Is Digg close to a $300 million sale?

Good thing Digg didn’t sell itself a year ago. Digg has performed spectacularly in the past 12 months. All key user and engagement metrics are up dramatically for the site:

Now I know Facebook and Digg are fundamentally different services, it’s an interesting head to head comparison nevertheless:

• Even though Digg’s and Facebook’s unique visitor numbers aren’t that far apart, the engagement metrics reveal fundamental valuation driving differences between the two sites.
• Facebook users are much more engaged with the site. They come back to the site more often, spend more time, and view more pages. Most important - most Facebook users have user accounts, have to be signed in to use any Facebook feature, and voluntarily share lots of juicy facts about themselves with Facebook. This has to be the main driver behind Facebook’s lofty $620/unique visitor valuation.
• Interesting that both have multi-year multi-million dollar ad deals with Microsoft.

Will Digg get acquired soon? We’ll find out soon enough. Maybe Microsoft should use some of its $18.8 billion war chest (again) to buy a small piece of Digg in its bid to catch up with Google/Yahoo/Fox in the social networking game. After all, Microsoft already has a $100 million ad deal with Digg.

Who had more sponsored link impressions than eBay and IAC in September and August? If you guessed Google, nice try but guess again. This company had more than Google itself and, what’s more, came from zilch in July, growing by 209,950%.

Hang out on MySpace a lot? You’re getting closer. Ever tried clicking on one of these?

Maybe you couldn’t resist… Don’t worry you’re not alone. In September alone, 12,801,186 unique visitors did it too.

WhoHasaCrushonYou? Inc. may be the most brilliant business model ever created. The company operates at least a dozen and probably more websites with names like PeferctLover.us, CrushCalculator.com, AladdinWishGranted.com and SwamiPredicts.com.

Their sole purpose is to get visitors to sign up for horoscopes, fortunes, ringtones and secret crush revelations via mobile phone text messaging. The hook? Those texts cost between $5.99 per week and $19.99 per month, depending on the carrier.

It works like this. You see a banner ad like the one above on MySpace, and more lately Facebook, and curiosity calls. You arrive at a landing page like this and fill out a few questions on your gender, name, age, Astrology sign and mobile phone number. WhoHasaCrushonYou? Inc. sends a text message to your phone with a PIN number, which you then enter on the website…. And Viola! Your secret admirer is revealed!

I actually test-drove the service and, eerily, found it to be not too far off… but that is another post entirely!

Compete found that 8 WhoHasaCrushonYou? mirror sites had 12.8M unique visitors in September and next to nothing before March. We did a break-out on the eponymous site Whohasacrushonyou.com and found it had a 7% conversion rate in July, down to 4.5% in August and September. We’ll let you do the math, but it can’t be denied — the company is an ad-driven juggernaut.

Here’s a sampling of how WhoHasaCrushonYou? shot up through the top ranks of the web, acquiring millions of visitors in record time.

Perfectlovercalculator.com actually broke into the Top 100 websites in September.

One last note, with a nod to legal - WhoHasaCrushonYou? is by all appearances a legal (if expensive) entertainment service. So far my cell phone bill does not even reflect my subscription, which I cancelled right away.

We want to alert users that Whohasacrushonyou.com and its mirror sites have been labeled as “bait and switchers” and that they should be fully aware of what they are signing up for.

The Facebook application platform took the social networking scene by storm for the past few months. But with MySpace (the largest social network in the US by a magnitude of 3) now on board with OpenSocial, it’s essentially everyone against Facebook. How will this impact the social networking sector overall? We took a look at the heavy users of Facebook, Myspace, and the top 5 OpenSocial partners (as of last night), to see how each site’s core users compare, and what sort of applications may have the most success in the context open social.

Across all social networking domains, heavy users tend to use the web as an extension of their profile. However, where and how they use the web outside of their network varies greatly. The chart below shows what heavy social network users do outside of their respective network, based on affinity*.

Heavy Facebook users have a strong affinity for sites at the edge of Web 2.0, as well as those that power its more popular applications.

• This group has a very strong affinity for Twitter.com, which is both a new platform for communication and a Facebook application.
• Heavy Facebook users tend to shop at trendy online retailers, and are seven times more likely than the average internet user to visit apparel sites like AmericanApparel.net and “social” t-shirt site threadless.com
• These users also tend to keep tabs on the Silicon Valley scene and geeky humor, visiting xkcd.com, and valleywag.com at more than 8 times the average internet user.
• Unlike their Open Social peers, Facebook users tend to use applications (and their respective sites) to do everything from image editing to dating.
• Outside of Facebook, power users have an extremely high affinity for the Greek9.com social network, but relatively little interest in others.

While Heavy MySpace users perform many of the same actions as Facebook users, they do so in dramatically different ways.

• Beyond the use of AOL instant messenger (assumed by the high affinity for AIM pages) MySpace users prefer Meebo.com for instant communication.
• This group tends to shop at Youth oriented retailers, being more than 4 times as likely to visit Journeys.com and Hottopic.com as the average internet user.
• The lack of applications forces MySpace users to look outside for some things that Facebook provides within it’s application platform. Projectplaylist projects music, imageshack hosts their images, flirty youth sites allows them to date, and imikimi.com gets their photos to sparkle.
• MySpace users also rely heavily on third party layouts sites to customize their profile pages. There are literally hundreds of layout resources, many of which receive visitor counts in the hundreds of thousands.

There is an obvious international skew among the other OpenSocial partners, a function of Orkut and Hi5’s large international presence.

• US members of these sites seem to have a strong connection to India and Latin America (showing strong affinity to sites like Shaadi.com). Interestingly, this group is also 9 times more likely to visit USCIS.gov, which deals with the immigration process (not shown).
• In general, heavy users of smaller OpenSocial partners behave much more like MySpace users than Facebook Users. In fact, the users of these smaller networks often show strong affinity for some of the same layout template sites that appeal to Myspace users.

New App Opportunities?

So given OpenSocial partner’s (including MySpace’s) user preferences, what should application developers tackle first? There are plenty of way’s to build on the successful Facebook applications, but deeper in the affinity data, there are some needs that earlier developers have failed to meet.

• GOOD quote generation: Across all social networks, members can help define their persona through favorite sayings…usually (and ironically) created by someone else. As a result, across all three groups of users, there is a strong affinity to sites that provide large quote databases such as thinkexist.com.
• Lyrics search / lyrics integrated music players / lyric tagging: Similar to Quotations, members across all networks use lyric related sites heavily. The ability to search (or simply see) lyrics within a standard format, and then tag lyrics that help define one’s online self would be – according to affinity data – a very valuable tool for the social web.
• Social shopping: Kaboodle (sort of) already does this, but most users won’t join another network specifically to shop. Given diverse personal preferences, ease of communication, an affinity for ecommerce among social networks, and the ability to “crowd buy” due to a massive number of users, this sort of application could be a hit.

Facebook may be in the clear regardless of whether they join the OpenSocial party or not, at least for the short term. The site attracts a very different group of core users than its competitors, and a large part of this group is now heavily entrenched in Facebook. It will be difficult for this group to leave, and questionable as to whether they would even want to. Either way, the Facebook staff has a tough decision (and possibly road) ahead.

For this post, “Smaller OpenSocial Partners” included Orkut.com, Friendster.com, Hi5.com, Plaxo.com, and and Ning.

“Heavy Users” were defined as a user visiting the social network more than 15 days in the month of September

Many media buyers are often forced to secure ad inventory based on total impressions…which in turn gives web designers a terrific incentive to inject a website with as many unnecessary pages as visitors will swallow. MySpace has been frequently called out on its bloated structure just for this reason. Because of page view inflation, flash and the increasing use of AJAX, time based metrics provide a much clearer picture of visitor interaction with a site.

But comparing traditional page view-based traffic to time based traffic metrics yields an interesting analytic: page views per minute, calculated as the average number of pages served for each minute a visitor spends on a site. Page views per minute (PPM) is a function of two things: how fast visitors are consuming content and the inefficiency of a sites structure. So who are the worst PPM offenders? Surprise! MySpace isn’t one of them.

The chart below shows the top 20 sites in terms of Page views served per minute in September, along with each sites total number of visits.

Among the list of highest PPM sites, there is an interesting mix of domains that would naturally encourage users to refresh pages frequently, sites that (innocently) could probably be tightened up, and those that are simply trying to serve as many ad impressions as possible without driving visitors away.

Questionable Motives:

• Facebook.com – Facebook serves 3.4 pages per minute of active use. This could be a function of Facebook members digging into all the meaty content, but there’s also something funky going on. Looking at this metric over time, PPMs start to increase dramatically. Back in September 2006, Facebook was serving 2.5 pages per minute. The .9 PPM increase may not seem substantial, but when your site is generating nearly 14 billion page views, that’s nearly $4 million in incremental monthly ad revenue at a $1 CPM.

Impression factories:

• Smashawards.com – Smashawards was by far the worst offender on the list. Part of the Smashits network, this site serves 6 ads on every page. Additionally, it automatically refreshes itself after about a minute of inactivity, effectively forcing new page views, 6 new impressions. I would wager these ads don’t perform well.
• Southasianews.com - this news site has 6 different ad placements on their homepage. With that much content and a new page served every 10 seconds, some of those advertisers are getting ripped off.
• Mygirlyspace.com – While MySpace.com doesn’t make the list, at least two sites devoted to MySpace layouts do. This site actually serves an ad when you click through to another piece of content. Here’s a tip, don’t do this when someone clicks on a link looking to advertise with your site.
• Makeoversolutions.com – Part of the glam network, this site serves a new page every 17 seconds. A word to media buyers, other glam network sites just barely missed making the list.

Content buffets: Sites that should have high PPM

• Smugmug.com - Devoted entirely to photographs, this site allows subscribers to share photos on an ad-free platform. At the pace that people browse photos, (especially wedding photos, the biggest tag on the site) its appearance on this list is no surprise.
• Americansingles.com - While the high PPM at this online dating site may mean members aren’t finding the love they are looking for, it’s logical they would be checking out all their options, so a high PPM is not surprising.
• Davidsbridal.com – Wedding Gowns and Tuxedos? Lots of choices means a lot of (quick) decisions.
• Enterprise.com – Renting a car apparently means inputting a lot of information. Enterprise apparently took the approach of spacing this visitor information process over multiple pages.

This type of analysis is not something that can be applied universally, and it means nothing without considering a site’s design, purpose, and content. But it does help to expose sites that are clearly out to make money or hit traffic goals at the cost of visitor experience… and hopefully help move the needle away from non-performing banner ads.

Recently, my Gmail inbox has received “New MySpace Comment” alert emails much more frequently than usual. Oddly, these comments are often times posted by Friends who rarely, if ever, converse with me via MySpace. Without fail, upon logging in to the social networking giant I find something similar to the image to the right has been posted on my page.

There is a picture (that looks like a video) coupled with some descriptive text that presents a compelling “click on me” pitch. I admit, at first I fell for the scam. I clicked on the picture trying to get the video to play (I’m only human, and male).

Now here is where the scam kicks in. Upon clicking on this faux-video I was taken to a login
screen asking for my username and password. To the naked eye the log in page looks completely normal, so most people have no problem providing their log in information. Below, on the left is an example of a scam log in page compared to the regular MySpace log in page.

Although these two pages look almost identical there is one major difference: the URL. On the left, the URL is http://rnyspacei.com/ while on the right the URL http://www.myspace.com/ - often an unnoticeable difference. (By the way, the Compete Toolbar will let you know if you are on a phishing site.)

Continue reading “The Anatomy of a MySpace Scam” »

The Community Next conference in San Jose, CA this last weekend resembled the mosh pit at a rock concert. It featured performances by the twenty year-old rock stars and a few older ones who have developed successful applications on the new Facebook applications platform. Business cards glowed with approval like cell phone lights at a concert. Venture capital promises were passed around like illicit drugs. The performers were mobbed by their fans.

On May 29th, Facebook opened its platform to application builders. Now four months later, 5,000 applications were reported at the conference. Compete data show that Facebook activity grew 32% from May to August, 2007, with more than a third of the growth coming from the new applications. Zach Allia, a recent graduate from Northeastern University in Boston is one of the stars. His Free Gifts application has grown from start up to 7 million Facebook users in the last 120 days. Cool!

Sage old rock star, Mitchell Kapur headlined Saturday’s presentations. He advised the young developers of the unavoidable tensions between their applications and the platforms they are developing upon. He counseled:

• Platform owners have the power
• Innovations migrate into the platform
• Some platform owners want to control the whole system
• Platform owners need their applications, but they are destined to absorb the best of them into the platform.

Mitch should know. Twenty years ago, his Lotus 1-2-3 and Lotus Notes performed brilliantly, but eventually succumbed to platform-provider Microsoft. I remember. I was there.

One of the hot young performers listening to Mitch was Craig Ulliott. In 2007, he launched Where I’ve Been which has quickly become Facebook’s most popular travel application. Craig is now pursuing the transformation of his Facebook application into a successful online travel company with its own web service (www.whereivebeen.com) and additional applications on MySpace and other social networks, beyond just Facebook.

Rock on!