Here's Why Mobile Social Networks Will Be The Money-Makers


Photo: Honou via Flickr

The rapid global rush to becoming social through technology is mind-boggling. People love being social. Sharing thoughts and personal information has gone from “no way” to “OK” in no time flat.But what about actual businesses? While some Web-based social sites are clearly doing well, the business model for online social sites is still in flux. The point is monetization: Show me the money, and show me consistency. MySpace scored a nice $1b search deal with Google at its peak, but the shine is gone and with it the lucrative search deal.

Meanwhile, the masses have moved to mobile, and as networks have improved and audiences have grown, mobile social networking is entering a golden era, that will last well beyond a fad. I’ve seen it first-hand with millions of paying customers adopting a mobile voice-blogging service (think Twitter, but through voice) in just a number of months in operation Yes, that’s right – paying customers. Not ad-supported, not free – an actual revenue-generating social-media service.

But beyond my experience, here’s three reasons why mobile will carry social networking to the land of milk and honey, or at least profits.

1. Social nets get the press. Operators make the cash. Quite simply, businesses need customers. The billing relationship between the mobile operator and their consumers is a beautiful thing. Whether mobile operators collect in arrears (so-called “post-pay” common in Western countries), or collect payment through “top-up” cards purchased at retailers (ie, “prepaid”), collecting payment through carriers is simple and easy. This billing infrastructure makes monetizing services straightforward in most markets, creating value for operators, service providers, and ultimately consumers themselves.

Operators have won and lost a few rounds in making money in mobile. They raked in billions on ringtones, lost most of the mobile ad gold rush but will come back strong on mobile social media. Why? They own the billing and they have the marketing muscle to gain customer adoption, especially outside of the U.S.

Operators will ‘be back’ like Schwarzenegger with marketing, mobile billing infrastructure and multi-device support (not just one app on one platform.)

2. Majority of Mankind is Mobile First. It probably comes as no surprise that the number of humans on this planet have a mobile phone more readily available than a PC. Just China and India’s mobile-first and mobile-only lifestyle tips the entire market potential of mobile vs. desktop internet.

For example, while there are 50 million web users in India, there are 600 million mobile users.  Throw in Indonesia (the largest BlackBerry market in the world), Philippines (ranked no.1 globally in social media usage) and you’re talking about a market size in the billions. These mobile phone users are primarily and often solely accessing social content through their mobile phones.

Now add in the phenomenal growth of mobile web browsing and you’ve got an audience that is growing by the millions per month. In fact, Nielsen just reported that the number of Chinese that surf the mobile web has passed the U.S.

Lastly the desktop computer is redefining itself into a mobile device. Apple’s iPad is becoming the new laptop but it runs and monetizes like an iPhone with an app store, approval process and premium billing for content.

Mobile is beating desktop and the tablet desktop is beating the traditional desktop, all trends pointing towards a monetizable social media world.

3. Check-ins Check-out and the Zynga-fication of Mobile. Mobile services have simply gotten more fun and more compelling as the user experiences have improved. On the Web (aside from the good old days of, say, AOL), consumers are not used to paying to access content. On mobile, the dynamics are reversed: People pay. They pay for apps, they pay for data, they pay for calls, they pay for features. Simultaneously, people are crazy for social. Even in markets where disposable incomes are very low, a mobile phone represents the individual’s identity, resulting in an unparalleled propensity to spend. When the de facto norms are that consumers expect to pay for services, an opportunity arises to build real businesses.

Check-in services like Foursquare are trailblazing localisation services that will drive local commerce and in-store traffic in ways that PC-based social networking has fallen short. Retailers will rely on location-based services and group-purchase concepts as the primary ways to reinvent local advertising and drive revenue, not just eyeballs.

Mobile social gaming is coming on strong, and is already a multi-billion dollar business in Japan. The popularity of freemium PC-based social games will undoubtedly take off in mobile, with monetization coming from digital micro-payments through banks and PayPal, and local convenience store “top-up” cards.

Rich-media social communications are on the rise. We know already that people have swarmed to text-based socializing. Voice-based socializing is back, as people are rapidly discovering the benefits of authenticity and humanity that’s only detectable by voice.  It’s one thing to tweet your thoughts, and another thing entirely to share your ideas by updating your  profile in your own voice.

In two years, the lines between social mobile and social Web will blur. This will be a beneficial, as it could change consumers’ expectations globally when it comes to paying for value. The merging of a world where you pay for mobile, while wiping out some of the norms around the “free Web” could create more opportunities for great companies to – gasp – build sustainable businesses. And with an ability to make money, mobile social networking be a money maker not just a buzz faker.

Thomas Clayton is the CEO of Bubble Motion. He has started, run, and worked for numerous high-tech companies.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.