After making waves online, social media sites in India are looking at the mobile to broaden their base. The question is how do they plan to make a business model out of it?
Social media websites such as Orkut and Facebook may be the hottest thing on the web, but the mobile phone is still unchartered territory for them. Even now, the reach of social media sites on the mobile remains limited. Facebook, for instance, has a site for the iPhone and MySpace has tied up with AT&T for a mobile community. Google’s Orkut is expected to launch mobile features soon.
In India, most social media sites are trying to involve their members through the mobile phone. Most of these sites use SMS as a form of sending messages among members as mobile Internet use is still low in India. Yaari.com has SMS-based mobile services using which members can send each other messages through the site and the mobile. Fropper, Desimartini and Indyarocks also have similar services. SMS GupShup is a mobile-based community created by Webaroo, and also has an online website. Reliance Entertainment’s BigAdda will soon launch mobile features.
SMS rules the airwaves
While display advertising is the way most sites will look at earning revenue online, they still have to figure out a clear business model for the mobile version. The infrastructure for these SMS-based services is usually provided by mobile VAS companies. For social media sites, they are effectively another operational cost, but that does not a business model make. Sending an SMS from the website is free of charge for the member, and group messages are charged at the rate of only a single SMS. Banner ads on mobile sites can only be placed on Internet-enabled mobile phones. So, that leaves the option of SMS advertising, which is what most companies are looking at.
Webaroo already follows this model for its mobile community, SMS GupShup. Chirag Jain, vice-president, India operations, Webaroo, says, “The ad-based model is the only model that will be profitable for social sites on mobile. Facebook on mobile is earning money through ads and this will happen in India as social networks have member profiles and they are best for advertisers. The money will come from them.”
The search for a mobile business model
However, not everybody is betting on the mobile to take them further. Desimartini, another social media site, launched SMS features six months ago, but founder and CEO Vivek Pahwa says that it “didn’t add value to the users and the service didn’t take off properly”. He adds, “SMS-based social networking will not work in India as it’s not very convenient or cheap. The value proposition is a little doubtful. SMS can just be used as an alert, but not the whole interaction.”
BigAdda will also launch both SMS and WAP features within six-eight weeks. “The business model for our wireless services will be a mix of advertising and VAS revenue share with the operators for the features that we will extend to the user,” said Siddhartha Roy, COO, BigAdda.
But there are naysayers here, too. Activemedia Technology develops mobile applications and campaigns for companies. Raj Singh, its executive director, thinks that GPRS services will cater only to a particular section of members. “On the lowest common denominator, people will start to look at maybe SMS scraps as a start point for extending the social networking experience on to the mobile phone. And over time, that will become richer. Only serious users will be interested in replying to a scrap from a mobile and to pay for it as they would not want to wait to get a PC first,” says Singh.
According to a Juniper Research report released in August, “the mobile user-generated content revenue will rise tenfold by 2012, reaching $5.7 billion from the current $572 million, with social networking accounting for 50 per cent of the total by the end of the forecast period”. And as the social networking sites do rigorous profiling of their user base, the advertisers on the mobile would definitely like to leverage this platform much more than the PC.