Hi, Vincent here. You’ve probably been noticing that social networks are springing up in every nook and cranny all around the net. Fast Company is starting one (which I joined, just for fun), Anthony Robins is starting one, even food-companies are starting them (check my post on the somewhat unsexy Milner-cheese on my blog). The question of why is relatively simple to answer.

Social networks are relatively cheap to operate (for certain types of companies), they do not require significant shifts of resources (for certain types of companies), and derive the majority of their content from user-generated content.

The types of companies that benefit most from them are two-fold. For one, those that already produce content for a living will find it easy to add in social features. Those that do not, will likely be more suited for a partnership with a content-company, as that will not distract from their core-focus. Another, perhaps less apparent benefit is competitive advantage.

Relational competitive advantage
With the internet there has been a growing shift of power towards customers. Customers are more informed, they are wealthier, and they are more selective. Competition in the global market-space is fierce and you’ll be hard-pressed to find companies that truly offer unsubstitutable products. Even Apple, to get back to tech for a second, which has some fairly unique attributes as opposed to its major competitors—Microsoft and Dell—is losing its uniqueness, more and more everyday, ever since shifting to the Intel-platform.

The problem is that, nowadays, features are no longer enough. It’s no longer sufficient to have a better design, a better tasting product, a lighter or faster machine, etc. Because these are factors that companies from cheaper regions on this planet can easily emulate and for a lower price. To briefly bring it back to food—my core-competency—you’ll be hard-pressed not to find a private label not able to offer the same level of quality that an independent manufacturer can.

What matters more and more—and this is the point I’m making in my Milner-post—is the relationship that companies are nurturing with their customers and vice versa. And that is where social networks come in.

Now clearly, no one is certain whether social networks are a fad or here to stay. Even I, on this blog, have thrown a lot of crap towards social networks*, because I’m suffering from so-called “fatigue.” However, it’s hard to deny that you can form much more complex relationship with people using social networks, than you can with most other marketing methods. And those relationships are a competitive advantage that other companies will find hard to emulate—at least for a while.

I’m going more into the case of Milner-cheese on my blog, explaining how they are forming relationships with their consumers.

Implications for tech
How I think this affects the world of technology is as follows. Experts on social networking are being called in to consult these companies. Case in point: Robert Scoble (5000 Facebook-friends / 7000 Twitter-friends) for Fast Company and Amber MacArthur (4000 Facebook-friends / 4500 Twitter-followers) for Tony Robins. Added to this, I think a new business-model will appear for social networks looking for one: creating platforms that they can license out / customise for companies. The same may also apply to app-/widget-designers. Media-/Marketing-companies with bright ideas on how to draw in a crowd and tie this into some kind of product-relationship will be popular.

* A note on my previous post about Facebook: My point was about cohesion. This is still a vital point, I feel, as without a solid core (see pic), social networks are like flies on the wall.
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