As we head towards the middle of 2011, yet another tech company announces its IPO; this time it’s professional networking giant LinkedIn with an estimated valuation of $9 billion. This valuation exceeded it’s expected value of $4.3 billion which, as some people have said, “Not bad for a social network that isn’t Facebook”.
Why all the fuss? Why the huge valuations? Surely these companies aren’t making that much money? Facebook the big daddy of the social networks reported that in 2010, it raked in $1.12 billion in revenue yet some sources say that Facebook could be worth an estimated $100 Billion when it announces its own IPO.
The truth of the matter is, Twitter, Facebook, LinkedIn et al have something that many of businesses don’t; a captured audience offering them lots of personal information and data, and this is where the value is – imagine being able to target marketing towards a specific set of people based on their past times, age, sex or even location. Sure this type of marketing isn’t new, but until now no one has been able to do this so accurately. So from an investors point of view, this captured audience represents a goldmine of opportunity.*
So how about from your businesses point of view? Does that mean that you should market yourself via Social Media? What if your products and services aren’t suitable for Social Media, should you forget about it? No you shouldn’t. The fact is, social networking is now so integrated with our society that even the likes of Google are having to pay attention, why? Because information and data (particularly personal data) is key to Google. Google uses hundreds of different indicators to figure out if a website is relevant to a certain key phrase and ranks those websites accordingly to its relevance but none are as good of an indicator as personal data and recommendations from real people and adding this to Google’s ranking factors would make their results even more relevant.
In 2009 Google reached a deal with Twitter so that the search giant could integrate its millions of live tweets into its search results which could help it find even more things on the web that people like**. For this reason as part of any good SEO campaign even if you are not directly targeting people, social media should be integrated to atleast give social signals to Google (and other search engines) afterall any good SEO campaign should include elements of all natural web elements.
*Note: I usually hate using phrases like “Goldmine of opportunity” but the thought of the weekend has got me a little excited which is why I’ve thrown in some old school terms to bring me back down to earth.
**Note 2: This doesn’t mean people should spam the hell out of twitter with links back to their sites, this isn’t how it’s done – instead more organic and natural social integration is the way forward. Spamming isn’t good, if you want SPAM don’t come to us, go to Tescos they sell it for a very reasonable £1.40 per tin (at the time of writing)