Social Networks: The Problem of Utility v. Engagement

Heather Green

Something that Samir Arora of recently mentioned to me makes me think of the NBC recent airing of its frustrations with YouTube. I agree with TechCrunch that what's causing the dustup isn't the loss of control, it's the money. The very fact that they are in talks and have been for quite a while proves that point to me. And the sticking point you have to infer is that they can't figure out how to make money that makes sense to the content companies.

Arora talked about what he had learned about social networks while he was Chairman of Tickle (previously eMode, which did the personality and IQ tests.) He learned through surveys that when people are at social networks, 75% to 80% are in utility mode. They're making comments, doing ratings, posting photos or icons. It's like email. It's a lot harder to make much money in ads around email.

Engagement, I know, is a label that's being thrown around a lot these days. But there is some truth behind its trendiness. If you have a lot of options online, the mode you're in can determine the kinds of ads--and money--that the service you're on can make.

Before it's here, it's on the Bloomberg Terminal.