Market Research specialist MINTEL Oxygen have recently carried out some research into the growth of social networking in the UK, which also predicts where this sector is likely to go in the near future.

I’m writing this because we feel that this might be of interest to our readers, as we recently wrote about ‘Thinking Outside of Facebook, Other Social Networking Companies Make Their Mark‘ and we think that Sociableblog would be the perfect forum to examine the research report of the MINTEL Oxygen about “Growth of Social Networking in the UK“.

Here we offer you a summary of the research and would be really interested in your feedback on this topic. We’re working very closely with MINTEL to build relationships with key bloggers in this sector, which is why we would love to have our readers on board.

Summary of the Research : “Growth of Social Networking in the UK, April 2008″

Market in Brief

Growth stalls as market races to maturity

• There were considered to be more than 25 million UK users of online social
  networking websites during the first quarter of 2008, but the exponential growth
  seen during 2006 and 2007 has stalled.
• Around three-quarters of the UK’s online population are believed to have a
  social network profile, although around 10% of these are believed to be
  effectively dormant.
• The two key challenges for social media providers therefore are to grow
  market share and to increase the engagement of users to encourage them to
  spend more time on-site.

Mobile the springboard for future success

• The mobile Internet is the means by which online social media can take its next great leap forward, giving consumers 24/7 access to their networks wherever they are, but particularly in the valuable ‘third space’ between home and place of work or education, and promoting revenue generation through integration with existing m-commerce applications.
• The major barrier to getting mobile networking off the ground is the payas- you-go character of the UK market (especially among social networking’s key younger demographics), in which the cost of Internet access is still perceived as both high and difficult to keep track of.
• Against that, however, social networking could prove the ‘killer app’ that drives take-up of mobile Internet and pushes top-up customers into monthly contracts that include flat-rate web access.

New competition builds alternative routes to the future

• Competition in the social media sector is increasing all the time. The potential for market fragmentation is rising with rapid growth in the number of niche networks, while innovation is not confined only to technology; the emergence of new business models presents three potential directions in which the future of online networking can head:
• Current trends of big-brand, broad church networks can continue, with sites encouraging users to spend more time on them.
• The networking focus could sharpen on communication, so that users are in touch with their networks more often, but spend less time on-site per visit.
• Or the focus could switch from communication to ‘utility’ so that members use their networks to get things done or find useful information.

Security and privacy issues: Education and verification

• Beyond the current hue and cry surrounding security, privacy and the safety of young people using online social networks, it is difficult to identify quite how significant an issue this is for the sector.
• Public and government concern is genuine, but Mintel’s consumer research undertaken for this report clearly indicates that privacy and safety fears are far lower among users of social media than among non-users, and that network members are largely wary of putting too much information online.
• Education is undoubtedly the way forward, not just for network users but also for the less computer-literate parents of the teens for whom social media is as mainstream as the telephone.
• The greatest challenge to the sector may lie in minimum age verification as Mintel’s research for this report suggests there is currently no bar to children accessing sites that specify they are for older users only.

Market share the new social media battleground

• The battle for market share is already under way, as traffic trends indicate bthat network size is a key determinant of user engagement – the more people there are in a network, the more time those people will spend on it.
• Facebook and Bebo are currently the market leaders and the only two sites to grow share in the six months to February 2008 – indicating that fragmentation is already arriving and that only the big brands have the ability to cut through the rising clutter.

Your social network: resource or communication tool?

• Although Facebook and Bebo are identified as the social networking market leaders in terms of active visitors and visits, published figures show that it is actually Friends Reunited which has the largest UK user base of any online social network.
• This discrepancy relates partly to the issue of dormant and lapsed accounts but also highlights the different ways in which consumers use social networks according to whether their character can be described as that of a ‘resource’ or a ‘communication tool’.
• Resource sites such as Friends Reunited and LinkedIn, which are visited for specific purposes such as tracking down old colleagues or researching a business contact, are typically less frequently visited than communication sites like Facebook and Bebo, where users drop in to see who has posted what, rather than for any particular reason.

Downscale demographics can dent advertiser appeal

• Advertisers may be able to target consumers much more accurately through social networking websites than through any other medium, but this may be just as well, since the most sought-after consumers are as hard to hit through social media as they are through any other channel.
• Mintel’s consumer research indicates that for the main part, online social networking draws the larger proportion of its user base from lower-income groups and the more downscale socio-economic grades, with only Facebook and LinkedIn of the major sites bucking that trend.

Networking acquires a social conscience

• Much of the focus on the social networking market has been on company valuations and revenue potential, but the sector is increasingly gaining an emphasis on ‘society’ as much as ‘social’ through its ability to connect groups and individuals potentially isolated from physical communities.
• A cultural shift towards more one-person households and an increased geographic mobility that leaves families dispersed has created a need for personal connections that social media can fulfil, benefiting groups such as stay-at-home mums and older people whose families no longer live just around the corner.

Innovation the name of the social media game

• The online social networking sector is a highly innovative space and will continue to be so, not just in terms of user-generated content but in commercial software development encouraged by the adoption of open platforms that enable new applications to work across multiple networks.
• The video games industry’s interest in moving into social networks is likely to bring further innovation, as well as increase participation within its core male demographic.

This report is supplied in accordance with Mintel’s terms and conditions.
© Mintel International Group Limited.