Commentary

Has Social Media Killed The Portal?

Let me conflate three headlines from the last few days into one question, which I'll get to below:

1.What Americans Do Online: Social Media And Games Dominate Activity

2. Ouch: AOL misses low earnings expectations

3.Facebook Advertisers Boost Spending 10-Fold, Sandberg Says

And now for the question: Are portals obsolete? Answering that will require digging a little bit deeper into all three headlines, but here's how the data stacks up:

  • The first headline, from a Nielsen report on online activity, reveals the stunning fact that Americans are using social networks 43% more than they did only a year ago, spending 22.7% of monthly time online time on social nets. Social networking is now the No. 1 online activity. Meanwhile, activity on portals dropped by 19%, to only 4.4% of time spent.

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  • Though it's been true for some time that AOL's first name could just as well be  "beleaguered," its missing of already-low expectations for the second quarter -- even as the overall online ad economy rebounds -- is pretty troubling. Ad revenue dropped by 27% (!) compared to the second quarter of last year (though the company said there was a slight sequential bounce because of improved sales of premium inventory). But still... 27%? What does that say about sites that aren't inherently social? Not a very good thing, whether you're talking about the AOL site or the other sites it sells inventory on.

  • Facebook, as a private company, doesn't have to release revenue numbers, but COO Sheryl Sandberg told Bloomberg that the site's "biggest advertisers have boosted spending by at least 10-fold in the past year." That's stunning. Some are speculating that Facebook's sales could reach $1.4 billion in 2010 -- last year's were estimated to be in the $700 million to $800 million range. Further, in the same Bloomberg interview, Sandberg said that pricing on Facebook had remained stable, despite the constant increasing of inventory caused by 500 million users.

    No one has to stay up late wondering where the money, and traffic, is going. It's crystal clear. But the details I've outlined don't even touch on a key point: that the way Nielsen measures activity is by site, not by what people are doing within those sites. In other words, one reason the Nielsen data shows declines not only in portals, but also in email (28%) and instant messaging (15%) is because content sharing and communication activity are now largely the province of social networks, so portals just aren't as necessary.

    Now, you may find it unfair that I singled out AOHell as a point of comparison -- but it's not as though Yahoo is ripping up the record books lately, either. While Facebook crows about its exponentially expanding ad revenue, what Yahoo terms "marketing services" revenue crept up by 4% in the last quarter. That's much better than AOL, but it's nothing to email home about. It's no coincidence that in its earnings release, Yahoo touts the expansion of its relationship with Facebook as one of its key business highlights.

    So, are portals obsolete? Perhaps. Or maybe -- just maybe -- they are useful in the broader Internet ecosystem as content creation engines, which can then provide fuel  for the sharing activity that goes on within social networks.

    Interestingly, in the same Bloomberg story, Facebook Director of Corporate Development Vaughan Smith hints that Facebook wants to buy bigger companies (though I should note, he did not say anything about portals): "As we get bigger and our platform gets more stable, I fully expect that we will be doing more significant acquisitions," he said. "This is working for us, and it's working for the people that we're acquiring."

    So, for the fun of it, let me rephrase the question: Is it time for a social network to buy a portal? Or do portals need social networks so much more than social networks need portals that it doesn't make sense?

  • 6 comments about "Has Social Media Killed The Portal?".
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    1. Douglas Ferguson from College of Charleston, August 4, 2010 at 4:02 p.m.

      The word media is plural, so it takes a plural verb. The singular form of media is medium. Twitter and Facebook collectively may be social media, but each in isolation of the other is a social medium. So the headline should be "Have Social Media Killed the Portal?"

      You're welcome.

    2. George Nimeh from KURIER, August 4, 2010 at 4:14 p.m.

      Who needs a conversation about portals and community when we can talk about grammar!!!!!

      Isn't the term 'social media' commonly used as a noun? If so, it's fine as a singular. Right?

    3. Jonathan Hall from American Pop, August 4, 2010 at 4:14 p.m.

      You can think of Facebook and Twitter as different kinds of information/content portals in which navigation is dictated by what links your friends choose to share with you. A very dynamic , socially driven portal. They're still a window into the fractal social ecosystems, news sites, etc of the web in which the editors are your peers. I would think an informal poll would show that a large percentage of most web users' browsing is driven by link sharing within social networks.

    4. George Nimeh from KURIER, August 4, 2010 at 4:18 p.m.

      Portals will die. They can't keep up with everything they would have to hold. Plus, as AOL taught us, once people "get" the internet, they need/use/visit portals less and less. They'll fade into oblivion, older generations become more comfortable and as more natives skip 'em altogether.

      So, for example, the last thing Facebook needs to do is to buy Yahoo.

      And for what it's worth, I think social media killed the microsite as well. And that's a good thing.

    5. Jonathan Hall from American Pop, August 4, 2010 at 4:33 p.m.

      "Drop the vernacular!" "This is a Derby!"

    6. Harold Cabezas from Cabezas Communications, August 9, 2010 at 11:12 a.m.

      Well-played, @Douglas Ferguson!

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