Projected revenues for two of the biggest social networks (MySpace and Facebook) have fallen according to eMarketer according to what can be described as “lackluster revenue growth.” Since their inception the question has always been posed, “How do you take a free service and turn a profit on it sufficient enough to allow for continued growth?” Social networks, until recently, have relied almost solely on ad revenue to meet their bottom line. But with the economy in dire straits ad revenue is down as marketing budgets nationwide have taken a hit. With the ability to advertise and sell products from personal profiles for free with tools like the Social Store Builder businesses are less able to justify paying for the same type of exposure to create and place ads.

Social Network Sites Are Expanding Offerings to Generate Revenue
More recently social network sites have begun expanding their revenue sources by offering the increasingly popular “virtual gifts.” These “virtual gifts” are icons or images that one user can buy and have “sent” to another user. Besides the plethora of seasonal virtual gifts ranging from reindeer to leprechauns and heartfelt gifts from teddy bears to roses, “branded virtual gifts” are becoming a hot ticket. Now companies can create gifts that bear their logo representing newly released products, recent accomplishments, and more. While “virtual gifts” have brought in their fair share of revenue they have a potential to be undercut by the alternative “free gifts” applications that have some similar gifts at no cost to the user.

The social networks have also refined their ad offerings in an attempt to keep ad revenue steady in the coming year. A newer MySpace offering allows businesses to target very specific demographics by honing on in members’ profile information. The highly targeted system is intended to achieve greater advertising confidence by prospective advertisers and a higher conversion rate. Their inclusion of video ads makes this a promising endeavor for MySpace.

Potential Offerings on the Horizon for Social Network Sites

1. Music Downloads
   Music downloads are likely to make a strong presence on the larger social networks in 2009, playing off of the successes of sites like iTunes and Napster. By embedding paid music downloads in the very area where users are discussing and posting about their music interests MySpace and Facebook have an advantage over sites that are solely based around downloading/streaming music.
2. Donations
   In the future most social networks will likely ask for donations like Wikipedia has already begun doing. The theory here is: “It doesn’t hurt to ask.” By reminding users that all the content they enjoy is available to them for free and then asking for small donations to help them continue to providing it at no cost some contribution systems have been able to bring in large sums of money. Wikipedia, for instance, reportedly has received just over $6 million in donations thus far. While the early days of MySpace and Facebook were marked by young, mostly income-less users, older users and businesses alike have been adopting these networks as a way to reach a wider audience. These new users have far deeper pockets and are more likely on average to donate money to worthwhile causes.
3. Developing In-House Applications
   An additional revenue potential for Facebook would be developing their own applications and charging users for access to them. Like many other business plans out there Facebook could charge users either a flat-rate or monthly fee for each premium application they want access to on their profile. Users could still have access to third party developed basic applications; and like the “virtual gifts” model they could expand to offering branded applications.
4. Paid Communication Methods
   One final speculation is that the social networks could start charging for communication methods (chat, email, internet calls, etc.) that would be tied into profiles and accounts- like a paid version of AIM, Gmail or Skype. The benefit to users would be fewer applications, profiles, logins, etc, for users to manage and tie-in potential with their existing social networks. The obstacle, however, would be convincing customers that they should pay for something that they can already get for free- but hey, it worked for satellite radio.

Falling projected revenues are forcing the social networks to innovate, causing more opportunities for users and businesses alike. As a user expect to see more features, tools, and options at your fingertips. As a business, expect to see more money making opportunities.

Ready to join the exciting future of social networks? Check out Volusion’s Social Store Builder!

-Kate Pierce eCommerce Specialist

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What is Bandwidth?
Bandwidth usage can be defined as any visit to a website that causes data to be transferred to a visitor (be it a customer, search engine, security scanning device, etc.). Anytime someone or something visits any website, it uses a certain amount of bandwidth.

What to Look for in a Hosting Company
Every hosting provider handles bandwidth differently and not all of them are particularly upfront about their bandwidth usage polices and associated fees. Before you choose a provider you need to know what you are getting for the money you are paying.

• Deceptive Practices To Spot and Avoid:

1. “No Overage Fees”
   This statement sounds too good be true! Well, it is too good to be true. A lot of times companies that do not charge overages will cap you at a certain bandwidth usage. So say you are allocated 5GB of bandwidth. You will never pay for anything over that 5GB because when you hit 5GB the company will turn your site off. Therefore, they are not lying when they say you will not have to pay overage fees, but having your site down for a portion of the month or year is not a great trade-off.
2. “Unlimited Bandwidth”
   Again this offer sounds too good to be true because it is. Some companies offer unlimited or outrageously high bandwidth allocations, but the trick is that in order to offer that kind of bandwidth the hosting they are providing cannot be very good quality. Think about it like this- say you are sharing a server with 200 other sites and everyone can frivolously use as much bandwidth as they want- the server is apt to get bogged down. Therefore, unlimited bandwidth is generally also accompanied by slow website load times, and frequent bouts of downtime. Again, an offer that looks so promising is weighed down by some serious negatives.

• Features You Need:

1. High Quality Hosting
   You want the highest quality hosting you can afford for your business because there is really no sense in putting time, resources, and money into creating and maintaining an ecommerce site if your hosting company is going to take away any chance you have to succeed by dragging your site down. Using a company that provides premium hosting no matter what level of bandwidth you are using is absolutely key!  Volusion’s premium managed hosting is closely monitored for consistency, backed up on a daily basis, PCI compliant, and highly secured.
2. Semi-Dedicated Hosting Options
   It is important for small businesses to make sure that the hosting company they are using offers more than just the resources they need when they are getting started. The goal is to grow isn’t it? You want to choose a hosting company that offers small and large business solutions and a wide array of services so that if and when your company grows you have options to help support your business and you do not have to start the search for a hosting company all over again. Volusion offers both small business solutions (with as little as 1GB of bandwidth included) and semi-dedicated/corporate solutions (with as much as 50GB of bandwidth included) so that any business can find a plan that fits their needs. Additionally, Volusion’s ecommerce services range from domain name registration to merchant accounts for credit card processing to design and marketing.
3. Reliable Technical Support
   The worst situation is having a problem with your website and not being able to get a hold of anyone to report the problem to or help you troubleshoot through it. The best hosting companies will provide 24/7 technical support and be able to fix problems and answer questions quickly and accurately. Volusion’s technical support staff does just that!

How to Reduce Bandwidth Usage

1. Use proper image sizes and file types
2. Minimize usage of downloadable files
3. Limit flash/video on your site (or host it elsewhere and embed it on your site)
4. Try to avoid importing and exporting very large files and tables frequently in the admin area
5. Do not use host images with your ecommerce provider and use them on your social networks (instead host them on the social networks themselves)

For more detailed information please visit our Knowledge Base- “Tips on Limiting Your Store’s Monthly Bandwidth Usage.”

Learn more about Volusion’s bandwidth overage rates.
-Kate Pierce eCommerce Specialist

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Defined:
The Google AdWords position preference tool “Lets you tell Google where you prefer your ad to show among all the AdWords ads on a given page.” Essentially you come up with ads for particular keywords and then decide where you prefer those ads to display and Google makes the adjustments needed in order to try to show your ad in that preferred position.

Benefits:
The interesting part about position preference is that it can be used to either keep your ads toward the top of the paid search results or keep your ads lower in the search results- it all depends on how you set your preferences. I know what some of you out there are thinking- “Who in their right mind would request that their ads be dropped in the paid search results rankings?” As you will see, there are good reasons for each strategy.

1. Featured near the top of the paid search results
   Do you remember that game called “king of the mountain” that you played as a kid? If there was a mound or hill several people would run toward the top and the first one who got there would declare himself/herself “king of the mountain.” Then all the other kids would try to push the reigning “king” out of the way, and once dethroned, the newest person at the very top would declare that he/she was the new “king” and the game would go on and on until recess was over or your Mom called you inside. Essentially using position preference can be like waiting around to see when there is the best chance to make yourself the “king” and then running up in all your glory to assume your position as “king of the mountain.” In terms of your ads, Google will closely monitor the paid search listings and stick your ads in when there are the fewest ads competing, the bids are lower, etc. while working within your usage parameters (like daily budget). So say you have a max Cost Per Click (CPC) bid that would regularly get your ad shown about 200 times a day in perhaps the 5th position. If you set your position preference for the first or second position only, your ads may now only show up 60 times a day, but they will be in those much higher positions. Some advertisers may not see the value in this because it is, after all, fewer showings per day, but others would rather have their ads shown in a higher position when they are displayed because they feel the conversion is better or it helps their brand recognition.
2. Featured lower in the paid search results
   While it is hard to wrap your head around- there are those that think the first position may not always be the best. Some large advertisers have done research to study the conversion rates from different positions for specific keywords, and what they found is that there is not much of a difference between say second and third. So what some companies will do is request that their ads be shown further down in the rankings. This way, you can easily target less expensive positions to get the maximum Return on Investment (ROI). Say the conversion rate is approximately the same between first and second and to be in the first place spot you have to pay $0.30 more than the second place spot. By requesting to be in second place you can save a small amount per click that really adds up over the course of the week, month, and year.

Whether you are using position preference to make sure your ad does not get lost in the many pages of paid search results for a very competitive keyword, or you are trying to maximize ROI, position preference is a powerful tool.

Rules:

1. Set the Position Preference
   • Higher than (ex. higher than 4th position)
   • Lower than (ex. lower than 2nd position)
   • Range (ex. from 2nd-4th)
   • Exact (ex. 3rd)
2. CPC will be Altered
   In order to show your ads where you request, your CPC will be changed to show it in the preferred spot. This means that if your maximum CPC bid is $1.00 but to show it in your preferred position it will only cost you $0.65/click, Google will change the value you pay to seat your ad in the listings in a particular spot.
3. Not Guaranteed
   Keep in mind that you can set your position preference to be whatever you would like but that does not mean that your wishes will be honored. Say you want to use the keyword “cell phone” (which can cost an upwards of $4.00/click) and you put your position preference as a range of first position to third position and your maximum CPC is only $0.20/click; there is no way Google will be able to show your ad in those positions for that price because its rank (which is CPC bid multiplied by your quality score) will not be high enough, so your ads will not appear. Position preference is not guaranteed- it is suggested. Additionally, say you set your position preference as lower than fourth but you have a really unique keyword and there are only two other people using it as part of their AdWords campaign at that point in time. Your ad will have no other choice than to show as third despite your request that it be shown lower.
4. Only Applies to the Search Network
   Your position preference only applies to the search network (it is independent of your content bids and placement targeted ads). This means that you can use this advanced technique of position preference for the search network portion of your campaign and also run ads on the content network on placed on particular websites without encountering any problems.

Constraints:
Unfortunately position preference, while highly effective for certain strategies, is not compatible with some of the tools that Google has in place to help you with your AdWords campaigns. Position preference does not work with:

• The budget optimizer
• Preferred CPC bidding

Let Volusion’s marketing team manage your campaign for you.

-Kate Pierce eCommerce Specialist

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