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Mobile Social Networks Have Untapped Potential

There's a big financial reward if social networks can get a significant portion of its users into the mobile space, but the business model may need to be tweaked.
Social networks have a large opportunity in the mobile space, but much of that potential remains untapped, according to a mobile researcher from Direct2 Mobile.

Nick Lane, chief researcher of Direct2 Mobile, said networks like MySpace and Facebook haven't fully convinced their users to migrate to mobile handsets. Both companies are making aggressive attempts though, as Facebook's iPhone application is routinely one of the most-download, and MySpace mobile is featured prominently in the Android Market.

MySpace has about 114 million users, and Lane estimates that about 4% or 5 million users access the site from wireless handsets.

"But if MySpace can eventually encourage 20% of its PC-based followers to embrace mobile as a complement to their PC-based experience, that would generate a healthy 35 million mobile users," Land wrote.

Other studies have shown that MySpace and Facebook are the most popular mobile social networking sites, but Lane said the two may be a bit confined in the mobile space due to their business models. Neither is likely to charge a subscription fee for mobile access, and advertisers may not have much interest because the companies do not provide robust meta data.

But Lane is still optimistic about mobile social networks, particularly if wireless companies can convince half of the estimated 580 million social network users to migrate to mobile.

"290 million people paying a $3 per month subscription would generate $10.4 billion per year. Or $7.92 billion based on an ad-funded free model with a CPM of $3 on an average of 25 page impressions per user per day," Lane wrote. "However you approach it, there is a vast untapped market just needing that little incentive to make the leap 'over the air.'"

Another possible revenue model is location-based advertising, but MySpace and Facebook currently have location-based functionality. This potentially opens the door for companies like Loopt, Brightkite, Buzzd, and others.