Friendster supports applications for rival sites
Friendster, an early online social network that has faded in the United States but remains strong in Asia, has begun letting programmers create photo-sharing applications and other programs that work on Friendster as well as rival sites.
Friendster had already announced support for this initiative, a Google Inc.-led plan called OpenSocial. But this week Friendster released the software tools that let outside programmers easily adapt chats, games and other functions initially made for other online hangouts.
By participating in OpenSocial, now backed as well by Yahoo Inc. and News Corp.'s MySpace, outside programmers can make their applications work on multiple sites with minimal tweaking.
That could, for instance, encourage developers of media-sharing tools for MySpace to adapt their programs for Friendster.
If the programs had to be written from scratch, the effort might not be worthwhile, given Friendster's smaller audience — 1.8 million in the U.S. in July, compared with 39 million for Facebook and 75 million for MySpace, according to comScore.
Likewise, programmers aiming to reach Friendster's Asian users can easily adapt their tools for MySpace's audience in the United States and elsewhere.
Friendster's use in the United States has fallen with the rise of newer online hangouts. Still, Friendster has been hot in Asia, particularly in the Philippines and other markets that the leading U.S. social networks are trying to tap as domestic online advertising growth slows down.
Facebook has yet to publicly back OpenSocial, though Facebook has had tremendous success encouraging developers to write tools specifically for it.
Other participants in OpenSocial include hi5, LinkedIn, Ning, Google's Orkut and Bebo, which Time Warner Inc.'s AOL recently bought for $850 million.
Friendster Lives: New Cash, New Boss and a New Strategy?
Don’t count Friendster out yet.
The pioneering social network, surpassed by MySpace and Facebook in most of the world, is still going strong in Asia, and now it plans to build on its success there. On Tuesday, the company will announce a $20 million investment round and a new chief executive, Richard Kimber, the regional managing director of South Asia for Google.
The funding round is led by IDG Ventures and includes past Friendster backers like Kleiner Perkins Caufield & Byers and Benchmark Capital.
Friendster, based in San Francisco, helped the concept of social networking gain broad acceptance before it nearly foundered amid technical problems and management chaos. It says it has more than 75 million users, though many who signed up in the early days have not used it for some time. It also says it is the top social network in Asia, with 33 million monthly unique visitors from the region -– twice the amount any other social network.
Beyond expanding in Asia, one clue to Friendster’s future plans may be found in its description of itself in this latest news release. Friendster “has a growing portfolio of patents granted to the company on social networking, with more expected over the next several months.”
Friendster v. Facebook in federal court, perhaps?
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THE Internet search engine is an indispensable tool of modern life and an advertising gold mine for Google, the favorite first stop on the Web.
But searching accounts for only about 5 percent of the time people spend online; the other 95 percent is spent on the wider Web, where a different advertising landscape looms. Instead of the short text ads that appear on a Google results page after a search, visitors often find display ads that are the Internet’s equivalents of glossy magazine ads or television commercials. These are typically the province of brand advertisers like Cadillac and Coke.
Until recently, however, it was impossible to tell whether these ads were in fact reaching their target audiences because no one had applied the computing tools and powerful mathematical analytics that were needed to link online display ads to specific markets. But that is changing, and a number of small companies are standing at the forefront of this transformation.
Indeed, many in the industry regard display advertising that can reach specific audiences as the next big online opportunity — the postsearch wave, the Internet ad market 2.0.
“The promise is to be able to measure the reach and effectiveness of brand advertising as never before,” said Rich LeFurgy, a principal at Archer Advisors, a digital-advertising consultant. “If that happens, it will really accelerate the migration of brand advertisers online.”
The big Web portals like Yahoo, AOL and Microsoft are working on it, trying to tease out which display ads should be shown and to whom. Last month, when Google paid $3.1 billion for DoubleClick, which specializes in software for display ads and has close relationships with Web publishers and advertisers, it declared that display ads would be crucial to its future strategy.
But besides the giant portals, there are scores of small, innovative companies — typically venture-backed start-ups — that are behind the revolution on Madison Avenue.
Industry analysts estimate that there are about 200 such companies. Many call themselves ad networks, while others are referred to as ad exchanges or optimization services. The roster includes Revenue Science, Tacoda, Tribal Fusion, Rapt, AdECN and x+1. In one way or another, they are all trying to bring more effectiveness to the online display ad market.
“There is so much money pouring into online advertising that there is a lot of opportunity for newer players,” said Emily Riley, an analyst at Jupiter Research.
These players are actually hybrids, possessing varying degrees of media smarts. They often operate thousands of miles apart, with the ad experts in New York and the quantitative analysts, or quants, as they are called, on the West Coast. Together, they are changing the nature of display advertising on the Web.
In the old days of the dot-com era, online ads were simple billboards plastered onto a Web site in the hope that visitors would notice them if not exactly read them. But faster and cheaper computing and sophisticated software algorithms are making advertising more intelligent and measurable. The quants have become a force in the advertising industry, much as they became a force on Wall Street starting in the 1970s and 80s.
The process of delivering relevant search-based ads is comparatively easy — a typed search term sets off related text ads, which appear next to the results, exposing consumers to sundry, generally relevant, advertisers.
Brand advertising, however, starts higher up on the marketing food chain; it is meant to foster brand and product awareness as well as purchases. The goal is to deliver select audiences — of thousands, even millions — to mass marketers.
The new science of online display advertising involves a potent mix of behavioral targeting, social networking algorithms, predictive economics, pricing optimization and other mathematical strategies.
These geeky tools are used to address the marketer’s quandary, well articulated by John Wanamaker, the 19th-century Philadelphia merchant who said that half the money he spent on advertising was wasted, but he didn’t know which half.
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