Social Niche

22 Apr

Posted by Andy Brudtkuhl under Business, Media

Unless you’ve been hiding out you are fully aware of the impact online social networks have had across the board. These networks have gained validity as big media adopts the models in order to cash in on high dollar ad networking. Obviously the biggest of these networks are places such as MySpace, Facebook, and MSN Spaces. Web services such as Flickr and Delicious create the same networks. The niche these services create is catching on and being spread among demographic segments.

The obvious demographic for these services has been 14-24 year olds, which happens to be one of the most profitable demographic markets. These services were not created because of the market potential, but because of the adoption potential. The 14-24 year old market segment was more likely to adopt online services such as these.

But as these networks do grow their potential to reach across demographc segments is very large. At the heart of these social systems is the sharing of ideas and information. Not only do these networks invoke collaborative interaction, they create economic markets for advertisers. It makes advertising easy because you know exactly what demograph is using your service, unlike television where you push ads to a broad market with no idea of your market reach. Social networks allows advertisers to recognize these niches and thus create effective ads and knowingly reach their target markets.

There are two distinct demographic segments that have high profitability potential. And these two demographic segments have hundreds of niche possibilities contained within them. One market is seniors, the 55+ demographic. At a recent conference, Senior Neilsen Analyst Leslie Marable said the 55+ segment should no longer be ignored by web services and internet companies. This segments use of broadband has increased a lot in the last few years. Why can’t they have social networks? There are hundreds of niches in this baby boomer segment that could use an online service to collaborate thoughts and ideas.

Another example of an untapped segment with a lot of potential is young parents with young children. Tara Hunt recently wrote an intriguing post on her blog called the ‘The Long Tail is Chunky‘. She uses the long tail theory to prove the potential of segmented markets, such as the ’stay at home young mom’. She writes,

So, let’s hone that down even moreso. Okay, now you are trying to attract an entirely different person. Forget MySpace. Whatever you can come up with, Tom will probably add to the feature list anyway, so why not come up with a tool for someone slightly under-represented online? Let’s say, “Stay at home moms with a high speed internet connection that want to connect to other adults.” This is actually quite a large market:

There are hundreds of possibilities in this market. Why not build a web service for parents in a community to collaborate on the transportation of children to their various activities? Why not build a network to allow collaboration on parenting techniques?

This are but two demographic segments that each contain hundreds of possible niches. Tara goes on to say,

So, as you go down the long tail, you may lose sheer numbers of potential customers, but you will have an easier time actually reaching those customers. The long tail is actually very ‘chunky’ in that, there may be oodles of more niche markets out there, but in each of these segments, you will find a dedicated, under-represented, overlooked and easier to reach community.

The options for the creation of scale free networks using demographic segments as you travel down the long tail is exponential. Now that these web service networks have proved their legitimacy among the major demographic markets the opportunity for entrepreneurs to cash in on niche markets has high potential.