Is Older the Way to Go for Social Networks? A Quick Comparison of Facebook and Eons

Posted on March 8, 2007

Old People SignAfter reading a post on Valleywag the other day discussing Facebook’s poor advertising performance and reading about the huge financing Eons just took I began thinking a lot about this whole social network trend.

Most of the social networks out there are relying on advertising to pay the bills. While there is nothing wrong with that approach overall it does leave these companies in a lurch when the advertising either doesn’t work or they simply aren’t getting the eyeballs they need for the business to make sense. These companies remind me a lot of the portals from the first web go around for these reasons:

Of course if one of these companies can’t get eyeballs they are done from the start since the value of the company is only there if the users are. However, let’s say they have the eyeballs like Facebook does. What then? Monetization via advertising of course. Well, in Facebook’s case the ads just aren’t performing right now meaning advertisers probably aren’t placing more buys which means the business model is in a bit of trouble. Why wouldn’t the ads be performing though? Valleywag puts it best I think:

Media buyers — the agency people who book campaigns — report that the college social network is a truly terrible target. They’re mainly students, with low disposable income, of course; but, beyond that, the users appear to be too busy leaving messages for each other to show much interest in advertising.

Exactly. This target group has no extra money and they are usually coming to Facebook as a reaction if they are anything like myself and my friends. What I mean by reaction is that they get an e-mail alert that someone has added them as a friend or that someone has left them a message, etc. They react to that, head to Facebook, take action on the item, perhaps poke around for a minute and leave the site. That doesn’t leave a lot of time for looking at or acting on ads.

Like the portals before them (i.e. Yahoo!) they could diversify into other businesses that they could charge for in addition to running ads. Facebook, for example, could possibly set up a job board for entry level post college jobs and internships. They could take on MonsterTRAK for that market and, due to their large installed base of users, probably do pretty well. Not only that, having something like a job board would keep users on the site longer potentially leading to better ad performance.

This bring me to Eons. Taking such a large round of financing recently ($22mm second round) has got people talking about the social network/content site for people over 50. At first I thought the idea was a little strange but over time I have begun to see the value in Eons. If you look at Eons in comparison to Facebook you’ll see the value too.

I’ll bet that Eons has a lot of well educated users who have a decent amount of disposable income therefore Eons, in theory, should be able to sell high value ad campaigns to companies like Mercedes, BMW, and Rolex along with vacation ads, health ads, financial services ads and drug ads (drug ads = big money). These ads will most likely perform well since Eons has good content on the site that will keep users there for a little while.

Basically, Eons is the exact opposite of Facebook.

So it seems that some target groups are better than others in terms of making a social network into a business but what else can help a social network grow? One critical (and obvious) thing is the networks ability to become an indispensable part of the users life and add to the users productivity. What better way to do that than to tie into the business life of users like LinkedIn has done? Interestingly LinkedIn also probably sees more of a post college crowd (although not as old a crowd as Eons) which leaves me to wonder if, contrary to popular belief, building social networks for older people is the way to go. I think it might be.

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2 Comments so far
  1. Ivan Pope March 12, 2007 9:28 am

    I read an interesting analysis of this the other day which is counterintuitive to what you would think. It said that although Eons seems like a great advertising/marketing space, because older people tend to have settled on the brands they like, there’s not much point marketing to them. So the Facebook crowd are a much better bet - i.e. as no Facebook type member has yet bought a Mercedes, BMW, and Rolex or their competitors, they are wide open to buy into the brand value of any of these. In thirty years time when they have money, they will have been driving a Mercedes for years and no amount of advertising by BMW is going to have much effect.

  2. Eric Olson March 12, 2007 9:53 am

    Interesting point Ivan. I do agree that younger people are more impressionable since they haven’t made up their minds in terms of brands yet but the evidence shows that, at least at this time, they aren’t clicking on ads while in Facebook. Perhaps this will change though in which case Facebook would be a great place to reach the younger people. Perhaps the ad placement in Facebook needs to be changed since MySpace seems to have an OK clickthrough rate on their ads.