By Dennis D. McDonald

I received an email last night from a reader of this blog asking me to comment on cost estimates he had received for the development of a new social networking service. He wants to offer targeted services to a specific but large population segment.

His thinking corresponds with a lot of interest people have these days for applying social networking techniques in a profitable or meaningful way to different population groups — young people, old people, professionals, managers, sports enthusiasts, podcasters, jobseekers, lonely hearts  — you name it. If there isn’t already a MySpace/YouTube/Linkedin clone targeting any group that can write a check or reach a keyboard, there soon will be.

There’s nothing wrong with that. It’s basic economics. Such services fill a basic need people have for making friends and/or influencing people, and many of the basic underlying processes really can’t be patented.

It’s always been like that. Only now making friends and/or influencing people extends electronically and can reach around the globe. It’s safe to predict that when the first Lunar colonies are built, blogging will not be far behind, despite that pesky time delay.

It is important to remember that, when you are a company or a group wanting to develop a relationship electronically with members of a group, you tend to concentrate primarily on how what you are already doing or supplying relates to that group. That’s natural; you want them to buy or use your product or service, not someone else’s.

At the other end of the chain, however, the individual looking back is a member of many different types of groups; some call these “communities,” though I think that may be too strong a word. Once you decide to compete in the “relationship management” game yourself you need to consider these other relationships and connections, some (or many) of which may share some of the features or benefits of the service you are offering.

Again, there’s nothing new here. “Competition” in the marketplace has always existed. Now, however, competition is getting more complex given all the options people have out there for time, attention, eyeballs, and ears. This is especially true when you are dealing with members of the public or other “non-captive” audiences. In fact, as I’ve argued elsewhere, the options now available are such that traditional organizations such as professional membership associations must compete with emerging web based communities that provide professional networking opportunities — but without the hefty annual membership fee.

Especially viewed with suspicion will be sites that provide access to similar or overlapping features or users.

Ultimately, the true differentiators  for web based community services will be not only the unique nature of the products or services they offer, but the access they provide to unique sets of individuals with whom users want to interact. Professional networking sites such as Linkedin already understand this.

An interesting question is, will manufacturers, retailer, and service providers that also adopt relationship management and social networking features be able to balance the value provided by their involved users with the value provided by the products and services they sell? I know it’s a mantra of many commentators to assume that good online social experiences provide a “halo effect” that generates positive sales impacts, but does that take into account the possibility  that social experiences and  collaboration may become the rule, not the exception?

Copyright (c) 2006 by Dennis D. McDonald