Upstart Social Networking Sites Gain Traction

While MySpace continues to hold a dominate position in the social networking arena, a new survey shows smaller alternative sites are now growing in popularity.

MySpace commands 80 percent of social networking market share, but newcomers such as Buzznet and iMeen continue to gain more ground each week, according to online intelligence service Hitwise.

"Social networking has been rising in popularity steadily for the past two to three years," LeeAnn Prescott, the director of research at Hitwise, told the E-Commerce Times.

Upstarts Join in the Fun

The survey showed user visits to the top 20 social networking Web sites rose overall by 11.5 percent from January to February of this year, with the largest increase in visits logged by upstart sites Buzznet, up 148.4 percent, and iMeen, up 145.7 percent.

"It hasn't reached the point of saturation yet," said Prescott. Increasingly, people discover social networks, learn what they do and how to use them, and then integrate time spent on these sites with the remainder of their online activities, she added.

Although competition has been sprouting up in many corners, MySpace's popularity has grown as well, garnering a 10.2 percent traffic uptick during this period, according to Hitwise.

Other fast-growing sites include Hoverspot (up 19.6 percent) and Bebo (up 17.8 percent).

Even with the increasing numbers across the board, the market still only draws 6.5 percent of all Web traffic.

Older Users

Several factors likely contribute to the increase in site traffic, including a recent increase in the number of users in their 20s and 30s coming around to the technology, as well as the genre's ever-growing teen market, according to Amanda Vega, a principal analyst with Vega Consulting.

"Kids have a circle of influence that spreads rapidly," Vega told the E-Commerce Times. "Now, we are seeing older users finally coming around."

In addition, the growth hangs on the use of social networking sites in the U.S. political process -- national political campaigns have been adopting the technology as a marketing vehicle and a way to broadcast political messages.

Crowded Field

After MySpace, Facebook came in second place with 10 percent of market share. Bebo, BlackPlanet.com, Xanga, iMeen, Yahoo (Nasdaq: YHOO) 360, Classmates, hi5 and Tagged rounded out the top 10, with each capturing one percent or less.

"MySpace is still vastly larger than any of these other sites except Facebook," said Hitwise's Prescott.

Some of the less popular sites are growing faster than the category as a whole, according to Prescott.

Monetizing Networking

As traffic rises, so does advertising revenue and the emergence of "social marketing." In fact, some 48 percent of brand marketers plan to use social marketing tactics in the coming year, compared to 38 percent last year, according to a recent JupiterResearch study.

Social network ad spending will reach US$865 million this year and nearly $2.2 billion in 2010, according to eMarketer.

"As usage grows, larger and mid-size companies are pressured to allocate more ad dollars to these sites," said Vega.

Although it may be difficult to predict any of the less popular sites knocking MySpace off its perch, history suggests that it could happen.

Friendster, once the top dog in social networking before MySpace landed, now holds a paltry 0.34 percent share, according to Hitwise.