Skyrocketing social networking and mobile usage has led many to speculate on the key business model for mobile-social services.
The most common answer is local commerce. But, checking in is not becoming a mainstream activity (see chart) and local couponing experiments aren’t working so well.
Here’s how it could work:
- What is social discovery? Using social apps on mobile devices to find nearby people and places that are most relevant to what users are doing at that particular moment.
- Contextual relevance: To spur spontaneous purchases from mobile devices, apps must understand information like the user’s past buying habits, preferences, tastes, and so on. This is precisely the kind of information users share through social networks and apps.
- Services and experiences, not goods: Social discovery works best for service-based businesses like restaurants, bars, hotels, and event tickets. These kinds of services are open to the sort of last minute spontaneous purchases that users are likely to make on a mobile phone.
- Brand advertising: Brand advertising on mobile devices is a tough prospect — phones don’t support the full-screen interactive ads common on the front pages of popular web sites. But social discovery apps that focus on fun experiences with friends could become a good bed for positive brand associations.
- Affiliate payouts: In this model, users could recommend purchases to their friends, and would receive a small payout each time those friends bought something. For instance, Instagram was building relationships with brands like Burberry before Facebook bought the company. Imagine Instagram adding a button like “buy now online” or “click here to see nearby Burberry stores” whenever a user shares an item of clothing.
In full, our report:
- Digs into usage habits of social networking on mobile phones.
- Explains new business models that will arise, with some help from two entrepreneurs in the social discovery space.
- Looks at which companies are best poised to profit from the intersection of these two trends.
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