8 million "active" users (once a week or more) in 19 Eastern European countries, according to Facebook statistics.
But there's not just Facebook. Foreign sites are facing tough competition from domestic social networks that have been growing at a frantic pace in many of the region's nations. In Poland, for example, the largest social network, Nasza-Klasa claims to be adding 20,000 new accounts daily. It had more than 11 million active users at the end of 2008. Interestingly, it was also the sixth largest social networking site in the U.K. ahead of Twitter, according to Hitwise UK. The Polish community in Britain numbers unofficially about 500,000 people.
That is clearly a dynamic audience that any media group would dream of capturing. Most users are aged between 18 and 34, but this age bracket is dramatically widening, with older people joining in.
Social networking has already stirred massive interest from advertisers. In the Czech Republic, the number of advertisers on Facebook has surged by 30 percent in 2009, according to Ataxo, an agency that sells ads on search engines. Paid advertising on social networks in the region is still marginal. In Romania, it accounts for only 1 percent of online advertising, a market that last year reached 20 million euros. But its potential is huge, advertising strategists are saying.
Internet advertising has been growing for more than five years by some 30 percent annually in most countries in the region, not even slowing much since the recession hit. The growth is predicted to continue. But can media milk this new cash cow? It can if it simply does what social networks are doing: build communities online.
THE TRUE GOLDEN AGE OF MEDIA
In the old days, newspaper and magazine publishers dreamed up more and more ways to communicate with readers. We had letters to the editor, reader's advice columns, and so on. The idea was to give voice to your readers and bring them together. Then, it was not that simple to have real-time debates, interaction, and participation. Now, it is. And it's cheap.
Facebook ended 2008 with about 800 employees globally. In comparison, the public TV station in Romania has some 3,000 people on its payroll, and its stale and goofy programming is alienating more viewers every day. Obviously, the two organizations' offerings and mission differ, but when it comes to the new media business, the comparison is worth keeping in mind, especially as social networking is fast transforming from a connecting-people platform into a knowledge- and information-sharing agora.
The model has been attracting large amounts of cash in recent years and we already see some serious consolidation in the social networking segment in Eastern Europe. Estonia's Forticom owns some of the biggest social networks in the region, such as Russian odnoklassniki.ru, nasza-klasa.pl, and the three Baltic "One" sites. The networks have a combined membership of some 60 million people. In May, Russian company Digital Sky Technologies, Forticom's investor, paid $200 million for a 1.9 percent stake in Facebook. Over the years, Digital Sky has pumped more than $1 billion into social websites in the region.
Social networks are cited in the media and talked about. Businesses and institutions create their own accounts and communities on these platforms. It is exactly what the media should do to maintain and attract fresh readers and viewers.
Social networking is not replacing journalism, far from it. It helps direct the journalistic product to its consumers. Media need dedicated, reasonably staffed digital divisions tasked with spreading the content through as many new platforms as possible. This will bring back the readers who stopped buying newspapers and the viewers who tuned out. And with them the advertising money.