The Dizzying Growth of Social Networks in Latin America

When conflict erupted earlier this year between Argentine President Cristina Fernández de Kirchner and Argentina’s agricultural sector on the issue of export taxes, various groups emerged on both sides of the dispute, appearing on Facebook — the online social network that is one of the most popular in the world. With assertions such as, “I hate Cristina” and “I support you, Cristina,” the latest version of the web enabled ordinary citizens to start debates and express themselves freely.

 

Social networks already bring together more than 230 million people globally. In Latin America, strong growth is expected for 2008, with the region accounting for 12% of all users around the world, according to Internet World Stats, a site that provides international statistics. ComScore, the online consulting firm, estimated in March that there are more than 47.5 million Internet users in the five largest countries of the region – Argentina, Brazil, Chile, Colombia and Mexico. Add Internet users in Puerto Rico and Hispanic users in the United States, and the total of Spanish-speaking users rises to more than 67.5 million.

 

According to Christian Doyle, professor of information technology at Austral University in Buenos Aires, “the main goal of virtual social networks is to bring together people who have similar needs. These needs can be work-related; emotional, social, or entertainment-related, and so forth. It all depends on the social network that ties them together. That way, at little or no cost, these networks help members find what they are looking for and what they like.”

 

Cristina Kirchner’s network is not unique. Her daughter Florencia has a Fotolog with all of the images of her social life. Even U.S. presidential candidate Barack Obama has a personal profile in Facebook, and he has made a major effort to spread his message over the Internet. This will be one of the key features of the Internet in the future. For example, Argentine politicians, while looking toward the 2009 legislative elections, will create profiles on social networks aided by news people hired to do help them achieve their goals.

 

Martín Becerra, professor at the University of Quilmes in Buenos Aires and researcher at Conicet (The National Council of Scientific and Technical Research), notes that “politicians use this tool as a form of selective affinity. They segment people into three different categories based on their relationship skills, which makes it easier for them to reach people with certain characteristics, such as young people.”

 

Sonico, a social network that began in Argentina and aims to spread to the rest of Latin America, Portugal and Spain, already connects more than 26 million people. Tomas O’Farrel, partner and chief marketing officer of the company, notes that “the team that created Sonico believes firmly that Latin culture needs to have an exclusive network that reflects the characteristic ways that its members use the web. The special quality is that they use Sonico as an online support for their offline life. The vast majority of people have accounts directly tied to their daily lives; they are real, not the product of an accumulation of contacts.”

 

Becerra agrees. “We Latinos have a predisposition to meet face to face, and we Argentine web users are more likely to use this platform to communicate with each other because we like to stay in contact. Social networks complement our way of socializing. In fact, we organize face-to-face meetings through the Internet, such as at [music] recitals.”

 

Nevertheless, Becerra warns about the negative effect of virtual communities. “It is an overly generous and exaggerated concept of friendship. That’s because if you to write to some 500 contacts in a week, that’s more than enough; you cannot do anything else. It’s impossible.”

 

One trend within virtual communities is specialization and the creation of themes, such as those that group together those people who share joint initiatives. However, the networks that grow fastest are those that tie together professionals, such as LinkedIn, which was created five years ago. In Doyle’s view, “the biggest positive impact of a network that ties together work or professional contacts is to supply jobs and projects. This enables people to associate independently of the city or country where they are living. They can develop new business ideas, and generate jobs at a virtual level or at long distance. I believe that this type of network is changing the structure of working relationships in an extremely positive way.”

 

In the case of Sonico, “These types of vertical networks are also very useful as work tools. At Sonico, we are working to make it easier for all of our users to segment their personal profiles into ‘work’ contacts and ‘personal’ contacts,” says O’Farrel.

 

Toward Profitability

 

Beyond making contacts, the best-known social networks – such as Facebook, MySpace, Hi5 and Orkut – are trying to find ways to become profitable. “As more and more members connect to a network, more and more data is moving around. Surely that will create a company that can generate an attractive amount of revenues, largely through the sale of advertising space (such as banners and pop-ups). This topic may be disturbing for some users, especially those that prefer to quietly surf the web or interact online, and do not want to be ‘invaded’ by publicity. There may also be others that come across tempting offers. It all depends on the individual,” says Doyle.

 

Depending on the source, total global revenues from Internet advertising will amount to between $50 billion and $80 billion a year by 2010.

 

Social networks are very attractive for advertisers and ad agencies because they enable advertisers to segment a community by age, gender or locality, among other options. Until now, the most frequently used strategies are online advertising, cell phones, value-added services (such as creating personal albums and printing them); and mobile services (such as birthday alerts via SMS, and virtual gifts).

 

At this stage, not every company views these sites as a business activity. “A lot needs to be done so that these companies adapt in part or entirely to this market,” says Doyle. “Many multinationals are already doing this. For example, Nike is already spending 70% of its advertising budget on the Internet. In this sense, large companies have already begun to take the lead. However, a lot remains to be done, especially here in Argentina, where a large number of companies continue to view the Internet as a market for stained glass and bottle caps, which deprives it of its real importance and the importance that it is going to have.”

 

As for Sonico, “Gradually, companies and agencies are discovering the potential and the benefits of social networks as a medium and channel for reaching their audiences. This year, we’ll see great progress in this area,” says O’Farrel.

 

Guillermo Riera, director of We Media Buenos Aires, an event organized to analyze new communications media, mentions another characteristic of online advertising. “Some have managed to use it intelligently, so that all of their advertisements have some relationship with the needs and interests of their users. This provides an additional benefit to users because they can view the advertising messages as another tool for doing their work.”

 

On the other hand, many social networks have received support from private investors who see a promising future for this new form of communications. MySpace was acquired in 2005 by News Corp. at a cost of $580 million. In 2007, it cost Microsoft $240 million to purchase 1.6% of Facebook.

 

Just the Tip of the Iceberg

 

In addition to e-mail, chat, Fotologs and personal blogs, social networks are a new way to interact globally. These “windows on the world” enable people to provide all the information that others want about their lives, and to show it all off in cyberspace.

 

According to Riera, this is only the tip of the iceberg. “For the first time in human history, any of us has the capacity to communicate on a massive scale. This is an historic change because there are no longer only a few sources of information and many readers. Now there are an unlimited number of information sources and an enormous number of readers who also have the potential to generate information.”

 

“There is an analogy with old social clubs in which young men, for example, meet with the excuse that they are playing tennis,” adds Becerra. “Now this sort of socialization takes place on a worldwide level; earlier, it was reduced to a gender or social class.” In his opinion, one of the challenges is to bring in more layers of the population. “Not every social sector has access to Internet,” he says. “However, over time, penetration will grow, so there is great potential for social networks to expand.” To put this in perspective, in Argentina, the penetration rate of the Internet is only 22% of the population.

 

In the near future, horizontal communities will give way to vertical communities (which are more specific and segmented). “Sonico belongs to the latter group since its focus is on Spanish-speaking users, and because it addresses their own ways of doing things,” says O’Farrel. According to Doyle, “Social networks have a long future ahead of them — one that will be constantly expanding. I believe that over the next few years we will see the birth of new nuclei of virtual socialization that will aim at diversity and will bring individuals together. We are facing a true technological and social revolution such as there has never been in the human race…. We haven’t seen anything yet.”

 

Riera agrees, noting that only a few years ago, “nobody was thinking about the likes of Facebook, LinkedIn or YouTube. Now, they seem as if they have always been around. Clearly the number of people using these social networks in this part of the world continues to grow by leaps and bounds. In the leading industrial countries, growth seems to have slowed a bit but usage continues to be intense. We cannot know whether these communities will continue to be what they are today, or whether they will become something else. Without doubt, however, these new technological tools have opened another door through which companies can reach people who are extremely attractive [as marketing targets], and who have unimaginable potential.”

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