Downturn helps LinkedIn growth

Not so long ago, I questioned the decreasing relevancy of LinkedIn in a Facebook world, but I think the recent downturn works in favor of this highly popular professional networking site. Given that folks are most likely to update their profiles when they are in career transition, it isn’t surprising to see a flurry of activity following the recent round of layoffs.

According to Compete.com, unique visitors to the site has gone up by nearly 182%, while the number of visits has gone up by 205% since last  year. As recent as last month, unique visits went up by 10%. It looks like the site is seeing a good uptick in user traffic and increasing user engagement during this downturn.

It’s challenging to add new interesting and enagaging features to a professional site, while social sites can load up on the cutesy features much more easily but I think LinkedIn is definitely going about it the right way.

I especially liked the introduction of ‘Companies’ (still in beta), which is very interesting and relevant for jobseekers. However, it’s still clunky and needs refining to make it easier to navigate. ’Answers’ and ’Groups’ add more stickiness to the site, but I think the site could benefit from more career-related rich content.

It’s about the only credible professional site out there so that definitely helps its popularity, but UGC can only take you so far. Adding more relevant career-related content may get the users to keep coming back even when the economy is not in a downturn.

Twitter and the conundrum of ‘free’ (social sites)

After a couple of highly frenetic work weeks and several crazy road trips later, I am finally back in the blogging scene.

Given the recent uproar over Twitter outages, the question begs to be asked (and answered), if you aren’t willing to pay for a service, should you be whining when it doesn’t deliver? What, if any, should your expectations be from a free service? Conversely, if you are a free site/platform, how do you justify additional investment in your company, if you don’t have any means of generating revenue?

This is a huge challenge for free social sites like Twitter. Good news is that you have millions of users, bad news is you have millions of users but no revenue. And if there’s no revenue, it’s heck of a lot more daunting to keep scaling to meet the needs of your burgeoning user base.

There’s where the venture funding helps, but sooner or later, Twitter (and free social sites like Facebook, Orkut, Friendster, and others) will have to figure out a way to make money. I think it’s quite dicey when the valuation of these social sites is based on freeloading users who don’t want to pay to use the site. Given that none of these sites like Twitter, Facebook have figured out a way to monetize this freeloading user base, the popular option seems to be advertising.

I have my own doubts about advertising as a sustainable revenue model for social sites. Especially, if the intent of any social site is to entertain and engage the user, driving them off the site with links to another site seems highly counterintuitive.

Therein lies the biggest challenge for these free sites, it’s all fine and dandy as long as the venture funds keep flowing in, all the site has to do is focus on getting more users (and of course, make sure the site doesn’t crash under all the traffic). Acquiring users for a free service is the easy part, but this story will get much more interesting when these free sites are forced to support themselves like some of the other ‘growed up’ social sites like LinkedIn.

Om Malik of GigaOM suggests charging power users like Robert Scoble, who according to Malik overwhelm the microblogging site. I think that’s a great idea, but how long do you think users will stick around if they have to pay for what they are used to getting for free?   

How many social networking sites do we need?

T-mobile’s Fav 5 campaign got me thinking about how many is too many? I think most people would agree that there’s an optimal number for everything. So the question begs to be answered, how many social sites does the online world really need?

Take credit cards, we all have a few but how many do you use most frequently? With the travel industry, you have your loyalty program once you get into one, you’re more likely to continue to use the same brand to rack up the points.

Let’s take a look at email accounts, most folks usually have a couple, one at work, another personal, one for perhaps your business, and maybe just one more super-secret, that no one, not even your significant other knows about..except the spammers, of course, there’s no escaping those  @@%%$$  but it’s usually in the range of 4 or 5 accounts. (unless of course, you have multiple personality syndrome combined with OCD and you feel compelled to email everyone with a different id. I know you folks are out there)

But my point is that there’s a magic number beyond which there’s no incremental value to having an additional card or email account, because chances are you will never get around to using it.

My pet peeve is the insane proliferation of social networking sites. Every other day, I get an invite to join some new social network or ‘community’ network because someone I know is on it. So now I have accounts on every possible social site in cyberspace and beyond. But how many do I actually visit regularly, meaning every day or at least once a week?! Maybe 4 or 5, at the most. Facebook’s clean interface won over MySpace’s chaotic design, I peruse LinkedIn every so often, for friends and family in Asia, there’s Orkut, and Twitter’s my all-time favorite choice for social-fun-about-nothing, but that’s probably about it. Law of finite time gets in the way of having too much ’socialization’.

I think it’s time, those who are thinking of starting a new social network or a community site should take a long hard look at their value proposition. At some point, acquisition is no longer that important, once you’ve signed up everyone from here to Kalamazoo (where ever that is). I’ve blogged before on the importance of user engagement. It doesn’t take much effort to sign up for a free account, but it’s far more difficult to stay engaged on multiple sites. There are so many choices out there and only so many hours in a day, even if you are an unemployed teen drop-out in the middle-of-nowhere-small-town-USA.

But despite my gloom-and-doom pronouncements, all is not lost. It does not mean the new social networks can’t win against the "incumbent" (it’s an election year, in case you haven’t noticed ). Facebook did it and so can your site. The key is to find your niche and grow that niche like crazy. However, it’s highly improbably (although not impossible) to pull users away from a site they’ve grown to like and replace it with your site unless you have some fiercely compelling value or offering. If you’re an aspiring new site, good luck to ya, it’s a long hard road ahead.