• by Shankar Gupta , October 6, 2006

Wal-Mart's attempt to claim a stake in the growing social networking space ended this week, when the retailing giant spiked its initiative, The Hub, just 10 weeks after its launch.

Industry watchers and analysts said the site flopped because Wal-Mart tried too hard to use it as a promotional vehicle, rather than make a genuine effort to build a dedicated community.

Greg Sterling, principal of Sterling Marketing Intelligence, said the target demographic avoided the site because they could tell it was more promotion than product. "Users could sense that it wasn't a real thing," he said. "The larger lesson here is that companies that are going to do this in a calculated or cynical way are not going to be successful."

Wal-Mart also tried to wield too much power over the site, said industry observers. "They want to do it on their own terms, and that runs anathema to the entire user-generated movement," said Aaron Cohen, CEO of social networking company Bolt Media.

Controls on the site included parental notification when kids join up and screening of all comments, profiles, videos and other content posted by users. Most of those efforts stemmed from the company's desire to avoid potentially racy or offensive comments, said Pete Blackshaw, chief marketing officer for Nielsen BuzzMetrics. But while this need is understandable, it's hard to reconcile with social networking sites, Blackshaw said. "Social media," he said, "is a very difficult dance partner for brands."

He added that comments on blogs and forums monitored by Nielsen showed that the site was failing to gain traction with its intended audience of teens. Instead, he said, most of the bloggers linking to the site were people who wrote about marketing. "There are parallels here to what happened with 'Snakes on a Plane,'" he said--referring to the summer movie that generated a huge amount of Web publicity, but modest box office returns. "The buzz, awareness, and attention all came from the wrong crowd."

Separate from the now-defunct The Hub, Wal-Mart also has a MySpace page that's been more successful; 3 percent of Wal-Mart's traffic comes from its MySpace page, according to Hitwise.